What does, "embedded deeper in the value chain than your product" mean in layman's terms? Does it mean something which causally precedes the product?
We used to think that.
Apple has been very successful in reversing that again on mobile, so software is once again the complement.
"$1 for an app. Ripoff!!!"
For example, if you sell toasters, you better hope that electricity has been commoditized in the value chain that you operate in.
Another corollary is that you should commoditize ‘deeper’ complements when you need to defend existing money-makers when they’re at risk of bottom-up disruption. Mobile could have seriously hurt Google’s ad business, so it was a smart defensive play to commoditize mobile os on their terms via Android. To see what happens otherwise, note that they pay Apple $12B annually to have google as safari’s search default.
What I'm getting from this is: 1) in the causal chain of competitor's profits 2) better camouflaged from the POV of your customers.