A few years ago, I started advising an AI layer above an AI layer for smart cities. I clearly remembered the conversation with the investors who told me, “We don't touch anything about hardware.” He said it was very slow, very capitalist, very danger.
To this day, the same company has solved its solution in American cities and now it employs hundreds of people. Once the very hardware, considered “very heavy,”, has become an undeniable basis for its market leadership.
And yet this is not an isolated story. Today, some of the most valuable companies in the world, such as Nvidia and Tesla, are primarily hardware -driven. Their heavenly cost is not only from software, but also by controlling infrastructure that enables others to build.
In the AI era, when software can be made (and copied) at electric speed, hardware companies offer something more sustainable: presence, stability and defense. Why I believe here is the time to review your position on venture investors and businessmen – hardware.
Hardware is a new ditch
The software is rapidly in commodities. Noon code, AI coding assistants and open source framework have reduced the gap between vision and implementation.
On the contrary, it is very difficult to copy or change after the physical hardware is installed. When your device is literally spoken in a city infrastructure, the switching cost is not just technical, it is political, logistics and financial. It is just a ditch software that rarely provides.
The software is still relevant, but it's developed on the hardware
The misunderstanding is that hardware companies are “just hardware”. In fact, there are the best platforms. Once deployed, they can permanently upgrade their offer through software, new features, analytics, integration and even AI layers.
This twenty unit of hardware becomes your permanent sales representative on the ground, enabling upsel and renewal without reproducing the basic products.
The prejudice against hardware is an outdated vastez
Many investors avoid hardware due to heritage stains: high burn, delay in manufacturing, complex supply chains. But those assumptions do not always live today. Prot typing, global contract manufacturing and progress in repeated review models have renovated economics. When formed properly, a hardware business can achieve a healthy margin, strong maintaining and expanding growth.
I urge the founders and the VCS equally not to get the hardware out of habit, as the next generation of sustainable tech giants is making their ditch with silicon, steel and infrastructure.
Ati Segi is a strategic adviser for companies and investors, who specializes in strategies, growth and M&A, who are guest partners at Crunchbase News, and an experienced lecturer. Learn more about their consulting services, lectures and courses at Segicopital.com. Contact them on LinkedIn for more insights and discussions.
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