Another example of technically sophisticated consumers undermining product differentiation strategies: The CHDK project, which is a piece of software that enables all sorts of advanced features on standard Canon point-and-shoot digital cameras.

Firms commonly re-use components between high-end and low-end products to save money and disable some of the features in the low-end models. In this case, Canon uses the same DIGIC image-processing chips in many kinds of its cameras. The CHDK software helps you to turn on the disabled features, as well as adding a scripting programming language that can be used to do all sorts of cool things like time-lapse photography.

I expect to see more and more of these cases, as consumers enabled by the Internet become increasingly sophisticated. Firms may have to rethink how they implement product differentiation.

(Via Lifehacker)