In the wake of Microsoft’s recent $44 billion unsolicited bid for Yahoo!, bloggers of all walks of life have been quick to write the beleaguered Internet portal’s obituary. Most of the articles I’ve read blame Yahoo!’s demise on an out of control brand extension strategy and the ensuing lack of focus.

I think they’re missing the point. It’s true, Yahoo! probably overextended its brand, but let’s take a look at the winning side of the aisle (Google) for a minute, and let’s see what we have:

Froogle, Blogger, Google Checkout, Google Documents, Google Adwords, Google Groups, Google Earth, Google Finance, Google Maps, Gmail, Google Video (plus Youtube), RSS services (Feedburner), and the list goes on and on.

If brand extension is the problem, how come Google is alive and kicking while Yahoo! is barely clinging to life?

The answer IMHO is that brand extensions are not the problem. The problem is not having a core competency that you can leverage across those brand extensions.

Google so dominates search, and search is such an important part of all other Google properties, that Google has no problem leveraging his core business across many different products.

Google’s properties also feed each other, like when Blogger encourages the use of Adsense, or when customers that use Adwords are also natural candidates for Google Checkout. At the same time, every property in the Google stable is made stronger by Goggle’s dominance of search.

Brand extension is not a problem in itself. Poorly executed brand extensions and not having a core competency strong enough to leverage across the right brand extensions are the issue.

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