Is the smartphone a commodity? | asymco

This helpful definition of a commodity, ways to recognize it and ostensibly its implication for designers, from Horace Dedlu. 

People throw around the idea of things being or becoming “commodities” but there is little clarity about what “commodity” status implies.If you look up the word, it has nothing to do with technology or innovation. In economics, a commodity is something that is substitutable fungible and roughly equal to competing versions of the same thing. A mineral good oil or agricultural product pork bellies is roughly of equal value regardless of where it comes from or who produces it. Commodities also have very liquid markets and are therefore easily priced according to demand. Commodities have a “fixed” quality which cannot be improved, and most likely was never improved. It’s a product that is essentially frozen in terms of innovation.But in technology and especially in terms of complex, rapidly improving and evolving products with uneven distribution a commodity is not easy to identify and there can be a lot of arguing about what is and isn’t.So here is another way to define it:In terms of innovation, a product can be defined as a commodity if it reaches a point where improvements do not create additional value. As the product gets better, it reaches a point where customers can no longer absorb the improvements and therefore they become unwilling to pay for them. Thus the price of the product cannot be increased or maintained in the face of competition.In other words, you can’t get a premium price for a better product.

via Is the smartphone a commodity? | asymco.

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