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Ubuntu Edge misses its crowdfunding goal

Ubuntu Edge misses its crowdfunding goal

The Ubuntu Edge has missed its crowd-funding goal by a considerable margin - but was that Mark Shuttleworth's plan all along?

Canonical's bid to raise $32 million to build a hybrid smartphone running its Linux-based Ubuntu for Phones operating system has failed well short of its goal - but that may not be bad news for the company.

Founded in 2004 by millionaire Mark Shuttleworth, Canonical is the big corporate behind Ubuntu - a spin-off distribution based on Debian Linux, created due to community displeasure surrounding that project's long release cycle. Since launch, Ubuntu has released a new version every six months without fail but in recent years has been accused of taking more from the open source community than it delivers as well as failing to listen to its users with regards changes to the user interface.

Ubuntu remains, however, one of the most popular Linux distributions around - and it's this cachet Shuttleworth is hoping to ride into the mobile phone market. The Ubuntu Edge was, the company promised, a high-end smartphone designed to run the company's Ubuntu for Phones spin-off operating system. Boasting a 128GB internal storage, 4GB of RAM and the fastest quad-core ARM processor around, the phone's gimmick was that it could be connected to a keyboard, mouse and monitor and used as a fully-fledged Ubuntu desktop computer.

A neat trick, but one for which Canonical demanded a high price, taking to crowd-funding site Indiegogo with a demand for $32 million in order to build a batch of the devices for early adopters. To put that into perspective: that figure is around three times the world record for a crowdfunded project.

Nobody will be surprised to hear that the month-long crowdfunding effort has failed to reach its goal, ending at $12,809,906 - but that may have been Canonical's plan all along. Shuttleworth's company is a software house, not a hardware developer, and many had questioned whether the company had the expertise to bring such a high-end device to market should the funding run prove successful - concerns which did not lessen when the company admitted to press that its pictured prototypes were, in fact, simply fake plastic shells with no electronics inside.

While it may have fallen short of its funding goal, there's little doubt Canonical has benefited from the effort: from its initial enthusiastic début to the news that it had broken the world crowdfunding record, the Ubuntu Edge project has translated into numerous column inches throughout the world - valuable publicity for the real power behind the project, the Ubuntu for Phones operating system.

Shuttleworth's last words on the project, posted when the funding run closed, reveal the truth: 'The big winner from this campaign is Ubuntu,' the company founder explains. 'While we passionately wanted to build the Edge to showcase Ubuntu on phones, the support and attention it received will still be a huge boost as other Ubuntu phones start to arrive in 2014. Thousands of you clearly want to own an Ubuntu phone and believe in our vision of convergence, and rest assured you won’t have much longer to wait.

'All of the support and publicity has continued to drive our discussions with some major manufacturers,' Shuttleworth adds - revealing, it would appear, Canonical's real goal: to demonstrate enthusiasm for the software in order to convince hardware manufacturers to take it on - either, as with the fictional Edge, to run alongside the far more popular Android OS or as the sole OS for a niche-market smartphone.

Canonical, naturally, would spin Shuttleworth's statements as simply being a way to accentuate the positives of a sadly failed funding run - but with no working prototypes ever built it would be no surprise to learn that it was never Canonical's plan to create the Edge, with the company relying on a sky-high funding goal to drive publicity with little risk of having to make good on its promises.

The big winner here, however, is Indiegogo: unlike rival crowfunding site Kickstarter, Indiegogo demands that funds are taken up-front with the promise that they will be returned to backers if the project proves unsuccessful. As a result, the company is currently sitting on nearly $13 million of other people's money - and warns that it could take up to five days for the refunds to be processed, on top of the thirty days it has been holding day-one cash. Interest accrued in that time will, naturally, not be returned to backers.

16 Comments

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B1GBUD 22nd August 2013, 10:59 Quote
I bet he's laughing all the way to the bank! I wonder how much interest he would have netted?
Gareth Halfacree 22nd August 2013, 11:06 Quote
Quote:
Originally Posted by B1GBUD
I bet he's laughing all the way to the bank! I wonder how much interest he would have netted?
Remember it's Indiegogo that gets to keep the interest, not Shuttleworth. But to answer your question: five days' interest on $13M at 3% per annum would be $5,342.47. However, I'm willing to bet you can get considerably better interest when you've got $13 million to invest - if we go for a high-interest account in the UK, you'd get 6.25% per annum meaning $11,130.14.

These figures are only for the five days from today to when the refunds are processed, remember: by the end of the first day, the project had raised $3.4 million - which Indiegogo has held ever since. Over 34 days (the 30 day funding period minus the first day, plus five days for the refund to be processed) that $3.4 million becomes $19,794.52 in interest at 6.25%. Plus the stuff it got on the second day, and the third, and the fourth, and the fifth...

