An important part of the Free Telephony Project is the idea of “open hardware”. The hardware designs that are being developed are being placed in the public domain under the GPL.

As a business model, it’s a bit of an experiment.

The technology being developed has very strong business possibilities – for example the ability to build a powerful IP-PBX for a couple of hundred dollars, much less than current IP-PBXes and even less than a low end analog PBX.

I have had to fend off several corporate dudes who wanted me to join them in ventures to make lots of money. It’s hard to turn them down but as I was not interested in “closing” the hardware they ran away fast. This makes sense if you want to build a large business, you need “secret sauce”. In other words: Intellectual Property (IP).

What I would really like is some sponsors for my work who can work with the open hardware concept, but so far they all want to lock up the IP. Which of course is the right thing to do if you want to make lots of money.

This has made me think through the concept of open hardware:

I think open software has been a good thing for the world, so I think open hardware is also good. If closed IP makes a small amount of people a lot of money – does opening the IP make a moderate amount of money for a large amount of people? The latter seems a better outcome to me. It also suggests that open hardware benefits small companies more than large ones. I think the specific benefit of open hardware is lower R&D costs. This is what is happening with my project – there is a small team of people designing DSP boards, BRI-ISDN hardware, doing Asterisk ports etc. So far I would estimate about 5 man-years of hardware R&D I now have available for free. If I like I can now re-use this open hardware in my local market, potentially without hurting the business of my co-developers. There is a spirit of cooperation rather than competition. A common perception is that “if the hardware design is open, people will just copy it and put you out of business”. Well after some thought I disagree. A business is much more than just the product design – for example you need support, capital, manufacture, service, and relationships with customers. So even if the whole design is open, you can still build a nice little business (but perhaps not a $100M business). You can also add proprietary components and build on the open technology, or focus on your local market. My pet favourite – open hardware allows us to invent new business models, for example developing countries could build advanced telephone systems for cost price. This is so much better than buying technology from a first-world profit-oriented business that must charge a 70% mark up to cover their overheads. This is the business model behind the one laptop per child project. A $100 laptop is possible if u remove the overheads, use community input and sponsership for R&D and build volume. Well a $100 IP-PBX is also possible. Another benefit is that the hardware can be built locally (remember the hardware design is free) overcoming import tariff problems and building local industry. Combining these elements means lots of people getting connected cheaply. And that is a very good thing for the world.

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