Arduino isn't just for hobbyists at this point -- it's already had a huge impact on the research world. I do HCI research, and making prototypes of interfaces and devices takes a few weeks instead of months.
It allows you to iterate on hardware much faster -- it's a lot like what Rails did to web development.
It also greatly reduces the amount of documentation I'd need to do for a project, because C code with Arduino is much more intuitive than many alternatives (no need to manually set registers and mess with a lot of low-level microcontroller quirks).
This is exactly what blew me away during my trip to China. The collision of quickly prototyping hardware using Arduino with the manufacturing muscle of China is fascinating. One interesting company to check out is http://makible.com.
I started using microprocessors before Arduino was popular and found there is a large learning curve to jump from software -> microprocessors involving the programmer, building the supporting circuitry (power supply, oscillator, programmer), etc.
While that's still my preferred method for anything I design, the Arduino (like any all-in-one dev board for the platform) is great for testing fast solutions in the time it'd take me just to find all the parts for my generic AVR programming kit.
I started playing with Arduino just a few weeks ago. I have many other kits/demo boards, mostly for PIC and ARM UCs, and while it's not that powerful, Arduino is the best for fast and simple solutions. It's nice to have the power of an ARM core or PIC32 @80MHz in a small device, but it gets less interesting when you have to program for half an hour just to get a C++ environment for your application.
The best thing is that Arduino brings together two worlds of tinkerers: the hardware/electronics guys now have a lot of software libraries available for free (drivers for a lot of hardware, filesystems), and the software/programming guys now have easy to use hardware modules, so they don't have to think too much about what kind of resistor this LED needs or how can I get a 3.3V supply for that GPS chip.
Yes, I got myself the SparkFun branded version http://www.sparkfun.com/products/10173 for Christmas, and it's a blast. Very easy to get started, and yet, compared to the inventor kits of my childhood, much more versatile because of all the third party hardware that is made for Arduino or can be made to work for it, and because an open source community has developed around it.
This video gets into exactly what I want to know: how can I turn my Arduino-based prototype into a commercial product? The video is really light on details, though.
Has anyone here done this?
I've got one prototype completed, and two others I'm working on. Unfortunately, I'm a programmer type, with very little knowledge of electronics, circuit design, and electronics production. Also, I just ordered a couple TI MSP430 LaunchPads to see if they're capable of doing what I've done with the Arduino, since the MSP430 looks like a much cheaper option.
It allows you to iterate on hardware much faster -- it's a lot like what Rails did to web development.
It also greatly reduces the amount of documentation I'd need to do for a project, because C code with Arduino is much more intuitive than many alternatives (no need to manually set registers and mess with a lot of low-level microcontroller quirks).