Quick guesstimate? I reckon you're looking at well north of $50,000 in interest.
j_jay4 22nd August 2013, 11:08 Quote
It's a shame Canonical can't take the $13 million of donations and invest it into their ubuntu phone projects or marketing or for leveraging hardware manufacturers. Then the Ubuntu phone, in whatever guise, would be more likely to become a reality . After all that is what the money was donated for. Not sure whether $13m is a drop in the ocean in this business but it sounds like a lot of money to me.
Gareth Halfacree 22nd August 2013, 11:16 Quote
Quote:
Originally Posted by j_jay4
It's a shame Canonical can't take the $13 million of donations and invest it into their ubuntu phone projects or marketing or for leveraging hardware manufacturers. Then the Ubuntu phone, in whatever guise, would be more likely to become a reality . After all that is what the money was donated for.
The money wasn't a 'donation' - but a pledge to purchase a product. Canonical claims that without $32 million, it can't afford to build the product - so it has to refund the money it did manage to raise.

Fear not, though: as the article states, Shuttleworth has confirmed that Ubuntu phones, built by actual phone makers, are coming next year. And you'll actually be able to *buy* those, rather than gamble $700 on the promise that a company will do something it has never done before.
rollo 22nd August 2013, 11:16 Quote
$13million is less than a drop in the ocean. Its 1/100th of Samsungs R&D budget at a estimate that they give.

The cash never gets took until a project meets its goal so the 13mil ish was just people who would donate if it hit its 30mil it never did so the cash transactions will not go through.

I said this project would fail when it was mensioned on here, People were all wanting it to succeed but 30mil is alot of cash in the current market for joe public to donate. They fell 27million short of target.

Big PR stunt is all it was.
Gareth Halfacree 22nd August 2013, 11:18 Quote
Quote:
Originally Posted by rollo
The cash never gets took until a project meets its goal so the 13mil ish was just people who would donate if it hit its 30mil it never did so the cash transactions will not go through.
Actually, if you read the article, the money has already been taken: unlike Kickstarter, Indiegogo takes your cash at the moment you pledge with the promise that it will be refunded if the goal isn't reached. (It also, interestingly, allows for pledges to be kept even if the goal isn't reached - although this is clearly communicated when you're pledging on such projects.)
j_jay4 22nd August 2013, 11:30 Quote
Quote:
Originally Posted by Gareth Halfacree
It also, interestingly, allows for pledges to be kept even if the goal isn't reached - although this is clearly communicated when you're pledging on such projects.

I wonder how many people did this, maybe all is not lost? (I assume you don't mean kept by indiegogo)
Gareth Halfacree 22nd August 2013, 11:37 Quote
Quote:
Originally Posted by j_jay4
I wonder how many people did this, maybe all is not lost? (I assume you don't mean kept by indiegogo)
Sorry, that was badly phrased. You can launch two types of projects on Indiegogo: funding, or all-or-nothing. A funding project asks for cash, and whatever cash you get at the end of the funding run is yours (minus Indiegogo's fees, naturally.) An all-or-nothing project asks for cash against a set goal, and you only get the cash if the goal is reached; if you miss your target, you get nothing. (The latter is how Kickstarter works.)

Canonical launched Ubuntu Edge on Indiegogo as an all-or-nothing project. It missed its goal, so they get nothing but the sweet, sweet publicity they've enjoyed so far.
j_jay4 22nd August 2013, 11:55 Quote
So I think it would have been better to have done Indiegogo's flexible funding model instead, with an astronomical goal. Then they could have collected all the money.

I guess it's like the story of the man who if you offered him a 50p coin or a £1 coin he would take the 50p. People from miles around came to see this man who was so crazy to take the lower value coin. In reality the man was very clever as he now had a pile of 50p coins. If he had ever taken the £1 coin, nobody would have made him the offer again.*

So if canonical had done the logical thing of flexible funding, they wouldn't have got much publicity, wouldn't have got much donations, but with the crazy goal and receiving no money, everybody now knows about this ubuntu phone.

*All characters appearing in this work are fictitious. Any resemblance to real persons, living or dead, is purely coincidental.
Gareth Halfacree 22nd August 2013, 11:59 Quote
Quote:
Originally Posted by j_jay4
So I think it would have been better to have done Indiegogo's flexible funding model instead, with an astronomical goal. Then they could have collected all the money.
No, because nobody would have pledged. You can't make one high-end smartphone for $700, it's impossible - but you *can* make 50,000 high-end smartphones for $32 million and sell them for $700 each. That's Canonical's argument for the sky-high goal: scale.

