Wired publishes an article by Marc Barros, the co-founder and former CEO of Contour, an action hands-free camera company. Marc discusses difficulties of creating a hardware company from scratch using camera startup as an example:
"Take cameras, for example. To make an amazing product you need: (1) a quality lens, (2) the latest image sensor, and (3) a powerful processor.
The best lenses are made in Japan (often by the camera makers themselves), so access to these components begins with $500K up front in engineering services and a guaranteed minimum order well into the thousands. Meanwhile image sensor companies are quickly being consolidated — so if a purchasing company isn’t a big name, it can’t even get access to the good stuff. For processors at least, the U.S. companies who created them are willing to provide access (to their true roadmap, SDK documentation, and engineering services), because they understand the importance of helping entrepreneurs build a product that maximizes their platform.
Overall, however, this lack of components means a hardware startup has to build volume with a crappy camera before they can make a really good one.
And of course, the established hardware players know their advantage in components is a massive barrier to entry. A few of them, like Sony and Samsung, are willing to sell other companies the same components used in their products as long as they don’t directly compete with them. Other companies, like Canon, build their own components to get ahead of the competition."