Does this still apply if the attractive profits were never there to begin with?
Some companies have made a lot of money on the internet.
A small handful have made a fortune by monopolizing key markets but web sites in general are not profitable and profit never seems to be much of a concern for those investing in the internet.
"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."
Companies make attractive money when they solve the hardest problems.
Read his book, "Seeing What's Next"
Also: http://eser.org/oil-and-gas/The_law_of_conservation_of_attra...
Just because it's true that many internet businesses have become modular, commoditized, and marginally profitable, does not mean that there is a shortage of difficult and highly valuable problems to solve.
The companies the author listed are "component manufacturers". Future profits will be created by combining those components in creative ways to solve new problems.
Quoting Economist Paul Romer: “Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable." see: http://eser.org/oil-and-gas/Eser_Corporation%27s_Business_Ph...