day 105

alice in wired world 9: when is a mercedes-benz a toyota?

Back to our question: will the Internet continue to decay and eventually beome as rotten at TV? Once again, we have to think outside the box of traditional economics; we have to apply software economics. Strangely enough, one consequence of inverse economics and the positive feedback of the new software economics is the impact on premium-priced products. [A premium market is the "high-priced market," while the commodity market is the "cheap stuff." Think of a Mercedes-Benz 500 as a premium market product and a Toyota Camry as a commodity market product.] Here is the key question: when does a commodity-priced product equal the quality of a premium-priced product? Answer: when the volume-learning curve raises the quality of the commodity-priced product to the level of the premium-priced product. Again, we use the Mercedes-Benz versus Toyota analogy. A 1996 Toyota is probably a higher quality product than a 1976 Mercedes-Benz. The technology of 1996 permits Toyota to build a high-quality car -- one that is as good as a premium-priced car of 20 years earlier -- at a commodity price. This is the meaning of inverse economics. Hard to believe, huh? Tomorrow I will explain how this works.

alice in wired world 1 2 3 4 5 6 7 8 Daily Dose Index