System76: Inside its shift from software to manufacturing

Image courtesy of System76.

System76 | Denver | Product: Electronics & IT

A pioneer in open-source operating systems, System76 has been selling custom Linux-based computers since 2005, but it only started making its own machines in 2018.

“Going from a software company to a manufacturing company is quite a change,” says Carl Richell, founder and CEO. “It’s a rare thing these days to take a raw material and actually bend it and shape it and build parts out of it, but it sure is satisfying.”

After more than a decade working with partners in Taiwan, Richell pivoted to manufacturing at home in Colorado in order to better control his supply chain. Using contract manufacturers, it would take months to address issues with an unreliable power button or another iffy component. “Being able to pivot quickly and improve quickly could only be done if we were doing the manufacturing ourselves,” he explains.

“We found it was very difficult at our size to plug into the massive supply chains in Asia,” he says. “We also had high-end customers looking for a quality product we felt we weren’t able to effectively provide.”

It follows that System76 invested in a true computer factory to make desktop computers. The company has nearly doubled its staff from about 20 employees to 36 to keep up with demand since it started manufacturing.

“There’s a brand identity in the products now that just wasn’t there before,” Richell says. “We also learned that it was profitable — more profitable than we expected. I attribute a lot of that to simply reducing the number of people between us and our customer.”

Next up: System76-made laptops. The company is currently working on designs, with a target to start selling them in 2021. “It can’t just be another laptop,” Richell says. “We want to build something special, and that means a lot more trial and error.”

This article is part of the 2020 Made in Colorado feature. To learn more about the Colorado companies changing manufacturing in the state, click here.