on the economics of Spark

A question about Spark that we're hearing fairly often is how the economics behind it will work. This question has come in a few different forms such as requests to explain the price point we settled on or how much of the proceeds will go where. I thought since it has come up a few times instead of answering it in blog comments repeatedly I'd answer it here in a proper blog entry.

The economics around Spark have, as you might expect, been a focus point for us from the very start of project planning. To state the obvious: if the economics weren't workable then the project wouldn't be viable. So that was where we started.

As we explored the economics, we found that it could not be limited to just the flow of money due to initial purchase of hardware by customers. A more comprehensive strategy and overview would be necessary. So we started with what our goals were and ultimately we boiled it all down to this one commonality: find ways to support and stimulate development around open devices driven by Free software. That is Mission #1 from which all other hopes and goals follow.

In practical terms the economics starts with processes of production. That was a simple one for us: all development will be Free and open. Design must be done in the open and participation must not be artificially limited. This is at the heart of the Make·Play·Live philosophy. Of course, one powerful way to stimulate participation is to put proceeds from sales into supporting the development, and that's precisely what we will be doing. As product success permits, we will be employing and/or sponsoring individuals and organizations to work on relevant Free software technologies and support the communities that drive them.

Where these funds will be targeted will depend on what needs doing, what needs supporting the most and how successful the products are in the market. The more success in the market, the more funds we have to direct. The more feedback we get from Spark owners about specific features or problems, the more we'll focus funding on those areas.

This also means keeping communication going with all stakeholders to gauge what is needed. Right now this is being done primarily through one-on-one communication by IRC, phone and email. This won't scale long term, however, so we will need to create something that will while remaining open and keeping network connectivity levels high. This is a topic we've noted down  for further research.

So as you can see, it goes a long ways beyond just directing money around. In fact, there are many other means to stimulate and support development. It all starts with getting devices into people's hands, both developers and end users. This creates a space where people can create and share openly. Money aside, without open devices, we won't have freedom in computing and the cultures of open participation we want and need become less and less feasible.

This is a bigger task with more scope than the Make·Play·Live team can accomplish on our own: we need to bring together networks of like minded, positive thinking companies and communities in new constellations to create things that are beyond our individual reach. In support of this I've been reaching out to various groups directly, and even more have taken the initiative and reached out to us.

By using Spark as the lens through which to make their work available to others, their expertise can be harnessed in a way we could never do with a top-down approach.

A nice example that is far enough along to talk about publicly is a project we're working on with Xompu: they have cloud storage services that integrate very nicely with their Linux system offerings that they would like to make available to Spark owners. That's a service that takes a very specific skill set to pull off and a lot of engineering effort to ensure it works smoothly. If we were to try and do this on our own, I really have no idea if and when we'd be able to offer it. By creating a network of stakeholder level participants in this way, Spark devices will have more capabilities backed by specialists in those areas.

It also means that more people become personally motivated to help make Spark a success, which in turn increases the odds it will be. Now expand that same strategy to the hundreds, if not thousands, of different kinds of services, functions and audiences that exist and it becomes evident that a project centered around open computing for devices becomes as much a social and business networking effort as it does a technical one.

When one examines the dynamics required to make it all "go", the requirement for a commercially viable device market centered around open devices driven by Free software becomes obvious. Due to the open participation model, we can not only be relatively transparent to stakeholders, we don't need to manage them directly; instead we are aligning incentives and encouraging diversity.

Summary: proceeds from Spark will be going back into funding Free software, but we're also looking at the bigger picture beyond just the dollar signs. We believe that the measure of our success lies in our ability to do that.

We feel this is can be a significant reason for people to get involved with, and indeed invest in, Spark: the more work together on this, the more we each get out of it.

But back to direct funding for a moment: Initially our investments will be weighted towards Plasma Active and Mer. We want to grow Make·Play·Live to the point where we can expand those horizons, however. Keep in mind that some of the proceeds will necessarily be re-invested in non-Free-software-development activities such as device design and procurement.

As we expand the product lines (there is good demand for different hardware configurations beyond the first 7" device), those costs rise and the logistics behind them becomes a bit more complex. Details like shipping, storage, insurance, communication and the usual business "G&A" costs all come to bear as well. We have to have a legal entity (a company) to make orders and ship large amounts of product across borders, and that in turn means managing bank accounts, paper work, insurance and various other contracts.

We have so far managed to keep this overhead very low by being creative, organized and planning oriented. We will do our best to keep it that way so that we aren't wasting funds that would be better applied to the technology. This of course all depends on market demand, but there is enough hunger for something like Spark that I believe we can, and indeed will, succeed in this. :)

In tomorrow's blog entry, I'll be sharing what we've learned about that so far thanks to the Spark pre-order registration experience.