Breder.org

The ever expanding frontier of commoditization

For personal computing, the early battlegrounds were around the hardware. Each manufacturer provided a distinguishable value proposition. Maybe the hardware was better suited for games, maybe the display had color, or even a higher definition --- albeit black-and-white -- graphics.

Afterwards, as RAM, hard disks, displays and other peripherals took their final forms -- and connectors for each became industry standards -- they all became commodities: an undifferentiated collection of parts, each available from multiple suppliers.

That shifted the competition lines towards the software ecosystem. Namely, what's the piece of software I should acquire, install and learn to be able to achieve some task at my computer?

More recently, for most people, the only program they're ever going to need is a web browser and what they're going to use it for, browsing the web, is platform-agnostic.

It doesn't matter too much if you're using a Samsung ARM-based phone, an Apple Silicon notebook, or a Dell Intel-based desktop computer: You're going to have access to the same experiences on the web.

Thus, the latest development is that everything, from the underlying hardware, to the operating system, up to the browser, have become undifferentiated commodities.

I'd consider these examples of commoditization to be beneficial for consumers and end-users. For example, the fact that there's multiple phone suppliers struggling to differentiate themselves pushes the aggregate price down.

As additional evidence, on the opposite side and resisting commoditization, see how Apple is able to charge huge premiums for additional RAM and storage for their computers.

They are able to do so because they maintain a tight control through vertical integration, and are not ashamed to leverage that for markup and price segmentation. After all, what are their customers going to do? Apple is the only supplier for the parts of their own hardware!

As always, competition is good for consumers. Multiple suppliers competing to produce the same undifferentiated good is better yet: it provides goods for consumers which are cheap and available in the long-term. Supplier variety benefits consumers by offering resilience against the whims and mishaps of any single company.