Guest Post: Why The Innovation Premium Is Diminishing
January 16, 2013 - 10:13am
Submitted by Charles Hugh Smith from Of Two Minds Why The Innovation Premium Is Diminishing The acceleration of competition as high-tech tools and skills have dispersed throughout the global economy is an under-appreciated trend. In the late 1980s, Apple famously reaped $1,000 in gross profit on each Macintosh computer sold: Apple was able to charge a very high premium for the innovations the Mac embodied. (Note: this was back when $1,000 was a substantial sum; that is over $2,000 in 2012 dollars.) This ability to reap a substantial premium for innovation is fundamentally what drives the technology marketplace: since competition arises in any high-profit space, the premium for innovation degrades as competitors enter the space. In the good old days, it took years for serious competition to arise. As the bumper sticker crowed, "Windows 95 = Mac 1985." (As I worked with both M...
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