Introducing the Open Source Hardware Central Bank [LWN.net]

Here is a proposal for the "Open Source Hardware Central Bank", an organization dedicated to easing the problems associated with bringing open source hardware projects to a successful conclusion. "The Open Source Hardware Bank will work to eliminate the scaling and quantity pricing problem for OSHW projects by funding the build of 2x the quantity of any Open Source Hardware product. That means, if a project has found a way to find 10 potential buyers, the bank will put down the money needed to fund 10 more, for a total of 20 products. If a project has found 25 community members to buy in, the bank will fund another 25, to bring the total quantity down to 50. This should reduce the unit costs by around 10-30% of any hardware project, and in the case of the Illuminato, it'll reduce costs by almost 40%!"

to post comments

Introducing the Open Source Hardware Central Bank

Posted Mar 8, 2009 21:34 UTC (Sun) by wtogami (subscriber, #32325) [Link] (4 responses)

> So Andrew, Justin, and I will see to it that the Open Source Hardware
> Bank does not default, and each of us will guarantee every investment.

It sounded remotely plausible until they wrote this.

Introducing the Open Source Hardware Central Bank

Posted Mar 9, 2009 4:05 UTC (Mon) by inthebitz (guest, #57047) [Link] (3 responses)

@wtogami - hey, it's me, matt (inthebitz) and i just saw this comment! it definitely took me a while to create an account and post here, but i tried... anyway, yes good point. right now it's just the illuminato that's getting built, and so i thought it was kind of going out on a limb asking for anyone to believe that it could work without seeing it happen or testing it out first. i was sure there was something i had forgotten, and in exchange for some folks taking a risk, i wanted to personally say that yes, it's an experiment, but at least while the amount of stuff getting built is still manageable, and while i'm "proving" or "disproving" the bank's model, i couldn't possibly have guarenteed all of the illuminato's personally (or else i just would have funded it all myself if i could have!), so andrew and justin said they'd help to, and be willing to see that no one could possibly lose out in the experimental stages. i suppose i could have just followed the traditional model and pooled just andrew, justin, and my money, but that wasn't the point :) it's a little tricky, because the goal is to try to reach an equilibrium, where no one is really "risking" nor "profiting" on the hardware built - it's just trying to reach a middle ground. anyway, it looks to have worked in isolation, so now i'd really like to see it work for a few more oshw projects... one project at a time ! :)

Introducing the Open Source Hardware Central Bank

Posted Mar 9, 2009 10:15 UTC (Mon) by tzafrir (subscriber, #11501) [Link] (2 responses)

Sorry, I don't get it. What's in it for such a bank?

It is obviously risking money that could have been invested in a mosre profitable way - you're not guaranteed to sell all 50 units of yours (or even first 25 units) even with the reduced price.

And if people in such a bank do work, somebody is going to have to pay for it. Which means that an equilibrium is just not good enough.

Unless you're looking for some sort of charity that supports small businesses or hobbyists.

Introducing the Open Source Hardware Central Bank

Posted Mar 9, 2009 11:52 UTC (Mon) by Zack (guest, #37335) [Link]

>It is obviously risking money that could have been invested in a mosre >profitable way

These days there seem to be no guarantees regarding money, even with established and renowned banks.

>- you're not guaranteed to sell all 50 units of yours (or even first 25 >units) even with the reduced price.

No, but he obviously knows how to build hardware, and probably has some sort of feel as to what is a viable idea and what isn't. In a way it would be like having your own investment advisor in the small-scale electronics market, and it's all open hardware to boot.
Furthermore, it would help real people build and design real hardware, instead of the opaque schemes overpaid voodoo-economists usually cook up.

>And if people in such a bank do work, somebody is going to have to pay for >it. Which means that an equilibrium is just not good enough.

On a small scale it could be manageable by volunteers. On a larger scale it should be profitable enough.

>Unless you're looking for some sort of charity that supports small >businesses or hobbyists.

In the comments on the linked article kiva.org is mentioned. From what I could see at a quick glance it operates under the same principle, and seems to be sustainable.

Introducing the Open Source Hardware Central Bank

Posted Mar 9, 2009 16:29 UTC (Mon) by ajross (guest, #4563) [Link]

Sorry, I don't get it. What's in it for such a bank?

It's not clear how the financials are going to work from the blog post, but one assumes that it'll simply be making a loan. If you can front the cash for X units, they'll loan you enough to increase that initial order to 2X units.

With hardware, or really any manufactured item that requires tooling or configuration of an assembly process, there's a very steep slope in per-unit costs at the bottom of the range. And that's where hobbyist stuff lives. So at least in principle, this bank could with comparatively small investments reduce the overall cost of open hardware by a significant amount. Cheaper hardware means more sales, which means that the vendors will be able to repay the loans. Again, in principle.

The idea seems sound (if tricky to administer) to me. I guess a lot of the details depend on what hardware they're going to be funding.

Introducing the Open Source Hardware Central Bank

Posted Mar 9, 2009 17:15 UTC (Mon) by boerner (guest, #4247) [Link]

Just to throw my two cents in...

I was the first person to order an Illuminato from the liquidware.com website under this new plan. My main motivation was I actually just wanted the device. The first run they had done had sold out before I decided to act.

My second motivation was to help. I can't code software, have only started dabbling in electronics, and certainly don't have a large amount of cash on hand (to fund things like this myself). If just throwing a little extra cash on an up front purchase can help bring the cost down of an object, and encourage more "open" hardware development, everyone benefits.

Other people have managed to get other projects made (see http://www.rowetel.com/ucasterisk/ for an excellent example), but it is still a very uphill battle.

I know this isn't curing cancer, but every little bit helps. Hindsight being what it is, I would like to have seen how this method would have worked in relation to the One Laptop Per Child project.

Even if this particular idea doesn't work, it can always be changed. If nothing else, it prompts more thought on how to "make things" better, faster, and cheaper.