Why Chumby failed: Hardware, Apple, and the state of denial

By now, Chumby’s demise is well known among fans and tech enthusiasts alike. The US company was most well known for its Chumby devices, which are intelligent, Internet-connected versions of otherwise dumb objects. However, it fell by the wayside soon after Apple changed the consumer electronics industry with the iPhone and the iPad.

In reaction, Chumby pivoted to producing a software platform for smart TVs, but that didn’t work out either. Their journey ended officially in late April. Andrew “bunnie” Huang, or just bunnie as he is often called, had front row seats to the San Diego company’s fall. He was serving as its co-founder and vice-president for hardware engineering.

Recently, we visited the Singapore-based entrepreneur for an interview, revealing some interesting insights about the inner workings of Chumby.

1) They lacked the mentality needed to be a successful hardware company.

The original Chumby: An Internet alarm clock with a touchscreen.

Andrew highlighted the unique challenges faced by hardware companies that set them apart from software companies. For one, getting early stage venture capital funding is difficult, since the sort of hockey stick growth desired by investors is difficult to attain for hardware companies due to the need to ship physical units to physical retail stores.

Hardware companies also need to deal with the holiday sales cycle that is part and parcel of the consumer electronics industry. In the United States, for example, sales of computer game titles during Christmas season can be ten times more than an equivalent span of time in the summer (this in-depth interview has more).

Television sets are extremely vulnerable to the sales cycle, since they are big ticket items that are purchased by families only once in a while. Christmas season is usually the preferred time to get one, since major sporting events like SuperBowl and March Madness are held early the following year.

In the case of Chumby, they found it challenging to adhere to the “ship or die” rule, since they are more of a software company with a hardware component.

Bunnie explains: “Culturally, it was hard for me to put across the fact that if you miss one cycle you’re going to have to struggle until you reach the next. There’s the sort of mentality that says, well, if you miss the Christmas season, it’s okay because there’re online sales and online retail channels. There were doubts about whether is it really the case that so much happens in Q4.”

2) They couldn’t pivot quickly enough because of too much soul-searching within the executive leadership.

When the iPhone became popular, they were in a state of denial. At first, they didn’t think the smartphone from Apple would be a competitor, but they were wrong. Although Chumby developed ‘widgets’, they had difficulty explaining the concept to consumers. Apple came along and changed the game with ‘apps’. Soon, every smartphone had them. Chumby was blindsided.