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The Electronics Cooperative Concept, Part 2

In Part 1 of this series, we started looking at a new (well, new for hardware design) business concept: the cooperative concept. In this business model, designs are not protected with patents or trade secret methods. They are instead “open-source” in the manner of some software.

Open-source as a way forward
The emerging open-source way emphasizes sharing of knowledge. Note that at the other end of the sharing spectrum, patents are intended to create the opposite effect: exclusivity. In practice, since patents do share some info, the exclusivity offered is often more than they secure — and with multiple undesirable side-effects. The simple industry model of the open-source way is that of two kinds of enterprises: designers and suppliers. Designers supply designs — information — and suppliers supply products to users. These three groups form a technology-sharing community.

Users are supported not only by suppliers but also by the designers. In the traditional company, they are hidden from users. Open-source designer websites reveal what is needed by a user to maintain the designed product or even modify it for user-specific applications. No licensing or permissions are required, apart from a general open-source agreement. (Several are available on the web; see www.sparkfun.com for some examples.)

In this scheme, designers can concentrate on what they do (and like) best, which is design. Suppliers, who are entrepreneurs and business people, do what they like best: manufacture and distribute the products of design. Both support the product in their own ways.

Such a strategy already exists in several existing market sectors. Agriculture is one, where the producers (farmers), like designers, leave co-ops to function as distributors (suppliers). Co-ops are run by business people who would probably not make good farmers. Origination and supply are two different functions and are two different businesses.

A closer example is that of architects who design, while building construction companies build their designs. Builders are free to build the designs of different architects while architects can supply their plans to multiple builders. In the electronics industry, engineers produce information and suppliers produce tangible products that can be sold.

The most obvious and potentially profitable route for open-source engineers to be paid is to collaborate with suppliers, through joint ownership in one or more suppliers, or through revenue-sharing agreements, or by being paid a “license fee” for new design information. It can include more than is otherwise disclosed: board layout files and possibly firmware (μC, ROM, PLD, FPLA/FPGA) source code. Users have open access to the information needed to maintain and even build their own unit(s), including circuit diagrams, custom parts information, and firmware object code.

How much of these design-oriented aspects is disclosed is up to the designer and suppliers. The open-source way need not be completely lacking in proprietary information between designers and suppliers, though both would understand clearly what is to be made openly available. Companies claiming open-source participation who fail to adequately disclose technology information can expect a cool reception from the market segment seeking open-source community involvement.

Next, we'll continue our look at the mechanics of the open-source arrangement among designers, suppliers, and users.

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2 comments on “The Electronics Cooperative Concept, Part 2

  1. Victor Lorenzo
    December 23, 2013

    Thanks @Dennis for this article series, it is an interesting topic. I'm looking forward to read the next part.

  2. etnapowers
    December 23, 2013

    @ Victor: I agree with you, the topic is very interesting. It looks like the concept which is the base of the open source Linux operating system platform development, it's a new vision for the business of the future. Thank you Dennis .

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