What Hardware Companies Should Know About Kickstarter

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While Kickstarter has changed its rules to make it clearer that the site isn’t just a store for hardware products, many companies that make actual products are still listing there. But two projects, one making motherboards and one a new type of chip, are struggling, leading me to wonder if Kickstarter is even the right place for geeky hardware plays.

Almost two weeks in, Adapteva, which is trying to bring an alternative chip architecture to the masses, is only a third of the way toward its funding goal. Xi3, a rethink of computer motherboard and chassis design, has raised only $38,123 of $250,000 (at time of publication) with 17 days left to go. Meanwhile, projects associated with the Internet of Things have topped their goals, and other toy tech-related projects are also doing well.

While this could easily turn into a piece wondering what type of hardware plays well with the Kickstarter crowd, I’m wondering how really geeky projects such as Adapteva’s 16- and 64-core supercomputer systems on a chip, or even a slightly more consumer-friendly modular computer from Xi3, should use the platform. Perhaps Kickstarter Chief Executive Officer Perry Chen can share more on this when he speaks at our RoadMap conference on Nov. 5 in San Francisco.

One could argue that both Adapteva and Xi3 are examples of Kickstarter fueling a niche market the big guys won’t touch, as a blog post by Robert Fabricant of Frog Design suggests, or that it is a last-ditch effort to succeed. In his post, “Kickstarter Rescues Startups That VCs Won’t Touch, But Here’s What’s Missing,” Fabricant writes:

Product design is governed by the laws of supply and demand. There is a tremendous supply of talent, yet very few products actually make it to market. So most designers have a huge stockpile of high-fidelity concepts and beautiful renderings gathering dust. While a number of these concepts turn up on Core77 and Co.Design, they have zero paths to market. Now you can argue that we don’t need another slab phone/pad with a slightly different chamfer or bezel. But there are a whole host of neglected device categories desperate for attention, like watches, bathroom scales, and thermostats. These devices feel woefully out of sync in an iProduct world. Perhaps the biggest service that Kickstarter has done is to reinvigorate these categories to the point where bigger players might see their potential and escape from “Slab Land.”

These projects fit in with Fabricant’s theme of Kickstarter being a good home for niche products that big vendors don’t want to touch or innovate, or even for new chip architectures. Because of the large economies of scale required to get and keep the cost low enough, the computing world leaves a lot of room for smaller projects. The big challenge for the Xi3 guys, and even Adapteva, will be whether they can match their Kickstarter price to the market demand in a way that allows them to survive and innovate.

Namely, can Kickstarter generate the margins needed for a full-on production manufacturing schedule at smaller scale, or the margins to continue research and development for a chip? Does it have to? In the case of Xi3, the answer is a decided “No.” David Politis, vice president in charge of marketing for the Salt Lake City-based company, says Xi3 decided to do a Kickstarter because it found the idea of crowdfunding so interesting and it had a product to launch.

While Xi3’s Kickstarter project hasn’t been much of success from a fundraising perspective, the company says it has gotten marketing benefits from the campaign. “As campaigns go it has been successful,” says Politis, adding that people who have visited the project page and viewed the video are already ordering the computer from Xi3 rather than waiting for the project to close. “You have to ask, at what point does a Kickstarter project become a media channel?” he says.

Adapteva and its Parallella project is in a different boat. It has turned to Kickstarter to build a market for its product after it couldn’t find continued venture capital backing. Adapteva has done well so far, but on Tuesday it also released its reference manuals, something CEO Andreas Olafsson said he wouldn’t do unless the project was successful. When asked if this was done to help generate more interest, a spokeswoman for Adapteva said it was just something the company decided to do now.

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