[raphman]

Building working prototypes is no longer a major problem. Nowadays, (experienced) individuals can design portable game consoles [1], alarm clocks [2], mobile phones [3], and pretty much everything else.

However, you need a lot of money, time and experience for manufacturing, testing, shipping, and supporting the final products. Unlike software startups, hw startups may need to apply for FCC and international certifications, supervise contract manufacturers, and need to think carefully about liability issues.

[1] http://openpandora.org/ - [2] http://www.chumby.com/ - [3] http://gta04.org/

[jgrahamc]

I was going to reply but you've done most of it for me. The big costs are going to be in the manufacturing and quality control post manufacturing.

Also, if your product contains anything to do with RF you are in a whole other world where you'll need certifications of various sorts and lots more testing.

[MatthewPhillips]

Aren't those phase 2 problems though? As a simple test to see if a market exists, why isn't it viable to sell your (polished) prototypes? One could make, (just spitballing) a doorbell that sends you an email as a hobby project, then throw it up on whatever the electronics equivalent of etsy is, and build them on build-to-order basis for the first few hundred units and then worry about investors only if your idea floats.

For the products we're talking about here, no competition exists. So I can sell my gimmicky doorbell for $80 or $90 just to see if there's any interest at all, then get investors and start building my own arduino boards from parts (since the specs are open) at scale.

[raphman]

Actually, there are a number of online shops that you can ask to manufacture and/or sell your design, e.g. [1,2].

However, manufacturing electronics in low quantities is quite expensive. Additionally, in order to legally sell this stuff in the EU, you need to get a WEEE certificate (i.e. someone needs to take care of recycling or disposing of your product) and a CE certificate (compliance to all regulations). And you cannot easily fix a bug in your board design or even the firmware, once the product has been shipped to the customer. You have to get it right on the first try.

I agree that it has become relatively easy to start a hardware company. However, compared to a software startup, you need to invest a lot of money upfront. And so much more can go wrong that you have little control over.

I don't know a lot about startup economics but I have closely followed the fates of a number of hardware startups. For example, the Pandora guys got screwed over by different manufacturers, costing them a lot of time, money, and goodwill. WakeMate shipped dangerously defective USB chargers they had to replace. OpenMoko just did not find enough potential buyers for their phones (and screwed up in other ways).

Hardware startups do not fail because of a lack of prototyping tools.

[1] http://www.seeedstudio.com/depot/ [2] http://www.sparkfun.com/

[stonemetal]

why isn't it viable to sell your (polished) prototypes?

From the electronics stackexchange: Certification with the FCC can cost around 10 to 20K. In the US, all products containing electronics that oscillate above 9 kHz must be certified.