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Hardware makers will tussle with application developers for the limelight at the South by Southwest Interactive festival, a conference better known for showcasing startups such as Twitter Inc. (TWTR) focused on software.

“There is more hardware happening at South by Southwest this year than ever before,” Hugh Forrest, the lead organizer of the event, said in an interview. “It’s a new thing, and that newness is always sexy.”

Memoto AB is touting tiny cameras that clip to a shirt, letting users capture a running photo log, while Leap Motion Inc. will try to lure attention to computers that respond to hand motions. MakerBot Industries LLC, meantime, is promoting a three-dimensional printer at the annual gathering of technology tastemakers that gets under way today in Austin, Texas.

Entrepreneurs and investors are growing more interested in gadgets, aided by an increase in websites that make it easier to raise funding and greater access to contract manufacturers that can help build products at a reasonable cost. That’s helping hardware gain ground at a conference, better known as SXSWi, which in previous years gave rise to software sensations Twitter and Foursquare Labs Inc.

Hardware makers traditionally have gravitated toward the Consumer Electronics Show that happens each January in Las Vegas. In Austin, startups focused on hardware can stand out, compared with companies building mobile social-media applications, which are represented in abundance, he said.

Crowded Field

“That playing field has become a little more crowded,” Forrest said. Hardware “is relatively new territory for us, and new territory means there is less competition and more of a chance to stand out.”

Hardware has long been a part of Austin’s technology scene. Dell Inc., which has agreed to be taken private amid a sales slump, was for years the leader in personal computers. Apple Inc. (AAPL), the most valuable technology company, is expanding its local campus and adding about 3,600 workers over the next decade. Samsung Electronics Co. (005930) has also been bulking up its $14 billion nearby facility.

Hardware jobs rose about 3.2 percent in the Austin area in the first three quarters of 2012, according to the Austin Chamber of Commerce.

Venture capitalists are taking note. Hardware investment rose almost 50 percent to $1.41 billion in the five years through 2012, according to the National Venture Capital Association.

Printing Guns

Bre Pettis, chief executive officer of MakerBot, a closely held manufacturer of 3D printers, will deliver opening remarks at the conference. The technology allows a digital image to be turned into a three-dimensional model. Autodesk Inc. (ADSK), the developer of software tools used in architectural and other technical-design professions, has built a “Makers” area at the conference for people to test out the product and make their own objects.

The conference also will highlight the potential drawbacks of breakthrough technology. Cody Wilson, director of the Defense Distributed gun-printing collective, is scheduled to give a talk about technology capable of printing weaponry.

“I hope SXSW has never been of the position that all technological change is always good,” Forrest said. “That is what makes an event like this compelling -- when there are naysayers amongst the cheerleaders.”

Sweden-based Memoto is trying to blend its wearable camera with the moment-capturing features that people like about smartphones. One of the finalists for an innovation award at SXSWi, Memoto has built a $279 camera that’s smaller than a book of matches and can be clipped on a shirt.

‘Life Logging’

Billed by the company as a “life-logging camera,” the device takes two pictures every minute and then organizes them online based on when and where the photos were taken.

“The idea is to create the ability for people to have photographic memory,” CEO Martin Kallstrom said.

Memoto, which plans to start shipping its product in May, is among the hardware companies that have benefited from new online fundraising tools such as Kickstarter Inc. That gives people who may not otherwise have thought to try to start a company or build a new product to test their ideas, he said.

“People are starting to realize that you can do hardware as a startup,” Kallstrom said.

After raising more than $500,000 through Kickstarter, Kallstrom is using SXSWi to meet with other potential investors.

He’ll also get the chance to meet other hardware entrepreneurs during a gathering tomorrow for product makers.

Maker Meetup

The event includes a networking session and talks by Kallstrom and the founders of Ube, a light-dimmer device; Supermechanical LLC, a maker of Internet-connected sensors; and Cinetics, which makes camera accessories.

“The nice thing about hardware is you get people from all different kinds of backgrounds who are excited to hear from these guys,” said Ryan Brown, an Austin native who organized the meetup. “It’s a mix of mechanical and industrial designers, software guys, and even artists and craftsmen.”

Aside from more fundraising avenues, hardware makers are also getting help from low component costs and 3D printing technology that makes it easier to build prototypes.

Leap Motion, the maker of a device to control a personal computer with motion gestures, is using SXSWi as a “coming-out party” after raising $45 million from investors including Founders Fund and Highland Capital, said Andy Miller, the company’s chief operating officer. Leap’s co-founders, Michael Buckwald and David Holz, are giving a keynote presentation tomorrow, and the company spent about $250,000 to erect a kiosk that lets people test the device.

Hype, Investment

“The last five years, there has been a lot of investment and a lot of hype,” about apps, Miller said. “Some companies became truly significant, and a lot of companies didn’t make it. Now the attention is shifting.”

Miller, a former general partner at venture capital firm Highland Capital Partners, said investors are moving away from backing iPhone and Android applications because it’s harder to make money from downloadable software.

Even so, there is more work and investment required to take a hardware product from an idea stage to a store shelf.

“It’s definitely a bigger undertaking,” Miller said. “It involves a lot of people and that’s why we raised a fair amount of money. It’s not for the faint of heart, but the payoff can be worth it.”

For all types of startups, the Austin conference is a chance for showing off wares to top tastemakers, said Chi-Hua Chien, partner at Kleiner Perkins Caufield & Byers.

“It’s an opportunity to get in front of early adopters and tell your story and get people to start using your product,” Chien said. “Everybody in the tech community convenes on Austin for three days, and it’s an ability to connect with them about what’s new and what are the innovative products that are being built.”

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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