The problem for SparkFun is that while it has experienced phenomenal growth, it’s also worried that it’s seeing a plateau. Lara Boudreaux, the project manager for the marketing department at SparkFun, said the company had sales of $27.5 million in 2012 but only grew 9.6 percent year over year.
The fear is that while the marketing interest in DIY and the maker movement is still high, the typical customer has been reached. Growth may now come from getting the established clientele to buy more. And while many DIY hackers are willing to spend on their hobby, growing in a saturated market is tough.
Microsoft has made products that get discontinued or can’t compete like the Zune. In the same way, companies in the DIY movement will get complacent or not willing to fund things that are competitive and visionaries will get the market share. Microsoft has been bullying the market because they have an operating system that works but Linux has been catching up.
You can’t just have a website to be in the business for the sake of trying to steal business. You have to be creative and appealing. In other words, you have to be a leader and not a follower.
Television usually starts shows to steal viewers but they are neither creative because it is stealing vs being creative.
I’ve found myself shifting from hobby suppliers like Adafruit and Sparkfun to Digikey. One starts out with the wonderful tutorials from Adafruit, with $30 Arduinos; but we quickly progresses into buying $3 MCUs from Digikey…
I was blown away that TI’s MSP430 MCUs come with a factory burned boot loader. How long will someone buy $30 Arduinos once they discover that a $2.30 chip will do exactly the same thing? The question in my mind is what does Adafruit do for me that Digikey doesn’t?
Unless you are an electrical engineer, Adafruit will still be here because people need tutorials and support. I gave up on another unnamed company because they don’t produce tutorials or enough tutorials and they kept sending me down different rabit trails. The stuff I made from Adafruit worked once I built it. It was because other companies were not helpful and half the time they don’t email you back.
Adafruit has helpful help and engineers to help answer questions.
Adafruit brings people and projects together. Without Adafruit, I wouldn’t have latched onto the Gameduino as fast because I wouldn’t have found out about it as fast and I wouldn’t have found products like the Panavise Jr so appealing in working with small boards.
It is no fun that Digikey doesn’t give out catalogs anymore. Going online and trying to find a part from Digikey is not so easy anymore because they are so big.
Of course, Digikey and Mouser will still be here to protect us buyers from price gouging from several other online companies but you also have to realize that people don’t work for free and the working man has to make their money somehow. The reason Digikey can keep their prices low is because they aren’t providing the same content that Adafruit and others provide. The reason you get a datasheet is because engineers make hundreds of dollars an hour and if anyone was to call XYZ company for product support, they wouldn’t get anyone on the phone because that company is not going to pay engineers $60 an hour or more to talk to customers on the phone to tell them how a product works.
I don’t agree with the "Grow or Die" business strategy. There is nothing wrong with a company staying the same size as long as it has enough profit to pay it’s employees and owners.
"Matt Bolton, director of production at SparkFun, estimates that any design the company produces will be copied within 12 weeks of hitting the SparkFun web site."
This statement is really unsubstantiated. When you learn to write in college, they teach you to back up your statements with facts. If the design was produced somewhere else, I would like to know so I could get the product cheaper but I doubt it because I surveyed all the major players and I don’t see it happening.
The problem with growth is that it is the derivative of size and financial types only seem to be interested the second derivative (growth of growth) when looking at how a company is performing. It seems to be a good measure when considering the success of say a Ponzi scheme or perhaps a cancer or infection but it’s probably not the best way of measuring the success of a stable business.
I live in Australia. We have a large retail electronics chain called Dick Smith Electronics (names after it’s founder) which started out as a small chain aimed at enthusiasts and kit builders. Eventually it was purchased by one of the largest supermarket chains in the country. Over time, in an effort to boost growth in the business it’s focus was shifted away from it’s niche market (electronic components and kits for enthusiasts) into consumer electronics. The strategy allowed for more growth but at the cost of alienating the enthusiasts who went elsewhere.
Eventually 100 of the stores had to close down. It turns out that it’s harder to compete when you offer the same product as many other retailers. The chain is still around but has since been sold to a private equity firm which seems to be streamlining the business.
I think the lesson here is that short term growth is only a small measure of the success of a long term business plan. Especially when choosing between selling into a niche market where you can offer more than merely the lowest price or selling into the mass market where you can’t rely on loyalty to keep customers. It seems very hard to appeal to both markets.
I think the DIY movement has to reinvent themselves if they want to see growth and they also can’t always fish in the same pond. If you saturate the market with the same product, people will get bored.
If I don’t know how to use a part, then the $3 MCU from Digikey is only worth $3 dollars. Before gold prices spiked, I couldn’t sell my gold and even jewelers weren’t interested. You could have gold but it isn’t worth anything unless you can sell it and today you can sell it but it wasn’t as easy a few years ago. What is a .07 cent resistor worth if you can’t use it? It is worth .07 cents. What is a resistor worth if you can use it? More than .07 cents? Maybe it is poor to use a resistor as an example but what about an LCD, a shift register, or RFID tag? Unless you can use them, their cost is just the bill of materials. Would a hobbyist buy that part that he didn’t know how to use? Not unless he knew someone to help him figure out how to make it work.
Chuckz – agreed & ditto; Adafruit is THE first place to check for a great tutorial. I’ve ordered lots of components here. However, if Adafruit is looking for “continuous growth”, it won’t come from selling more of the same to existing customers. Like it or not, we’re all plodding up the learning curve.
I remember reading "Compute" and "Compute’s Gazette" for the Commodore 64. I subscribed for several years and they ran tutorials for every season because Commodore 64’s were gifts and people kept buying them. I got tired of reading elementary tutorials but people kept buying them.
You can’t say that you won’t reach more than a million people as customers because there are more people than that in the world.
There are at least six people in every relationship. The person I know I am and the person you think I am, etc., etc. Sparkfun thinks I’m one way and I’m a different person meaning they don’t know how to reach me.
Sparkfun is also operating on an assumption that their data is the only variable. Presentation has to be appealing, tutorials have to be overwhelming and price has to be effective in order to target their audience so if their audience is at a different level than what they presume us to be then they aren’t reaching their target audience.
I know a another forum that doesn’t ever get any new members. Why would that be when they have a product? It means they aren’t reaching people.