Executives at HAX, the five-year-old hardware accelerator and seed funder, know a lot about hardware. They’re getting ready to release a detailed analysis about hardware trends, and last week informally previewed some of their insights, expectations, and lessons learned. It was a bit of a drink-from-a-firehose experience. In five years, the group has learned a lot, and the HAX executives all seemed to want to say a lot more than they could cram into their time slots. Some takeaways:
On the consumer Internet of Things:
“Three years ago, the theory was people would buy families of products to link together in homes, possibly under one brand,” said HAX program director Kate Whitcomb. “You would enter through your smart door, the lights would turn on, the music adjust.”
That theory it turns out, was completely wrong.
“We are not seeing that,” Whitcomb indicated. “Consumers are not buying products as suites. Consumers buy individual products for a single purpose, and if they work together, do so through voice.”
That, said HAX general partner Duncan Turner, has made “a lot of investments in smart home look dumb until recently,” at least investments in those companies trying to market the gadgets directly to consumers.
Smart home investments do make sense for utility companies to help them run the grid, he said: Nest users, for example, are being paid $30 to $50 per year by some utility companies to allow them to level load on grid.
And, as general partner Ben Joffe points out, consumer IoT gadgets have turned out to be attractive to insurance companies, with home, car, and health insurance providers offering discounts tied to the use of specific connected products. And in the case of the Beam smart toothbrush, he said, the hardware maker is itself turning into an insurance company.
On the consumer health business:
Consumer gadgets, said Turner, are turning out to be potential Trojan Horses, getting into people’s lives and then collecting all sorts of data that will revolutionize healthcare in the future. Nura, for example, is marketing a set of headphones that measures characteristics of a user’s hearing for purposes of customization, and can also gather information of how hearing changes over time. That’s high value data, Turner says. Another headphone company gathers data about how well a person concentrates at different times. Combined, that could be used to build an interesting data set. Other companies are doing the same thing, but with sleep data. He indicated, sleep technology is going to be a huge market, as are various approaches to back care.
Getting the rights to use that data, however, is going to be tough, Turner said. “People don’t want to donate data. Do you donate organs when you die? Then you should donate your data, to help us be healthier in future.”
On other emerging gadget trends:
Sports tech companies that do real time coaching are going to be huge, said Joffe. Aftermarket personalization is becoming the new normal, he indicated, pointing to the Revols earphones that custom fit to individual ears as an example. The second wave of smart glasses, which will take a more pragmatic approach and be more successful, is imminent, Joffe says.
And personal mobility devices will be huge, he said. “Hoverboards that catch fire? That was so last year.” The next boom will involve Ninebot (a two-wheeled mini Segway), electric single-wheel transporters, and electric skateboards. “These aren’t jetpacks; they are things we will really use,” he said.
HAX sees huge opportunities in industrial agriculture, as new sensing devices are implemented to improve efficiencies. For home agriculture, Turner said, the opportunities are limited at best. The only companies he’s seen to date that have created successful products for home agriculture are either involved in farming insects for protein (Livin Farms), or growing weed (Grobo). “The cannabis area is the only one we think is high value enough to get this technology into the home,” Turner said.
On the future of manufacturing:
Manufacturing has been going to China, said Turner, but people have been wondering where it will go next. “The answer,” he said, “is nowhere, because robots are coming in to take over these manufacturing processes.” He pointed out that China, Europe, and Japan are investing heavily in robots for manufacturing, and the United States and Britain are falling behind.
On the Maker movement:
The gap is widening between makers and startups, said Joffe. “Maker Faire used to be the place for hardware startups to show innovation,” he said. “Now it is CES.”
On how to deal with hardware copycats:
“Software is your best protection,” says Joffe. “When the intelligence is in the software, it’s hard to copy. Patents can help, but for a young startup, they are hard to defend.”
On big failures:
Hardware companies don’t always succeed. Whitcomb pointed to Lily Robotics, Pebble, Hello Sense, and Scully as prominent failures. “Those explosions affect the whole marketplace, and hurt other startups,” she said. “But the reality is most products do ship, and explosions are few and far between.”
Tekla S. Perry is a senior editor at IEEE Spectrum. Based in Palo Alto, Calif., she's been covering the people, companies, and technology that make Silicon Valley a special place for more than 30 years. An IEEE member, she holds a bachelor's degree in journalism from Michigan State University.