Tuesday, May 13, 2008

The Long Tail of Consumers of Open Source Hardware

Back to the heavier side of things, here's something to think about. Who is the target consumer of open source hardware? In a sense, there are two types of consumers, the hardware developers and the end users, and they intersect to some degree. For example, the people using the product in the end may also contribute and customize the product, and vice versa.

To both types, the value proposition is customization. Customization is great for the so-called “long tail” of consumers whose needs are not entirely met by the specifications of general products. The concept is something like 80% of consumer needs can be met by 20% of the products (I’m just making up these numbers, but it’s something like that). Hence the long tail is the 80% of products that meet the remaining 20% of customer needs. Common sense tells most of us to go after the huge 80% chunk of consumer needs. The problem is that common sense talks to everybody, and now you have a ton of people competing to be in the same 20% niche of products.

What does this mean for the long tail? There may be more untapped opportunity in the long tail than there is in the upfront portion. Though the long tail only consists of 20% of consumer demand, it takes 80% of products to meet this demand. This 20% captures the diverse, quirky interests of consumers that don’t exactly align with the mainstream. Because it’s more diverse, it is easier to enter and target a niche in this area.

Another consideration is that some of those who fall in the steep, upfront portion of the curve are there because they compromise and are willing to settle for mainstream items that are already available. These items meet most of their needs, but there are just those one or two things that would be great to have, but since it’s not there, they’ll get over it. What if you could make customization a part of your product? It would be cheap and readily available. Some of these folks who compromised and went with the mainstream option will now have a compelling reason to purchase a customized option. Each customized option caters only to a relatively small number of consumers, which means it falls into the long tail. As more consumers purchase customized products, the long tail will increase, to encompass maybe 30% of overall consumer demand, rather than 20%. While the long tail may never grow to be as big as the mainstream, addressing the long tail presents an even greater opportunity than readily apparent. Due to its intrinsic property of customization, open source hardware presents an opportunity for the large, growing and unsaturated long tail market of consumers.

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