In this paper, we show how product standardization, or its absence, affects the rate of technological progress. Two types of outcomesthose in which innovations are compatible with old products and those in which they are not - are market equilibria. The incompatible regime is characterized by more frequent product innovations and more rapid technological progress, on the one hand, and greater expenditure of resources in return for this progress on the other. In our framework, an absence of product standardization fulfills the role of "functional obsolescence," which may serve a socially desirable role by fostering more rapid technological progress.