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Beware the perils of the gadget market

Tags:
Gadget,
Dell,
IPods

Michael Kanelllos CNET News

Published: 06 Nov 2003 17:20 GMT

Dell, Hewlett-Packard and other PC makers are rushing into the market for consumer electronics. If history is any guide, it could be a mess.

For tech companies, consumer electronics is one of those things -- like solar energy or a movie star with a record contract -- that look a lot better in the planning stages. What could go wrong? Asian contract manufacturers have boiled the logistics and design down to a regimented procedure. Large manufacturers can get rock-bottom prices on components, and they have large staffs of engineers and sales execs who have proved their ability in the field.

Yet success has proven difficult. Intel, Gateway, Compaq and other manufacturers all came out with electronics entertainment gadgets in 2000, only to exterminate them a few months later.

Even established manufacturers have a difficult time. The same day that Dell came out with its portable music player and LCD TV, Sony announced it would lay off 20,000 employees.

Devising a hit product is, of course, an elusive art that involves aesthetics, branding, good timing, luck and -- most of all -- an intuitive, difficult-to-define grasp of human behaviour. In the '80s Sony had a huge, fairly unexpected hit with the Walkman. The Watchman portable TV didn't do as well.

The Japanese giant is now tinkering with the home humanoid robot. Logic says these will fail. Intuition says they are kind of cute and a lot of people speak to their cat on a regular basis. Time will tell.

Companies, though, chronically underestimate the intelligence of the average person. The public flocks to a new item, and marketing departments convince themselves that society has plunged into a new chapter of civilisation and, particularly, into an era they themselves are suited to dominate.

In reality, consumer electronic products pass through four rapid phases of life.

First comes fascination, when the breakthrough seems almost impossible to believe. Those who grew up in the '70s will never forget the first time they saw a Pulsar digital watch. They were priced at $2,100 in 1972, but were a far cooler fashion accessory than dingo boots. Haile Selassie and Sammy Davis Jr. both owned one.