Hardware is dead

A low price point on commodity hardware certainly doesn't correlate to the hardware industry being dead. If anything it is quite the opposite. With such a low price point, the potential market opens up quite significantly. There become many more people that can now afford a tablet, and there also becomes many that can justify having a few around the house for various tasks. A tablet in the kitchen for just recipes becomes a viable product. Of course I would want that particular tablet to have some particular features. Maybe water proof, and easy to clean.

On the opposite end of the spectrum, you do have the Apple's and Amazon's of the world that the author mentioned. Quality/expensive hardware will continue to exist long into the future. It will help drive the advancements in technology, and a portion of consumers will always demand quality regardless of price.

If anything the low price point opens up the market for new products. Take Ouya as an example here. While they managed to get $8.5M on Kickstarter, their initial outset had them need less than $1M. I would argue, and I think I have here that we are on the brink of a cambrian explosion of new hardware devices, and given the low entry point, there will be many new companies that bring us exciting new products.

What hardware are you using? I've wanted to try home automation for a while but all I can find is either the lowend stuff (X10) or the really highend stuff that requires a dealer to install it for you.

If I had a processor that ran 1000x faster than current processors, would I be limited to selling it for $50?

Currently commoditized hardware is dead, perhaps.

There will come a hardware invention that offers something new, and there will huge profits there.

Android 2.3, never going to get updated, crappy resolution, slow single core processor...

Honestly, it's going to suck compared to a Nexus 7. Remember, Android 2.3 IS NOT a tablet operating system, the first of which was 3.0, so it's basically a 7" non-cellular Android phone.

Being a mechanical engineer and a hardware guy myself, I may be biased, but I think hardware is alive and well. With rapid prototyping and open-sourcing of 3D printers, fabrications shops and the like, the opportunity to create new hardware devices is easier now than ever before.

The issue the article focuses on is commoditizing of hardware. Tablets all essentially have the same components and the economies of scale are exaggerated. When you have multiple manufacturers of very similar devices they all start reducing their margins to gain market share. This is a race to the bottom, and I believe the point the article is trying to make.

However, the innovators of hardware are the winners. New devices that create new markets, new functions, new possibilities for consumers have the potential to sell large volumes at high margins. This has the advantage of the added barrier of manufacturing. Competitors take longer to tool-up and compete, giving first-movers a larger advantage than software producers. The iPod, for example, still remains the leader to this day.

Hardware isn't dead, it just becomes a commodity over time. To avoid reaching the bottom, you have to be a company that's always innovating, just like software. Creating new products, vastly improving design, etc. Leave the copycats in China to turn it into a commodity, you should be onto your next big thing by the time that becomes an issue.