The Diff | Byrne Hobart | Substack

And, in another sense, hardware companies that shift to a subscription model are pricing according to reality. If you buy something and use it every day for years, it makes sense that you’d pay for it as you use it rather than buy an uncertain amount of usage at one upfront price. The gradual shift to subscription-based hardware is just the economi... See more

Another option is to reverse this, by offering hardware as a complement to an existing software business

A final option is financial engineering: turn a hardware purchase into a subscription by either leasing the product to the end user or financing their purchase for them.

When the buyer population shifts from early adopters to average people, it necessarily shifts from people who will buy every brand-new update because it’s a brand-new update to the much larger cohort that’s satisfied by default with the current options and doesn’t feel the pressing need to upgrade.

One possibility is a hardware product bundled with a subscription. This is what Fitbit has done

It’s hard to determine the total addressable market.

The upgrade cycle gets longer.

Paul Graham points out something Fitbit, GoPro, and Sonos investors have also observed: hardware is hard.

Apple, of course, is one of the most successful versions of this. The company currently has 585m total paid subscribers for its various services, allowing it to earn revenue over the usage cycle rather than from purchase to purchase.