A good example the commodity trap is the WinTel computer. Suppliers were offering very similar products and eventually the personal computer became a commodity. The original bare bones IBM PC sold for just over $1500. Thirty years later for $1000 customers can buy an amazing amount of computing power. Taking inflation into account the machines of 2010 cost the equivalent of $300 back in 1980 while offering a quantum leap in performance.
This has been great for customers but the firms selling the personal computers of the Wintel variety have struggled to increase their value relative to their increased revenues.
Incidentally the massive gains in computing power have come from the semiconductor companies not from the computer companies. So in spite of being given great increases in computer power the computer companies were unable to leverage them into increased value for the company. For whatever reason “Differential Advantage” was not in their strategy.
