Startup the Commodity

Om Malik writes in Business 2.0 how a new breed of startups are embracing commoditization. I've written before on datacommodities. Not only is the cost of company formation is falling because of the forces of physical commoditization, but it creates new opportunities because of increased volatility and complexity. Smart startups are now proving paths that leverage low-cost inputs with unique bundles, risk management and management layers.

Comments

[anu]

I'm obviously being dumb, but how is this new ? Sure you can cloak it in jargon, but really, where's the news ? Reduced commodity prices allow more people to form companies - wow, stop the presses !

The advent and spread of the internet, for example, dramatically reduced the cost of direct marketing, and do you know what ? Yup, lots of people jumped on board and started to direct market via email. The PC dramatically reduced the cost of computation, and...yup, you're ahead of me here.

So - have I missed something, or is this really just more of the same ?

[Ross Mayfield]

Email was a new application that enabled a new application of direct marketing. Email doesn't exhibit enhanced price/performance, in fact, quite the opposite. Its more expensive to use than before because of negative externalities (e.g. spam).

Yes, this is Moore of the same. The commoditization of processing, storage and bandwidth is shifting innovation from the bottom of the stack (enhancing Mb, Mbps & MIPS) to the top, towards solutions & services. What's new is because the market is saturated, remaining opportunities will either:
* posess unique combinations of underlying technology that solve relatively smaller problems (what Om's article was about)
* converge fields (bio/info)
* hedge volatility (software as service)
* reduce complexity created by other innovations (management layers that virtualize)
* or will address the hard problems of interface (William Miller called it social applications)
* but never rule out new discontinuous innovations