One of the many pleasures of working at Octopart is the opportunity to observe trends wax and wane in the industry. One of the more exciting trends has been the growing visibility of small hardware startups. There is plenty of speculation as to why there appears to be more and more groups of individuals developing hardware projects -- we have a unique view into at least one factor which plays into it: pricing. A simple hypothesis as to why this trend seems to be growing is that the price of developing projects is falling. We decided to use our historical pricing data to test this hypothesis.

We focused on the price of microcontrollers as it is often the dominant cost for production runs and prototyping. Using our search index, we looked at the top 1000 microcontrollers and created trendlines for each, tracking percent change in price from January 1, 2012. While we could go back further than this, we'd start to leave out an increasing number of microcontrollers introduced after the start date. We then averaged all of the trendlines to create the Octopart Microcontroller Price Index:

Interestingly, while there is a sharp decline in single component pricing, and an overall decrease of 3.5% since January 2012, volume pricing has gone up slightly! This data does not lend bulletproof support to the idea that pricing is driving the number of hardware startups up, but it is plausible to assume that the cost of the initial development of hardware projects has gone down with the reduction in single component pricing.

Apart from testing our original hypothesis, we were pleased to find that the price index has many tantalizing features which beg many more questions than we can answer. It appears at times that single component pricing trends lead volume pricing trends. Is there space to build a predictive model here? What market forces drove the steep decrease in single component pricing in January 2012? What other features might emerge if we were to segment the index by microcontroller features?

We'd love to hear your answer to these questions as we ponder them ourselves. In the meantime, we are excited to start applying this analysis to other component types of note. Stay tuned!