O’Reilly: When something is commoditized, an adjacent thing becomes valuable

I believe that now that software is being commoditized, as is cloud hardware, that a lot of data is now easily captured. So analytics has become valuable. Analytics has not been commoditized yet, and good analytics are still prettify rarified.

However, imo when he says that he 'realized that software was becoming a commodity', he is over-generalizing and his bias may be due to the fact that his focus is on the "adjacent things"

My bias is that I'm a product developer and don't see software as a commodity. The bias of developers who provide software for free and charge for "support" is likely to be that software is a commodity and that support is valuable. O'Reilly's belief in free software, belief in charging for e-books etc. seems to be leading to his bias.

imo there is value in all these models. Software is not going become a no/low value commodity anytime soon.

1. In this video Tim talks about what “Web 2.0″ means. (How he views the internet as an operating system).

2. Tim realized that software was becoming a commodity. He saw the same thing play out earlier with hardware in the IBM era. When something is commoditized, an adjacent thing becomes valuable. In the IBM era when hardware was commoditized, software became very valuable (and Microsoft won).

3. The web is a platform. The example Tim gave was Napster. Napster worked by indexing the songs you already had on your computer, not from a pre-determined master list. This was a huge shift in thinking about what the web could be about.

4. Tim encourages entrepreneurs to not “paint by numbers” when it comes to solving problems. Just because one company was successful doesn’t mean you should clone their product.

Unlike the shift from hardware to software the meaning of adjacent has changed

What's adjacent to software?

Well other software.

So it's not that software become commeditized but what we currently use it for do.

There are still many many things we can't even imagine using software for that we will some day.

So perhaps it really is the ideas and the vision that matters most of all at the end of the day.

content-wise, though, i'm not sure i would discount the many me-too startups merely because they are "derivative". sure, you've seen this Y before in X, but i feel the trickle-down force of technology is, if anything, becoming stronger by the day, i.e. the breadth of "real life" to which you can bring even existing technology or old hat ideas and still make a profound difference is huge.

i walk around and see about a thousand things where i say "couldn't someone bring at least a bit of X into this Y?"

second, it's ironic that one of the two things that are virtually guaranteed to become ever more valuable in a world in which everything else eventually becomes "commoditized" are commodities.

another hard limit is the future. anything that can push the boundary in forecasting will become extremely valuable in a time when everything becomes so interdependent.

Yes my mind is stuck on that side of things, but then I've been doing less free time coding and more plotting writing projects of late ;)