Startups are subject to something like infant mortality: before they're established, one thing going wrong can kill the company. Hardware companies seem to be subject to infant mortality their whole lives.
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I think the reason is that the evolution of the product is so discontinuous. The company has to keep shipping, and customers to keep buying, new products. Which in practice is like relaunching the company each time.
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I don't know if there is an answer to this, but if there were a way for hardware companies to evolve more the way software companies do, they'd be a lot more resilient.
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Tesla is a example. Hardware (Model S 2016) gets update now.
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One of my friends is a food production line engineer. The amount of time and effort he spends onsite setting them up and getting them working is massive, and he gets paid a lot to do it too.
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I would not buy that hardware.
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Should software companies avoid incorporating a hardware component to its operations even if it’s compatible and potentially lucrative?
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I think Apple has done that in some ways. It's not exactly hardware-as-a-service, but there is fair amount lock-in and lots of upsells / licensing revenue that comes after the initial sale.
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Some hardware company could come along in, say AR/VR or gaming and offer, "Pay us $100 / month and you'll always have the latest and greatest version of our device" and it could work. Surely some of the lag in adoption is people waiting because they know v2 will be better
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Sell merchandize
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I think the answer is modularity. To start new version/prototype from scratch takes too much energy and difficult to pivot midway.
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This just shows how much more scallable software is, as hardware needs volume to be lucrative (it seems). Would breaking down the value chains to allow for more flexibility lead to increases somewhere in that value system?
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On top of that, software got an alignment language: the code itself. I believe that in hardware processes human alignment is a bigger chunk of the work too. Not that they don't exist in software, but ramping up production in a factory across the globe requires different (more?).
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