When a capability becomes cheaper to buy than to build, it doesn’t disappear. It moves out of the companies for whom it’s a necessity and into the companies for whom it’s the product.
Around 1900, a factory that wanted electricity had to generate it, with its own plant and its own staff. Then central utilities showed they could make power for less than any factory could make it for itself, and within two decades most US manufacturing ran on bought power. Generating electricity went from a capability to a line item. The factories stopped thinking about it and focused on what they competed on.
The same thing happened to commerce when Shopify made building a store cheap, and it’s happening to knowledge work with AI. What decides who keeps the capability is whether it’s an advantage for that company. Moving it out is the logical next step once it’s become a necessity, since necessities have a point of diminishing returns.
References
- Brian Potter, “The Birth of the Grid” (opens in new tab), Construction Physics
- Nicholas Carr, The Big Switch, 2008
- The U.S. Economy in the 1920s (opens in new tab), EH.net