The Replication Economy:
According to Bill Gurley, digitization=commoditization=hypercompetition.
It does - but only for the players that want to enter this Red Queen race. Firms have another alternative: build resources for the future protected by isolating mechanisms.
What does this mean? It's pretty simple: if Apex sells a China-manufactured DVD player at Wal-Mart for 43 bucks and change, it's tough to compete - especially when China's manipulating it's exchange rate. But no one doubts that in ten years, Sony is going to own part of the home's networked hub - and Apex isn't. Why is this? Because Sony's evaded the replication economy neatly by platform thinking
. Platform thinking protects resources and capabilities.
Sony also hasn't entered the massive BPO arms race either - so it's core competences aren't being rapidly eroded.