Doesn't this bother anyone? It seems every consumer technology business is suddenly focusing on areas it didn't used to. Nokia (NYSE:NOK) makes a set-top cable box. Dell (NASDAQ:DELL) produces PDAs and televisions. Hewlett-Packard (NYSE:HPQ) has PDAs. Gateway (NYSE:GTW) sells DVD recorders, MP3 players, camcorders, and televisions.

Each is focused on capturing a significant portion of these new segments, though, it's not as if any of these segments were simply laying fallow. Sony (NYSE:SNE) and a dozen other Japanese and Korean companies have dominated the consumer electronics markets in several segments, but there are also other companies that are already well-established in these markets, such as palmOne (NASDAQ:PALM), Scientific-Atlanta (NYSE:SFA), and Research In Motion (NASDAQ:RIMM).

And it seems that every single one of these devices offers some form of camera functionality on them. Kyocera (NYSE:KYO) offers PDA/cell phone agglomeration, Garmin's (NASDAQ:GRMN) PDA also has a global positioning device, or maybe since Garmin's a GPS company, that should be the other way around.

It's consumer electronic soup
Oh, sure, you have the occasional unadulterated success. Apple's (NASDAQ:AAPL) iPod comes to mind. You also have instances of interlopers taking a big chunk of an existing market, as Microsoft (NASDAQ:MSFT) has done with Xbox. But these two cannot be considered the rule. All of the companies above are expecting to take substantial market share in consumer electronics markets that differ from their core offering. Most of them will be wrong. They have to be. It's like the telecommunications market in the 1990s, where you had 10 different companies all going after being able to claim 25% of the market. Well, let me know when you find that 250% market, folks.

All of this comes to mind after Nokia's warning sent it skidding more than 18% yesterday. Some pundits said that the company's fumble gives its rivals an opportunity. One analyst noted immediately that Nokia's claimed overdependence on lower-end models opens the door for Motorola (NYSE:MOT) based on the recent strength in the cell phone market. This could be. Or it could be a precursor to what happened in the telecommunications business: The trickle of warnings weren't a sign of relative weakness of one company; they were instead a sign that the total industry had way too much capacity. That there are more than 100 companies worldwide producing cell phones, and given that Nokia has now offered tepid unit sales with rapidly declining average unit sales price, I think that the answer in cell phones at least points to the latter. Interesting that Nokia's bold pre-announcement in late January now seems to have been somewhat overstating the case.

Good business screams diversity?
Which brings me back to the Dells, Hewlett-Packards, and Gateways of the world. They're fighting middle age in the PC business -- the overwhelming majority of households in the developed world that would want a PC already have one. Where Dell once had a negative cash conversion cycle for its products, it's now running larger receivables and inventories. And yet the company trades at a price-to-reported earnings (which ignore options grants) of 34, a price-to-free cash flow of 32.

That's a price that suggests very good things, but corporate actions at Dell and its biggest competitors -- including price competition, huge rebates, and kind financing terms -- suggest that their core PC businesses are not exactly hopping. This at a time when money supply is priced at what James Grant calls "an emergency rate." I look at the drive by these companies to diversify out of their core businesses into already extremely competitive arenas, and the whole thing screams "overcapacity" to me. And yet Dell, Motorola, and other companies have high P/E's, which means that investors expect them to turn in exceptional growth levels.

I just don't see where it will come from. This doesn't mean that it isn't out there, but I just don't see it. What I do see is enormous overcapacity, even without considering that rumbling we all hear as the Chinese consumer electronics manufacturers continue to increase their exports overseas.

"I'm not dead yet"
By the way, this past week, in discussing the most recently announced changes in the Dow Jones Industrial Average, I noted (with no small amount of bemusement) that, had the index not rather regularly made adjustments, we might still be tracking Laclede Gas, one of the first component companies.

Well, we should let no undignified jape go unpunished, for it should be pointed out that, though Laclede is not currently a candidate as a dominant American company, it hasn't been assigned to the ash heap of history, either. To wit, Laclede Group (NYSE:LG) is still independent and publicly traded. It's principally a natural gas transportation company, but now also operates in insurance and real estate. How do you like that?

Want to see what income-producing company Mathew Emmert unearths next? Take a free trial to Motley Fool Income Investor.

Bill Mann owns none of the companies mentioned here. He wonders whether the folks who decided how to spell stuff made "dyslexia" so hard to spell just to mess with dyslexics. The Motley Fool is investors writing for investors.