Technological Advancement Through Capitalism

[All Seeing Eye]

I always hear that Technology advances so quickly because of the competition between rival companies but is that necessarily the case?

For example, you have 5 separate phone companies, they each spend £1 Billion pounds designing the next generation of phone and each come up with a design.

If we look at them today they all generally end up being pretty much the same. Same features etc etc.

Now if we were in a society that was not capitalist instead of 5 companies there would be only one. That one company would be able to spend £5 Billion on designing a next generation mobile phone instead of just £1 Billion.

Now you will probably say that without competition there is no motivation to design a new phone but I disagree with that.

That company will still need to continue to create profits and to do that they will need to create a newer phone so people will spend more money.

It just seems to me that a phone designed on a budget of £5 Billion is better than one designed on a budget of just £1 Billion.

Does anyone agree or disagree?

 

[RobertVA]

One of the problems would be phones that cost $300 with a two year contract for $200 a month instead of the current $50 (or "free") phones with a two year contract for $50 a month (monthly charges not including insurance and various government fees and taxes). The additional supply from competing sources tends to limit how much things cost. There are some issues with some of the competing businesses lowering their prices too much and going bankrupt, but when government doesn't interfere that results in a reduction of supply that drive prices back up to a profitable level.

 

[STR]

For example, you have 5 separate phone companies, they each spend £1 Billion pounds designing the next generation of phone and each come up with a design.

If we look at them today they all generally end up being pretty much the same. Same features etc etc.

Except, they don't looks the same, or work the same except on the most superficial levels. Blackberry, Android, iPhone and both classic and upcoming versions of mobile windows are all dramatically different architecturally, even though Blackberry & Android share the java programming language, and iOS shares with Android unix roots, they're all markedly different with how that is implemented. As such, when you have users that have more specific needs that "Does it have Facebook?" the level of security, openness and flexibilty (since there's tradeoffs in each) becomes important.

Basically, the world is too big for a one-size-fits-all mobile.

Deeper down, all of the above run on one of 3 processor types (Qualcomm, Samsung (Apple's is a derivative of Samsung), or TI), all of which are based on original work by ARM Holdings. As such, 99% of phones today are the same electronic "guts" slapped into various cases and loaded with different software. As such, there's really only so much innovation you can do with ANY budget. $2 billion just won't buy you any more than $1 billion. In economics, this is a classic case of the law of diminishing returns.

 

[sojourner]

As the U.S. found out, having one phone company leads to a monopoly and poor services/prices. Where is the motivation for the company to improve it's product if the users have no choice to go elsewhere? The phone company will, instead of using it for research, take that $5 billion and make it's employees fat and happy.