Atoms Are Not Bits; Wired Is Not A Business MagazineS

Chris Anderson has an important message from the future: Did you know you can outsource manufacturing?

In the cover story of the latest issue of WIRED, Editor-in-Chief Chris Anderson makes a claim that at first, soaked as we are in the "maker" DIY culture of the internet and science fiction, doesn't seem completely preposterous: "micro-factories" are the "future of American manufacturing"—as the title proclaims, "Atoms Are the New Bits."

The problem is that they so aren't. Atoms are real, finite things. Until 3D printers can do more than squirt out mono-material resin sculptures—inevitable, perhaps, but not within the next decade—even the at-home revolution that Anderson puts up as an example of a new way of manufacturing consumer goods isn't actually new at all. Until that glorious day, Anderson suggests American enthusiast makers outsource the dirty work to China.

"Today, micro-factories make everything from cars to bike components to bespoke furniture in any design you can imagine," claims Anderson.

We used to call "micro-factories" "small businesses", but that was before we knew they were a revolution.

It's painful for me to point this out, because many of the people involved in this so-called "revolution" are my friends. They're smart people doing admirable, clever things. But at best they're changing the way hobbyist and boutique manufacturing works. The future of mainstream industry remains about the same as it's been for the last thirty years.

Reinventing Wheels

Let us fisk. Anderson's opening example is Local Motors, a shop which is building a $50k "crowdsourced" car with a Creative Commons-licensed design:

The Rally Fighter's body was designed by Local Motors' community of volunteers and puts the lie to the notion that you can't create anything good by committee (so long as the community is well managed, well led, and well equipped with tools like 3-D design software and photorealistic rendering technology). The result is a car that puts Detroit to shame.

I think the Rally Fighter is nifty, but get real: It's not all that different that designs from major manufacturers. Moreover, you'll find in the very next paragraph that the design sprung first from the mind of a single person, a design student named Sangho Kim.

So great. There's a car company building a kit car that uses a BMW crate engine. You can download their plans—but not their parts—for free. They plan on selling a couple thousand.

So what?

There are dozens of kit car manufacturers in the United States. Add in the custom car companies like Devon or coach builders like Sportsmobile and you're up into the hundreds.

It's very neat that they designed their car with input from others online. But until I can go down to the local Local Motors dealer and test drive one for myself, you can hardly call it a revolution. Open source is a nice way for information to disseminate, to make a project better; its addition does not guarantee a revolutionary—or even successful—business model.

Why Pay Licensing Fees?

Everyone knows about Brickarms, right? They make weapons for the Lego men that Lego themselves won't make. They're a fun little thing for hardcore Lego fans who want their minifigs to wield Uzis or grenades.

Anderson offers Brickarms up as an example of...something. Perhaps of inexpensive prototyping? Brickarms' owner, Will Chapman, models his weapons at home on his computer, makes his own simple molds using a cheap CNC router, and then hand-presses the Lego weapons to sell online.

Atoms Are Not Bits; Wired Is Not A Business MagazineS

If you go to Brickarms website right now, you'll see that they've stopped taking orders so they can "catch up" on manufacturing. The future of business, apparently, is not having enough supply to meet your demand.

Please also note that in Anderson's companion video for his piece, he singles out Brickarms' unofficial Halo gear as an example of something that the market has asked for but Lego and Microsoft have not provided. But when introducing Local Motors earlier in the piece, Anderson notes, "One problem with the kit-car business...is that the vehicles are typically modeled after famous racing and sports cars, making lawsuits and license fees a constant burden."

Guess when worrying about licensing fees is unnecessary? When your business is too small to make big money.

China Is Not A Robot

There are several other vaguely supportive examples in Anderson's piece, but the one I find most grating is DIY Drones, Anderson's own company which sells inexpensive kits from which you can build your own UAVs. It's a fine little company with a fine little project, but to hear Anderson talk about it he's stumbled on an entirely novel way to run a business, when in fact he's simply experiencing what it is like to run a business in the modern era.

Here's how DIY Drones makes their kits:

1. Anderson hires a "21-year-old high school graduate from Mexico" to help him create a design.
2. They send their design to a Colorado company, Sparkfun.
3. Sparkfun sends the design to China, where elfin robots make "millions of them using automated etching, drilling, and cutting machines."
4. "That's it."

Except it's not. Those PCBs are made by human beings in factories. Factories that are at the best of times less than cushy, populated by workers without a union.

To marvel that you can convince a Chinese company to make a small batch of electronics for you? In many cases, that's when conditions are worst. Try to get something that is more than a greenboard made and you're back to standard manufacturing issues like making dies for stamping parts. Why? Because real 3D printers don't exist yet.

Using the web to communicate with Chinese factories is an improvement...over the fax machine. But the real revolution is that it only costs a few bucks to ship a part from Shenzen to Sunnyvale. You want to talk revolution? Thank FedEx.

There Is No "Virtual Manufacturing"

Here's Anderson's penultimate paragraph, right before his Wired-by-numbers "Welcome to the next Industrial Revolution" kicker:

How big can these small enterprises get? Most of the companies I've described sell thousands of units - 10,000 is considered a breakout success. But one that has graduated to the big leagues is Aliph, which makes the Jawbone noise-canceling wireless headsets. Aliph was founded in 1999 by two Stanford graduates, Alex Asseily and Hosain Rahman, and it now sells millions of headsets each year. But it has no factories. It outsources all of its production. And though more than a thousand people help to create Jawbone headsets, Aliph has just over 80 employees. Everyone else works for its production partners. It's the ultimate virtual manufacturing company: Aliph makes bits and its partners make atoms, and together they can take on Sony.

Here is the key deception: a line drawn between hobbyists making a few items for sale, and western design outfits that work essentially as branding consultants for Chinese conglomerates.

Just because an entrepreneur can turn the former into the latter with more convenience than ever before doesn't make it novel. It certainly doesn't make it moral. And it damn well doesn't make it good for business.

It's great that hobbyists can make ever more complex items, sell them on the internet, and have a small business. But the same process used by Aliph to manufacturer Bluetooth headsets (and bear in mind it takes 80 people just to coordinate this!) is exactly the same outsourcing process used by Apple to make iPhones.

But the difference between an Apple or a Sony versus a Brickarms or a Local Motors is vast, both in ancillary services offered like warrantees or technical support, to the only metric by which any industrial revolution can be measured: profit.

Atoms are not bits. Bits are unlimited resources. Atoms, as the fundamental, literal elements on which a market of scarcity is based, are not.