How Nicholas Carr Misunderstands Commoditization

from the let's-try-this-again dept

Nicholas Carr sure is getting a lot of attention for his book rehashing last year's argument that "IT Doesn't Matter." Last week we had two different posts explaining why Mr. Carr's thesis was wrong. Now, Wired Magazine has let Carr speak for himself, and he does a dreadful job trying to defend his position. It is definitely true that many people misunderstood his thesis concerning the commoditization of IT. However, the industry execs he mentioned in the article did understand his thesis and responded with valid points. Carr's problem is that he thinks that those who are arguing against him don't believe that commoditization is happening. He's wrong. Everyone knows that technology is being commoditized. That's the process of technology advancement and competition. It's how the world works. So, by giving examples of how the companies that criticize him are commoditizing products he doesn't help his own argument. The point that he's wrong on isn't that products become commoditized, but it's when he believes the world ends with commoditization. Once a product is commoditized he seems to believe that all power to profit is gone. As we explained last week, that's not true at all. The power of commoditization is that it becomes a cheap input, rather than a final output. It becomes the building block of more innovation. What the smart company realizes (and Mr. Carr seems to miss) is that commoditization drives innovation, rather than kills it. By completely misunderstanding the arguments that show his thesis is wrong, Mr. Carr does himself a huge disservice. It would be great to see him actually debate the points raised against him. Instead, he just trots out a straw-man argument (that companies are commoditizing IT products). Everyone agrees with him that this is happening, so arguing about it is pointless. What he's confused about is that companies (and individuals) know how to use commoditized technology to create new opportunities.