Hardware doesn’t have to matter as much as you think

In an era of smart homes, connected cars and subscription everything, how do you think about hardware? In my very first newsletter, I argued that hardware was just a Trojan Horse that would deliver a company’s service to consumers, and it’s becoming increasingly clear that’s the right way to view the connected world.

And in the year and a half since I started writing this newsletter, a few case studies offer some telling examples of what happens when companies or startups forget this lesson. It also raises questions about what it means to own a piece of connected hardware.

For anyone unfamiliar with the concept (this video explains it well), the idea is simple. Hardware is simply a representation of whatever service a company provides. That hardware may be as simple as the dash light that Lyft drivers can use to signal what they are or as complicated as the steam oven launched by Tovala this month to support its subscription food business.

Thinking about your hardware this way changes how you design it. Instead of focusing as much on the physical device from a specs and features perspective, you design something to be flexible and future-proof with the upgrades coming from software. Simple is better.

Juice-pressing startup Juicero acts as an embodiment of this lesson. At $700 when it originally launched*, the cold-juice press that Juicero built was beautifully engineered, but when a news organization showed you could press a bag of the Juicero juice as effectively using your hands, outrage and mockery ensued. The problem was that Juicero focused too much on engineering the hardware (an easy thing to do in this age of Apple and design thinking) and built an incredibly expensive device.

Consumers, media and others focused on the device instead of the real value that Juicero was trying to provide–an easy way to deliver responsibly grown vegetables.

What’s becoming really interesting is how new hardware can lead to new services and how existing services can boost their utility by partnering with companies that make hardware. For an example of hardware enabling a new service, look no further than Amazon’s Alexa, which was a service built into a smart speaker. This was a piece of hardware designed to showcase a voice-based assistant that could do a variety of things from playing music to turning on your lights.

The Echo is a great example of a rather generic device that was mostly a delivery mechanism for Alexa’s expanding capabilities. My two-and-a-half-year-old Echo works as well today as it did in Dec. 2014 when I bought it, which I can’t say for many of my computers. What’s surprising is that now Alexa is built into other hardware made by companies that aren’t Amazon. This is a case where the original hardware, which is the smart speaker, has become a commodity, while the service behind it has become so important that it’s built into appliances, thermostats and even outlets.

But even when done right, there is a very real question of whether consumers will buy into the new ownership model implied by some hardware-delivered services. For example, with the Tovala oven, it’s much less useful if you don’t subscribe to the meal service. Or, my Eero routers offer me several valuable network services, but if I dislike the new terms and conditions the company implements, the $500 I spent on the system is wasted because my only option to avoid their new terms would be to stop using the devices.

There are also issues about digital rights management and if consumers want to limit themselves to using only certain products in a smart appliance.  We’re entering a brand new world of ownership and it’s unclear how our legal regimes, business models and our spending habits will adapt.

*This story was updated on August 2 to reflect the Juicero’s original price at launch was $700. It is now $399.