Software vs Hardware

One of the things I am noticing is the trend to try to solve problems with software instead of dedicated hardware. That makes sense for a whole bunch of reasons, but the biggest ones are that the marginal cost of additional user is almost zero with software and that you can iterate your product much more quickly with software.

Smartphones make this trend possible because we have a hardware devices on us most of the time. A good example of this is the Moves app. Instead of using a device like FitBit, Up, or FuelBad, the Moves app turns your phone into an activity tracker. Right now, Moves eats your battery too much which is why it is not more popular. But fixing that is only a matter of time. Of course, iOS and Android could also make activity tracking part of their operating systems, and arguably should do that, but that's another story.

Chromecast is another good example. Why buy an AppleTV, a Roku, or some other hardware device to bring internet TV to your family room when you can buy a $35 dongle, connect it to your TV set, and your smartphone can now control your TV? It would seem that all TVs will eventually come with this feature that allows your phone to take over the screen and play whatever is on the phone. Then all internet connected TV innovation can happen in software instead of hardware.

This begs the question for me how the "Internet of things" will play out. What are the "things" that the Internet will connect to. Will they be smart cameras, thermostats, and doorbells or will all of those things run on our phones in time? And how will that be made possible?

This also makes me wonder about the health care diagnostic sector. Will I be able to take my blood pressure, blood chemistry, xray, cat scan, MRI, on my phone? Those last ones are kind of crazy, I know, but I am just aksing the question to make a point. Will healthcare diagnostics go the way of the compass, the flashlight, and the game console?

I don't know the answers to these questions I am asking. But it sure does seem that entrepreneurs are finding ways to do things with software and a smartphone that used to require dedicated hardware at a rapid pace these days. I think this is a trend to pay attention to. And it may, over time, make investing in hardare based business less necessary. Which would be a good thing from my perspective.

#mobile#VC & Technology