Scheduled System Maintenance:
On Wednesday, July 29th, IEEE Xplore will undergo scheduled maintenance from 7:00-9:00 AM ET (11:00-13:00 UTC). During this time there may be intermittent impact on performance. We apologize for any inconvenience.
By Topic

The paradox of commodities

Sign In

Cookies must be enabled to login.After enabling cookies , please use refresh or reload or ctrl+f5 on the browser for the login options.

Formats Non-Member Member
$31 $13
Learn how you can qualify for the best price for this item!
Become an IEEE Member or Subscribe to
IEEE Xplore for exclusive pricing!
close button

puzzle piece

IEEE membership options for an individual and IEEE Xplore subscriptions for an organization offer the most affordable access to essential journal articles, conference papers, standards, eBooks, and eLearning courses.

Learn more about:

IEEE membership

IEEE Xplore subscriptions

1 Author(s)
Greenstein, Shane ; Northwestern Univ., Evanston, IL, USA

A commodity is available from many vendors without distinction. Simply stated, a commodity is not a high-margin product. Pricing at multiples above unit cost requires something special - valued brand, frontier features, unique service, or lightening-fast distribution. In the beginning, computers were not commodities. During its heyday, IBM had the most storied distribution and servicing network in the world. IBM's engineering was pretty good, too. The combination of advanced technology and tailored service was extremely potent. IBM dominated the market. It was able to charge prices at multiple levels above a machine's unit cost. Computing has come a long way since then. Today, very few firms can garner high margins on their products. This fact fosters a myth that all high-tech product markets eventually evolve into commodities. There are four positive and three negative strategies firms use to fight commodification. It is simply wrong to argue that firms cannot make money in a commodity technology market. Yet, that leads to the central paradox of commodity markets: Starving off commodification requires investing in something special.

Published in:

Micro, IEEE  (Volume:24 ,  Issue: 2 )