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Innovation, Globalization & the Perils of Commoditization

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Douglas Alexander
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re: Staving off comment
Douglas Alexander   11/26/2011 4:54:30 PM
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Jbond. I have several expensive toys that are sooooooo 10 minutes ago! You are absolutely right. Product life cycles as released seem to be getting shorter and shorter...especially the hand-held goodies.

Douglas Alexander
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re:Opening statement on Commoditization
Douglas Alexander   11/26/2011 4:49:23 PM
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Bolaji, I really like your definition of what a commodity is with regards to declining price trends. I think most of us know that if we can wait 6-9 months after a company introduces a new product, we will have the benefit of that price erosion usually in excess of 20-25%. I waited for my first digital camera, Dimage, announced at $2500, and bought one about 8 months later for $999.00. 6MP. Can you say WooHoo? Alas! My new Samsung Galaxy II Skyrocket only has 8MP rear and a measly front facing camera at just a few MP. I can't wait for my next phone with a side facing camera of 16MP. Should be out in about 6 months at $299.00.

bolaji.ojo
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bolaji.ojo   11/16/2011 2:42:57 PM
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@jbond,Interestingly, after I wrote the article I saw a report about Apple that the company may have to lower the price of its iPad tablets. The report (iPad 2 price slash incoming analyst insist) may not be correct but it points to a possible trend. Some other analysts have questioned the veracity of the report. We'll find out soon how true this is. Knowing Apple, it's a challenge that must be countered.

Himanshugupta
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impact of price dynamics on supply chain
Himanshugupta   11/16/2011 1:09:50 PM
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the premium price that we usually pay for the new product is for the niche technologies so that the company can recover the RnD cost asap. And the price difference between a new product and an old product makes sure that the company can cater to a wider range of customers. By doing so, the company puts more pressure on its supply chain as the parts used in an upgrades version are almost same/similar to the previous version. So, doesn't it make sense to analyze how to free up the supply chain by stop producing one/two generation older products? 

Barbara Jorgensen
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Commoditization
Barbara Jorgensen   11/16/2011 8:43:08 AM
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I'm a big fan of having a choice in the market when it comes to the low-end versus high-end. I can certainly understand a company that wants to create a high-value product that holds it value--luxury cars is a great example. I think Apple can continue to succeed with this strategy but they'll have to sacrifice a product here and there, such as the phone you mention that is priced competitively. But it's tough to see which way the market will trend, and developing new products at the pace Apple has to to maintain leadership will eventually lead to a price war.

jbond
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jbond   11/16/2011 7:23:43 AM
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No company or product is above commoditization, and to think so is foolish. The best anybody can hope for is to stave this off for as long as possible. I think Apple is making a good move by getting involved on the low end of the market. There are still plenty of consumers not able to spend big dollars on the latest models. These people will also spend money on apps and still bring in a revenue stream.

prabhakar_deosthali
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prabhakar_deosthali   11/16/2011 6:49:01 AM
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Yes! there is a huge market for the commoditised products in the developing world. And many times the quantum of sale from such products can offset the low volume high priced premium products. Today in India the loest level labourers earning a mere $2 a day, can be seen engaged in hour-long conversations with their near and dear ones on their mobiles. These devices are not those hi-fi Iphones or Blackberries but some unbranded products coming from China, serving their purpose at the price they can afford.

The coomoditization of PCs has helped the student community in developing countries like India , where they can now afford to have their own desktop/laptop instead of waiting for their turn at the college lab for the precious computer time.

Like the Fshion industry is driven by innovation all year around, but the consumers for this designwear are only a select few. The masses wear only the commoditized designs.

So actually the maases are getting benefitted when the pace  of innovation increase as they get better products much sooner at affordable prices.

 



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