This is a biased point of view. It is biased because most of the companies I worked for are hardware oriented or started with hardware. They are also large corporations.
An observation that I derived with a friend was it’s more likely for software company to succeed in hardware versus hardware company in software. Great rise of hardware companies transforming to solution selling companies, for higher margin, and most have failed.
Here’s the answer, man versus the machine
Our reasoning
- User centric vs product centric. Software development involves more UX consideration, that habit system creates relatable hardware. It’s not easy for a hardware company to adopt this from ground up.
- Margin structure. Software companies have lower cost and more consistent cashflow from ARR. This would provide steadier runway and the mindset to add premium to cost and price. Hardware companies have less margin to burn through, the cashflow is limited to stock and distribution.
- Time. It’s faster for hardware companies to gain revenue traction: manufacture and sell in channel. Software requires time to generate, convert, and sustain users. Hardware company owner needs to be patient.
- Revenue acceleration slope. Selling hardware brings large revenue and small margin. Software, at an early stage, has small revenue and needs time to pile up. Owner needs to be patient.
Reply from Claude, Opus 4.5.
