BusinessWeek recently published an article entitiled “Accenture Goes the Tailor-Made Route” by Damian Joseph.   It describes how Accenture is working with Bug Labs to develop a number of compelling hardware + service offerings that they believe will drive significant interest from their customers and prospects.  In fact, Accenture’s Andy Zimmerman was already thinking about how this could work last year when he posted “Build your own Tridget” on his Accenture blog.  We are thrilled to be working with them and appreciate the media attention.

But one thing that gets a little lost in the excitement is the fact that Accenture is now a proponent of the Open Source Hardware (OSH) movement.   This doesn’t mean that they will suddenly create and publish a slew of new hardware designs.  That will happen gradually, and will focus on the verticals they identify in the article.  More importantly, it signals an acceptance of a nascent business model that could help point the way for future OSH projects.  It’s similar in form and spirit to Red Hat’s revenue model in that it’s based on services not product per se.

Bug Labs makes money selling hardware and complimentary services that help our customers get the most out of their BUG investment.  Where we see higher, longer term value though is in offering core services around the software stack that makes it all work together.  These services, ranging from OS level to application level certification and verification offerings, come in the form of annual subscriptions; very much like Red Hat.   This makes sense to many companies building new devices because they don’t want to be in the business of managing the unlying software infrastruture.  And if Red Hat can do $600+ M (2008) in revenue using that model, then I feel relatively safe in saying it works.  Of course, Bug Labs is not Red Hat.  We have a long way to go to earn that level of distinction, but then it’s always good to have a goal

This business model works for us because the devices we are building all require complex OSs and frameworks.  It doesn’t really work for less complex, non-network-connected approaches.   But we feel that, over time, as Moore’s Law continues to work its magic, it will become common to have sophisticated software foundations in cheaper and cheaper devices, with the attendant necessity to maintain them.

Open source hardware is a huge economic category.  It’s not as simple to grok as open source software.  As a result, finding a one-size-fits-all business model is impossible.  But as this example suggests, when companies start using OSH to address real business problems, solutions can be found.

There are three things that make us huge fans of Austin, Texas here at Bug Labs: the growing tech scene, the endless BBQs, and South by Southwest (or SXSW, as the kids call it). And thanks to everyone in the BUGcommunity, you helped us go to our very first SXSW last year, where we presented a session on hardware mashups and the now-legendary “Pizza Tail.”

So we thought we’d have a go at it again. For this year’s SXSW 2010 Interactive Festival, we submitted the proposal “You Developed the Content. Now Build the Hardware,” where we plan to present actual cases of entrepreneurs and enterprises using open source hardware to create the next batch of game-changing devices. With Amazon’s Kindle, TechCrunch’s upcoming Crunchpad, and a growing list of software and content developers jumping into the world of consumer electronics, we plan to show you (yes, you) how to build and sell your own hardware devices cheaper, quicker and better than the big companies.

But we need your vote to make this session happen. So:

1. Register on SXSW’s PanelPicker
2. Vote for our session and help spread the word
3. Party with the BUG team in Austin next March
4. ????
5. Profit

It’s a win-win situation all around, and you can help make it happen. Voting ends September 4, but it’ll take you less than a minute to get your vote and spread the word. Looking forward to seeing you in Austin!