Bundles and profits

sometimes you have to bundle different modules in order to deliver a good-enough product, it depends on technology and context, but those can change, the prodcut can be commoditised and a competitors can unbundle the product and compete on single modules. Where do the profits of integration go? Are they lost? Christensen states the law of conservation of attractive profits, under the new technology and market arrangements, opporutinity to re-intergate in contiguous modules of the value chain emerges and the profits will go to the new intergated product

So it is a cycle of bundling and unbundling with profits jumping from the bundled up to the unbundled and the the bundler again

There’s a business saying “In business, there are two ways to make money. You can bundle, or you can unbundle.”
– Jim Barksdale

“When attractive profits disappear at one stage in the value chain because a product becomes modular and commoditized, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage. That is, the location in the value chain where attractive profits can be earned shifts in a predictable way over time.”

-Clayton Christensen

Jim Barksdale was Netscape CEO to the end, then secretly built the optic fiber cable linking Chicago to New York, shaving 3 millisecond in the transmission time, such a tiny speedup that only algorithimic traders could appreciate it. The way of market arbitrage are infinite, infinitely small


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