Hardware as a rule isn't necessarily expensive. If you had a specialised peripheral you might be able to get going on a million -- maybe even a lot less if you can push functionality to software (eg a simple setup where the fpga or microcontroller does all the heavy lifting).

The problem is when you want to compete in a market with volume and wide distribution. Eg something like a tablet pc. Unless most of the idea comes from OEM parts then you need big money.