PC vendors in consumer electronics

Wired article that suggests PC vendors have an edge in the consumer electronics space. Points to the success of the iPod, Dell and Gateway's entry into plasma TVs and more, HP's push into digital cameras, etc. The article argues that PC vendors have learnt the lessons of standards and interoperability.

If traditional electronics firms were all about exclusivity, computermakers are all about common standards and commoditized parts. And the PC folks know how to implement software-based systems. They know that if documents, pictures, video, and music are merely streams of 1s and 0s, it makes sense to put software in computers, cameras, and DVD and CD players. And they know how to do it for less money.

In Clayton Christensen's terms, this shift to more modular architectures is facilitated/fueled by the performance of the subsystems passing the point of "good enough". Improvements in processor performance, hard drives, etc. have gotten the industry to a point where the product architecture doesn't need to be as integrated to achieve the desired level of performance. This is one of the drivers. The others are (1) increasing digitilization, (2) emergence and embrace of standards (MP3, DVD, WiFi, etc.), (3) the PC vendors being accustomed to a faster rate of innovation and their technological expertise which will translate into the ability to add new features such as wireless network connectivity, storage, etc. (4) PC vendors' more efficient operations which allow them to offer lower costs and operate at lower profit margins (10-12% compared to 30-40% or so for the CE vendors).

In the computer industry, commodification reduces manufacturing costs (improving razor-thin margins) and guarantees inter-operability. It'll work with consumer electronics, too... What comes next? Device compatibility. The PC industry was built on the under-standing that consumers buy accessories from multiple companies, and, in order to maintain customer loyalty, products will be competition-friendly.

Also see my recent post on this subject.