The Technology Commoditization Curve
posted by John Spacey, February 04, 2011The Simplicable Technology Commoditization Curve shows the path of technology prices over time.
All technology, whether it be hardware, software or a service becomes commoditized with time.
New Innovative Product
For the purposes of illustration, consider the VCR. First introduced by Sony in 1975 - the VCR was a truly innovate product.Hype Builds
The VCR was launched with little fanfare - first to the Japanese market in 1975. Japanese consumers were first to rush out and buy them. By 1977, the global media was full of stories about VCRs.Peak Price
By 1977, all models of VCR cost in access of $2000 US.Cheaper Producers Mimic Product
In 1977, there were only four or five manufacturers of VCR. By 1980 most major consumer electronics manufacturers had at least one model — prices started to drop.War of New Innovation Begins
Auto-seek, longer play VCR tapes, two tape decks — manufactures struggled to differentiate their models in an increasingly crowded market place.Consumers Start to Lose Interest in New Features
There are only so many useful features you can pack into a VCR. Remote controls started getting too complex and consumers lost interest in innovative models — they started buying the cheapest models.Disruptive Innovation - A New Product is Introduced That Steals Most of the Market
When DVD players hit the market in 1995 it was the beginning of the end for VCRs. Prices plunged.Product Goes Off the Market
By 2000, high end VCRs were a thing of the past — cheap off-brand models were all that remained. Even these were more difficult to find as most retailers dropped VCRs altogether.Commoditization is one of the five unstoppable technology trends that drives technology innovation.
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