Cell Phones: A Look at Warding Off Commoditization

Business Week has an interesting blog entry on cell phones, and how they are poised to take a piece out of the lucrative credit card processing market. This comes shortly after Napster's decision to partner with AT&T -- a partnership that allows the firm to distribute its digital music catalog through cell phones.

Interestingly enough, the San Francisco Chronicle reports that while cell phone sales are rising, profit margins are decreasing.

These series of events signal that the cell phone market is ripe for commoditization. It exhibits the two key signs:

1. Profit margins are falling.
2. Most important: The industry is losing value as a standalone service and is now relying on integrating other services to add value.

This is a prime case study for any entrepreneur. If you're looking to break into a new market, look for firms approaching commoditization that may benefit from gaining revenue through distributing your service. On the flip side, if you are in an industry that is becoming commoditized, look to see how you can integrate other services to add value to your offering.