Sunday, August 21, 2011

is software truly "eating the world"? according to andreessen in the wsj, it is. i beg to differ #software rules? no. #innovation #appropriability

aug 21st, 2011 CE

i fear andreessen doth protest too much. 

software is not about to take over the world. 

what is happening is what teece, among others, predicted long ago: the US is hollowing out in manufacturing. 

it thinks it's escaping up the value chain by focusing on software.

wrong. 

there is the cautionary tale from christensen about steel mills and mini-steel mills. the insurgents will chase the incumbents up into more and more high-end segments, causing each of them to become a Red Ocean where profits have collapsed.

for instance, apple is now enjoying the fruits of its massive business model innovation in creating an alternative channel in iTunes, and thus finding that it could escape from the tyranny of microsoft and windows as the gatekeeper. that led it to prosper. 

but the future will be cheap tablet knockoffs such as the $99 4 inch android tablet just introduced in india. apple will have a couple of good years, and then it will be back to niche player. 

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