Ask HN: Startups that do hardware?

All of the startups I see around HN seem to be developing some kind of app that connects, syncs or organizes something. While this is all exciting, are there any stories about startups that do hardware?

I would be interested to know about startups that want to change the way the internet works by building the next generation router or a different way to store data. How did they fare? What were the challenges?