Hardware Is The New Software

Nest, GoPro, Beats, Jawbone, Oculus, and a host of others, all belong to the hardware industry that is making waves in today’s tech sphere. These are the forerunners who have amassed multi-billion-dollar valuations, through strategic acquisitions or high-value private investments. The accomplished tech giants across the world continue to see their potential.

The business landscape has witnessed a shift in perception and valuation of hardware versus software companies. For years, software companies enjoyed elevated appeal compared to their hardware counterparts. For instance, last year, software ventures attracted an unprecedented $11 billion in venture capital, culminating in completed 1,523 deals. In contrast, consumer electronics attracted a relatively meager $848 million, with just 31 separate deals.

This preferential investment focus on the software sector is the result of the ease with which software can be developed and deployed. The rise in easily accessible open-source services coupled with cost-effective cloud computing has leveled the playing ground for startups, even eager individuals that aim to penetrate substantial markets almost instantaneously via app stores. Reduced overheads equated to increased profit margins, painting a lucrative picture for the software industry.

However, user experience cannot solely rely on software. The ultimate interaction takes place through the tangible, tactile, physical world of hardware.

Hardware has a certain charm that software finds hard to replicate. It sparks an impassioned response from users who eagerly anticipate the release of new technology, sometimes even etching their favorite tech brand’s logo onto their bodies.

The task of creating compelling hardware isn’t a piece of cake. The renowned venture capitalist, Marc Andreessen, puts it succinctly: Hardware is hard. The process of developing robust hardware requires more than a makeshift garage setup. It demands the collaboration of specialized teams, hefty financial resources and dedicated time.

Despite the challenges, there is a silver lining for hardware — the development process is becoming easier, marking a pivotal turn in user experience. The advent of crowdfunding platforms like Kickstarter, Indiegogo, and various other capital-generating sources, are smoothing the pathway for hardware progression. This has catalyzed the rise of a new kind of hardware—powerful, yet application-centric.

The current age can rightly be termed as the era of “Hardware 2.0.” Many companies are reinventing traditional ideas about hardware-software convergence, emphasizing a seamless user experience. The disruption brought on by Hardware 2.0 is so impactful that tech behemoths are investing billions to remain at the top of the game.

Creating successful hardware or software enterprises is already a daunting task. The challenge amplifies when one attempts to excel in both simultaneously. Giants of tech and venture capitalists alike are discovering this, leading them to pour billions into acquisitions and investments, making global impacts.

source: Min-Liang Tan is co-founder and CEO at Razer. Article originally featured on TechCrunch

Updated in 2025 to align with recent developments.