added by sari · updated 2y ago
The Diff | Byrne Hobart | Substack
- The upgrade cycle gets longer.
from The Diff | Byrne Hobart | Substack by Byrne Hobart
sari added 3y ago
- A final option is financial engineering: turn a hardware purchase into a subscription by either leasing the product to the end user or financing their purchase for them.
from The Diff | Byrne Hobart | Substack by Byrne Hobart
sari added 3y ago
- And, in another sense, hardware companies that shift to a subscription model are pricing according to reality. If you buy something and use it every day for years, it makes sense that you’d pay for it as you use it rather than buy an uncertain amount of usage at one upfront price. The gradual shift to subscription-based hardware is just the economi... See more
from The Diff | Byrne Hobart | Substack by Byrne Hobart
sari added 3y ago
- Another option is to reverse this, by offering hardware as a complement to an existing software business
from The Diff | Byrne Hobart | Substack by Byrne Hobart
sari added 3y ago
- For a hardware company to grow, it needs to ship more units or ship more expensive units every year. Early on, the challenge is operational: GoPro had to figure out how to assemble more cameras, and had to design better ones. But in the later stages of a hardware company’s growth cycle, two problems emerge:
from The Diff | Byrne Hobart | Substack by Byrne Hobart
sari added 3y ago
- When the buyer population shifts from early adopters to average people, it necessarily shifts from people who will buy every brand-new update because it’s a brand-new update to the much larger cohort that’s satisfied by default with the current options and doesn’t feel the pressing need to upgrade.
from The Diff | Byrne Hobart | Substack by Byrne Hobart
sari added 3y ago
- It’s hard to determine the total addressable market.
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sari added 3y ago
- Apple, of course, is one of the most successful versions of this. The company currently has 585m total paid subscribers for its various services, allowing it to earn revenue over the usage cycle rather than from purchase to purchase.
from The Diff | Byrne Hobart | Substack by Byrne Hobart
sari added 3y ago
- Paul Graham points out something Fitbit, GoPro, and Sonos investors have also observed: hardware is hard.
from The Diff | Byrne Hobart | Substack by Byrne Hobart
sari added 3y ago