Commoditize, Modularize Incumbent Value, then Aggregate

Ben Thompson’s post on Stratechery does a nice job highlighting how value creation shifts when an incumbent’s integrated system is commoditized and modularized… and replaced by a new aggregation and integration marketplace strategy.

More broadly, breaking up a formerly integrated system — commoditizing and modularizing it — destroys incumbent value while simultaneously allowing a new entrant to integrate a different part of the value chain and thus capture new value.

Commoditizing an incumbent's integration allows a new entrant to create new integrations -- and profit -- elsewhere in the value chain.
Commoditizing an incumbent’s integration allows a new entrant to create new integrations — and profit — elsewhere in the value chain.

This is exactly what is happening with Airbnb, Uber, and Netflix too.

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