Can Arduino be used in commercial products?

Since legal questions sometimes need really specific answers, I found Arduino's exact position on this:

Physically embedding an Arduino board inside a commercial product does not require you to disclose or open-source any information about its design.

Deriving the design of a commercial product from the Eagle files for an Arduino board requires you to release the modified files under the same Creative Commons Attribution Share-Alike license. You may manufacture and sell the resulting product.

Using the Arduino core and libraries for the firmware of a commercial product does not require you to release the source code for the firmware. The LGPL does, however, require you to make available object files that allow for the relinking of the firmware against updated versions of the Arduino core and libraries. Any modifications to the core and libraries must be released under the LGPL.

The source code for the Arduino environment is covered by the GPL, which requires any modifications to be open-sourced under the same license. It does not prevent the sale of derivative software or its inclusion in commercial products.

In all cases, the exact requirements are determined by the applicable license. Additionally, see the previous question for information about the use of the name “Arduino”.

Source: http://arduino.cc/en/Main/FAQ

Disclaimer: Arduino's position on this may change over time, I'm not a lawyer and this doesn't constitute legal advice, blaa, blaa, blaa... :) In short: I'm not responsible if you get in trouble.

Update: February 2021

The structure of the Arduino FAQ page has changed, but it looks like the main point remains the same. The above text has been broken out across multiple sections of the "Compatible Products" section:

• Physically embedding a board inside a project
• Deriving design from Eagle files
• Source code and LGPL
• Arduino development environment (Slightly changed wording)

Sure you can. There's nothing in the usage license that prevents you from using it in a product you make. I use the arduino mega as the brain of my beat sequencer interface, http://beatseqr.com

The open source license really has to do with the instructions for creating arduino clones or variants. If you're just using them in a product, that's A-OK.

Often times the counter argument you'll hear from "advanced" people is something like "why would you?" and "the arduino is too expensive to use in a commercial product!" or "the arduino is way underpowered for anything worthy of a commercial product!" or the opposite "the arduino is way overkill for something you could do with a 2 dollar chip!" But to all of those people I say "hogwash"... if the arduino works for your project, and you can find customers who will buy it as a product, go for it. Eventually you'll become more advanced, and you may even agree with one or more of those advanced opinions. But until then, go for it.