Is the Era of Hardware Startups Resurging? Insights from the Facebook-Oculus VR and Google-Nest Acquisitions

Introduction

The recent acquisitions of Oculus VR by Facebook and Nest by Google have undeniably stirred the pot in the tech industry. These deals demonstrate a renewed interest from major tech companies in acquiring hardware startups. This article explores why the era of hardware startups might be on the rise and what it could mean for the future.

Apple, Facebook, Google, and Amazon are all known for their substantial investments in tech acquisitions. However, the recent acquisitions of Oculus VR by Facebook for $2 billion and Nest by Google for a similar amount indicate a growing interest in hardware startups that have the potential to serve as platforms for software.

The Rise of the 'Internet of Things' (IoT) and 'Internet of Everything' (IoE)

Hardware startups are indeed getting more attention, especially with the rise of the Internet of Things (IoT), also known as the Internet of Everything (IoE). This phenomenon is not just a buzzword; it represents a significant shift in the tech industry where data and physical objects are interconnected to improve user experiences, enhance productivity, and enable personalized interactions.

Companies like Nest, with its smart thermostat and smoke alarm, and Oculus VR, which offers virtual reality technology, are prime examples of hardware startups that are leveraging their platforms to integrate software solutions. Such acquisitions indicate that these tech giants see hardware as a vital component of their strategic growth.

The Strategic Value of Hardware Startups

The strategic value of acquiring hardware startups is clear. These acquisitions offer several advantages:

Platform for Software Development: Hardware startups, like Nest and Oculus VR, provide a platform for developing and integrating software, creating new opportunities for innovation. Install Base: The potential for a large install base is significant. For Oculus VR, the VR market presents an entirely new platform for software, and Nest has the potential to rival the scale of smartphone installations. Sense of Urgency: These acquisitions create a sense of urgency among venture capitalists and investors, leading to higher valuations for promising hardware startups.

However, it's important to note that not all hardware startups will be acquired. The ones that have a strong potential to integrate with software and have a sizable install base are more likely to attract major tech companies' attention.

Future Outlook for Hardware Startups

While the future is inherently uncertain, the current trend seems to favor hardware startups that can demonstrate real-world utility and software integration capabilities. The era of hardware startups may indeed be back, but it's a very selective one.

For the foreseeable future, hardware is back and here to stay, provided the vertical aligns with the increasing need for connectivity and integration. This could include anything from wearables to smart home devices, making the hardware space more competitive than ever.

Conclusion

The Facebook-Oculus VR and Google-Nest acquisitions serve as strong indicators that hardware startups are gaining more attention. While not all startups will be acquired, those with the potential to serve as software platforms and create a significant user base are likely to see increased investment and higher valuations. The future of tech is undoubtedly shaped by the integration of hardware and software, making this an exciting time for hardware startups.