Imagine if a thousand people had pledged $700 each for an Edge on a no-goal funding run. That's $700,000 that Canonical would have been able to keep - but that's not enough to build a thousand Edges. As a result, those thousand people are now $700 out of pocket and will not be receiving the smartphone they thought they were 'ordering' - not a recipe for happy customers, I can assure you.

Canonical used the only model it could, and the cynic in me says they got exactly what they wanted out of it. Hell, Shuttleworth alone - not Canonical - is worth $500 million; if cash had been the goal, they've got plenty of access to that already.
The_Crapman 22nd August 2013, 12:18 Quote
Quote:
Originally Posted by Gareth Halfacree
Quote:
Originally Posted by B1GBUD
I bet he's laughing all the way to the bank! I wonder how much interest he would have netted?
Remember it's Indiegogo that gets to keep the interest, not Shuttleworth. But to answer your question: five days' interest on $13M at 3% per annum would be $5,342.47. However, I'm willing to bet you can get considerably better interest when you've got $13 million to invest - if we go for a high-interest account in the UK, you'd get 6.25% per annum meaning $11,130.14.

These figures are only for the five days from today to when the refunds are processed, remember: by the end of the first day, the project had raised $3.4 million - which Indiegogo has held ever since. Over 34 days (the 30 day funding period minus the first day, plus five days for the refund to be processed) that $3.4 million becomes $19,794.52 in interest at 6.25%. Plus the stuff it got on the second day, and the third, and the fourth, and the fifth...

Quick guesstimate? I reckon you're looking at well north of $50,000 in interest.

You'll actually find that interest rates go down the more money you have. Most high interest savings accounts will only pay the top level of interest up to a certain amount (say £100k-£250k). Also the days of high interest savings account in the UK are gone. With the base rate being so low and being kept low in the long term by BoE, it's a rarity to find anything over 3%. There are a couple of accounts out there that have 6%, but they are regular savings account with a max monthly deposit of £300.

With $13m, they'd be lucky to see 1%, and even for an entire month, that's only about $10k.
Gareth Halfacree 22nd August 2013, 12:20 Quote
Quote:
Originally Posted by The_Crapman
You'll actually find that interest rates go down the more money you have. Most high interest savings accounts will only pay the top level of interest up to a certain amount (say £100k-£250k). Also the days of high interest savings account in the UK are gone.
Not when you've a few million to invest - you don't get offered off-the-shelf savings accounts when you hit eight figures.
Andy Mc 22nd August 2013, 18:33 Quote
Lets be honest, they were NEVER going to get the full $35 million. But to be fair they did pretty well to get as much as they did.
mucgoo 22nd August 2013, 19:12 Quote
Quote:
Originally Posted by Gareth Halfacree
Quote:
Originally Posted by The_Crapman
You'll actually find that interest rates go down the more money you have. Most high interest savings accounts will only pay the top level of interest up to a certain amount (say £100k-£250k). Also the days of high interest savings account in the UK are gone.
Not when you've a few million to invest - you don't get offered off-the-shelf savings accounts when you hit eight figures.

No really you do get worse interest rates.
The rates you see on the high street are to entice you in and cross sell other products. Even with that more than 2% isn't currently possible without ridiculous pay in this much a month and maximum amounts of a few thousand.

The only safe place to keep several million is short term (1 month<) government debt which is currently about 0.5% a year. Any bank has credit risk. Also you might of heard of LIBOR(the rate banks lend to each other). The current 6 month rate is 0.59%.
XXAOSICXX 22nd August 2013, 19:40 Quote
XXAOSICXX 23rd July 2013, 09:12
"I spy vaporware...."


And there it is!
fluxtatic 24th August 2013, 06:14 Quote
Quote:
Originally Posted by XXAOSICXX
XXAOSICXX 23rd July 2013, 09:12
"I spy vaporware...."


And there it is!

I wouldn't congratulate myself too quickly, if I were you. As others (and the article itself) pointed out - Mark Shuttleworth is worth a buttload of money. He could start writing checks to put these into production tomorrow if he were so inclined.

However, by this gambit, he bought himself several million dollars in publicity for free - a bunch of people fronted him a fair bit of money (the 12 million), but they're getting that back. Indiegogo gets a piece (interest on the cash being held during the campaign), but Ubuntu - Ubuntu just got themselves on the front pages of every tech-related site on the planet several times over the past few weeks, talking about they want to build phones.

Seems a win-win to me - if Shuttleworth is serious about this, a ton of people are now aware of it. If not, the haters will hate, but they would have anyway. Best of all, hardcore nerds want this worse than Android or WP (and iOS is off the table - it's not for true nerds) - real Linux, on their phones. And that's they'll push to mom and grandma and aunt Jane and anyone else who will listen.

Shuttleworth is thinking like a rich guy - get what you want with other people's money.
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