"Confidence is the elixir of the wise man and the liquor of the fool." - Vikram
It's true that consumer choice is what defines the market. So really, yours is a cultural question. What do we as a society value? If it's brand identity, like today, then we will get branded products with as little purpose as possible. If we value authenticity, then brands will start building more authentic products. There's obviously a delay between what we value and what they offer, but its clear that building what customers want always yields a place in the market.
innovation has stagnated because businesses have driven us to stagnation. Very few businesses provide any real value - the ones that do are running circles around everyone else - given the lack of ability, businesses turns to other, less useful methods of prying our money away from us and largely succeed because consumers are gullible and malleable.
I took pg's point to mean that just because consumers see value in the purchase, that is not the same thing as the purchase being valuable - the race changed from 'provide the best function/value for the thing' to 'provide the most differentiated value to the consumer as an identity' and that is, for the most part, less useful.
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