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#DigitalSkeptic: No to Software and Apps -- It's Hardware That's Hot

"I wanted to make the Iron Man suit," Sean Petterson told me over ramen noodles in Chinatown a few weeks ago. The 23-year-old recent graduate of the Rochester Institute of Technology has mastered a new generation of easy-to-use 3-D printers and prototyping tools to found StrongArm Technologies. Based in Rochester, it is creating an industrial lifting aid that aims to revolutionize how workers do physical labor.

"The vest keeps the worker in just the right posture as he lifts," Peterson explained. "And it greatly reduces the chance of injury."

Peterson, who won a $100,000 MassChallenge prize recently and is closing in on finishing a manufacturing-ready prototype, says raising money has not been his problem.

"Once I get the product just right. I should be ready to fill my first order," he said, "I am in a good place."

Hardware is still hard
What's critical for markets to understand is that every single one of the two dozen or so hardware-oriented entrepreneurs, educators and backers I have spoken with over the past three months agree that though their space is growing, hardware still presents unique challenges.

And despite the hype surrounding hardware prototyping tools such as Brooklyn's MakerBot or chip technologies such as Arduino or fresh capital flowing from sources including Kickstarter and Indiegogo, none of these technologies changes the fundamental challenges of getting a real product made and sold to real consumers.

"The idea that you can 3-D print a product at home sounds terrific," Marco Perry told me at his company's display booth at a trade event in Queens a few weeks ago. He's founder of Pensa, the New York hardware design consultancy with a long string of first-tier product credits with firms such as OXO, Bic and Panasonic. "But it does nothing to change the fact that most people still buy product from retail stores."

Perry and others close to the retail supply chain confirm emphatically that getting a product into that retail store pipeline is a major problem.

"You are still up against the Wal-Mart (WMT) economics of low-cost products made en masse using tools like high-output plastic molds," Ted Ullrich, founding partner at Tomorrow Lab, the New York intelligent product design shop, explained to me over a burger several weeks ago. He says that molds such as these can cost upward of $75,000 to make -- per product. So unless a startup knows it can sell tens of thousands of something, taking advantage of those economies of scale can be very challenging.

"That manufacturing reality is not going to change no matter what cool 3-D printer you use," Ullrich said.

All of which puts a premium on operations that can master the basic blocking and tackling of solving the real-world problems of getting a well-designed, real product really made.

"This is an exciting time to be getting into hardware," summed up the Zahn Center's Elhawary. "But hardware is still hard."
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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