Commoditisation

The process of becoming a commodity. Micro¬chips, for example, started out as a specialized technical innovation, costing a lot and earning their makers a high profit on each chip. Now chips are largely homogeneous: the same chip can be used for many things, and any manufacturer willing to invest in some fairly standardized equipment can make them. As a result, competition is fierce and prices and profit margins are low. Some economists argue that in today's economy the faster pace of innovation will make the process of commoditization increasingly common.