Business, Cloud Computing, Hardware, Software Programs

Ubuntu Edge Failing to Attract Enough Funding


The guys at Canonical have launched a crowdfunding campaign for a new smartphone called the Edge. We initially reported about this promising smartphone that would dual boot Android and Ubuntu about two weeks ago, at the beginning of the campaign. Canonical’s goal was to raise $32,000,000 in 30 days, which I believe is the biggest crowdfunding campaign goal to date. I was pretty skeptical that they would be able to raise $32,000,000 via crowd funding unless people all around the world really cared about their project AND could afford it.

Since then, Canonical has gone on what some people could consider to be a PR blitz. Most recently, they recruited the support of Bloomberg as their first and only enterprise customer ($80,000 which buys you 100 phones). Before that, they had a referral contest where they awarded an Ubuntu Edge to whomever promoted their campaign the best. And while that was going on, they also had a Reddit AMA about the Ubuntu Edge which also gave them a significant amount of PR and attention.

However, as I watched them do all of these things, they still pretty much sat at around $6 million which was where their crowdfunding campaign had sort of started to lose its steam. They only crept up to $8.5 million. Why? I have a few sneaking suspicions. Canonical doesn’t have the ability or experience of dealing with consumer electronics and consumers don’t particularly see the purpose of this device. Sure, there are plenty of geeks in the world that would love a phone like the edge, but it’s incredibly cost prohibitive. Personally, I think they would’ve been better off selling us Nexus 4’s or the next Nexus phone with their software on it. This would make the device more accessible and they would probably see twice if not three times as many users get interested and funding the project would be significantly easier. It’s simple economics.

The other problem that I see with the Edge, which I mentioned in my initial coverage is that the phone will only be released to the majority of backers in May of 2014. The problem with this is that they are asking for about $800 and only promise to deliver a phone in as little as 9 months and 11 days with NO delays. And anyone that’s ever funded something through crowdfunding knows that projects are more likely to be late than be on time. Only a few projects are usually on time and those are usually projects established by companies that have done crowdfunding before. Also, take into account that by the time this project is funded and then the phone eventually comes out, there will almost surely be an entirely new crop of phones and phone hardware, including DRAM, NAND and SoCs.

Essentially, crowdfunding a smartphone is a stupid idea unless your turnaround is incredibly quick, which means that the hardware has to already be developed, tested, and qualified and the rest is just software QA. When this project first came out, I argued with my co-founder about whether or not this project would get crowd funded, but now it appears that this project will have a very hard time getting funded. Even with a few dozen companies fronting $80,000 and buying enterprise packages.

Additionally, from my recollection, Canonical is not necessarily a large company. The last time that they reported their income, they weren’t profitable (2009) yet and they had about $30 million in revenues. Now, I highly doubt that Canonical is still a $30 million a year company, but I have a strong feeling that a $32 million project would represent a huge boost to the company’s own revenues and possibly even a turn towards profitability. After all, we have no idea how much money Canonical will make as a result of this crowdfunding campaign. Bear in mind that the company started as a feel-good project by Mark Shuttleworth, a wealthy South African woth $500+ million and this could be one of ways to divest without losing the controlling interest. 

I have a feeling that a lot of things about this crowdfunding campaign didn’t rub a lot of people the right way and as a result, they’re sitting just past 1/4 funded with more than 1/2 of their time elapsed to get funded.