Published on 12/ 7/2004
Yahoo has a line of Consumer Electronics with devices like DVD players or Home Theater Systems.
Of course, Yahoo does not manufacture or design these products. They just place a Yahoo logo on it. This is not new: Dell has launched a consumer electronics line as well. So, why wouldn't Yahoo do it?
Because Yahoo is not Dell? The Texas computer giant can leverage its incredible buying power because the same people who manufacture and design Dell's PC components are also the ones building DVD players. Dell's main strategy is to squeeze the margins until the competition chokes to death.
What does Yahoo brings to the gunfight? A Banana.
Sure, the design of Yahoo's devices is pretty sleek, but let's face it, what would prevent someone else from ordering devices like that from a Taiwanese manufacturer? The Yahoo brand is well known… as a search engine. Yahoo only brings a brand and I think that a brand is not good enough.
Worse, studies are showing the consumers are getting smarter: with the standardization of both components and features, they tend to shop for the best price, rather than going to the "safe brand". The first victim of this effect is Sony, which once dominated the sector.
That's exactly the future that Dell is predicting and I think that they are right. Yahoo's move in the consumer electronics is a classic diversification attempt, but honestly, I don't see how they are going to pull this off.
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