Dell could start making phones

Dell could start making phones

Summary: Market experts say the signing of a Motorola executive may lead to a launch in the mobile arena

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TOPICS: Networking
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Dell will have to enter the mobile phone market in order to keep up with rivals such as HP and Apple, a US analyst has claimed.

Wireless market analyst Jack Gold, of J Gold Associates, also suggested that this might best be achieved by buying an "established player" such as Palm and jettisoning "the non-strategic components of Palm's business".

Gold's predictions are centred around Ron Garriques, the former Motorola handset boss lured to Dell less than two weeks ago to run its consumer division. "Garriques… brings another unique capability which we believe Dell is on the verge of utilising. He has extensive wireless experience, an area [where] Dell will have to become a player — and soon — as HP and Apple push into this key market segment," wrote Gold on Monday.

According to Gold's analysis, Dell would stop selling standalone PDAs — a fast-dying market — "within the year", concentrating instead on "offering a smartphone device that has all of the features both business and high-end consumers would want (eg push email, office document viewing/editing, media capability)".

"We believe Dell will aim at both consumers and enterprises with slightly modified and/or differentiated products, but we expect the products to be Windows Mobile-powered, maintaining the relationship Dell currently has with Microsoft for its handhelds," the brief continued. "But to be successful, it will require not only good products, but also partnerships with carriers that will power these devices — another area in which Garriques has extensive experience, and where the existing Dell organisation has virtually none."

Dell itself refused to comment on "rumour, speculation and/or future roadmaps", but other analysts thought Gold's theory made sense. "Fundamentally, the barriers to creating a Windows-based smartphone aren't that high," Disruptive Analysis' Dean Bubley told ZDNet UK on Tuesday, adding: "It's not as though Dell lacks the resources".

Bubley also suggested that Dell would be a welcome entrant to the enterprise smartphone market, as competitors such as HTC and iMate lack an enterprise salesforce and "aren't especially enterprise-friendly". However, he expressed scepticism over the idea that Dell might cosy up to operators, pointing out that the company is "not historically used to selling through the carrier channel" and describing such an idea as a "complete shift" away from Dell's traditional direct sales model.

"If you have a channel for smartphones, could you justify not having a channel for laptops?" asked Bubley, suggesting instead that Dell might be the right manufacturer to establish a "large-scale non-operator channel".

"Given that a lot of the enterprise [fixed-mobile convergence] offerings are going to be fairly anti-operator, in so far as they save enterprises money, it makes sense to have phones at a price point that is not dependent on operators," said Bubley, complaining that other manufacturers "seem to be a bit more hesitant for risk of killing the golden goose".

Gold disagreed, telling ZDNet UK on Wednesday: "If you want to play in wireless, then working or partnering with the carriers is unavoidable. It's all well and good to want to sell direct, but if your device has not been tested on the carrier's network, they won't allow it to operate. Yes, you can plug in a SIM card, but if it's not an approved device, the carrier could easily just turn it off. As much as we hate to think the carriers have such power, in reality they do."

Gold added: "Even Apple, which plans to market direct to end users, has a carrier partner [AT&T/Cingular in the US] that has tested and endorsed the product. So I don't think Dell will have a choice but to work with carriers, even though it will most certainly sell devices direct to enterprises."

Topic: Networking

David Meyer

About David Meyer

David Meyer is a freelance technology journalist. He fell into journalism when he realised his musical career wouldn't pay the bills. David's main focus is on communications, as well as internet technologies, regulation and mobile devices.

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4 comments
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  • Product Naming

    A Dell-i-Phone?
    brian.catt@...
  • Is the move worthwhile for Dell?

    If at all Dell start making phones, it is more likely to be defensive strategy on its part to extend the life to its standalone PDA products. Considering, Dell's Axim series runs on windows mobile its probably going to be a Giffy to add on a mobile chip in the device to bring out an converged device. HP and Palm has successfully made the transition from standalone PDA to a PDA-Phone (smart phone). It is obvious that, if Dell ever decide to make phone it is most likely to follow similar path as their PC (work with ODM/OEM). Hence, launching a phone doesn't look like much of challenge for Dell, however, making inroads in the highly competitive mobile handset market (where dozens new models in each week is common) is definitely a huge challenge. Also, considering the fact that mobile carriers have much say on which handset actually ends up on end users hand, Dell would face an uphill task as it has virtually no relationship with carriers (no, I'm not underestimating Garriques experience with them).
    The biggest question that comes to my mind, is it worthwhile for Dell even considering entry in to an almost alien segment that is relatively saturated and high competitive?
    Is it that lucrative to leave behind Dell's direct model? Should Dell be concerned about the mixed signal to market on its delivery mechanism? Does it really make a strong business case?
    In my opinion, there doesn't seem to be much of a business case for Dell here since they don't 'make' products. They just sell. Unlike other handset vendors, they wont even design the product or develop applications. Dell's biggest market has been the US where direct selling to consumers wont work since they will be bound to sell through operators. It is unlikely to be different in the rest of the world as well. And globally, even by gaining 4% (being overly optimistic) market share of smart phones, they would be selling probably about 2.4 million handsets a year. And if they are just 're-selling' the product from a OEM, Dell's own revenue from it likely be very low. Supposing that they target a niche market with high end PDA phones, selling at $200- $300 per set. So, we are looking at $440 - 720 million in revenue?! I wonder if a company that made close to $60 billion a year would go through the hassle of tapping into a new arena for this sum!
    krishnab@...
  • The Dell DJ of mobile phones?

    I can hardly wait...
    58045-52164
  • Alternative Mobile Devices

    I already have a notebook /Laptop which I use as a Mobile phone at home. It has Skype and WiFi, so I need Mobile connectivity via WiFi or a GPRS datalink (GPRS is much too expensive). Really its more like a DECT phone but cheaper.

    Its great in expensive trunk call countries. Developing such ideas for PC architecture based consumer devices would be cool, so that you have an integrated video phone if you have a connected computer or smart terminal, it would even be a differentiator in a commodity market for a bit.

    A small Vaio would be great for this as well.

    Or Dell could be building my closed and integrated Next Generation Consumer PC which will be a consumer product, nothing like a current PC and would include telephony as standard as its an intrinsicaly connected device - see www.eurochannel.org/blogs/The_Next_PC.

    The Motorola guy would know how to create such a closely integrated consumer product versus the clunky bag of bits PC - as would someone from Apple.

    That's my bet. Next generation consumer computing devices. 10 years later than we would have got them without Bill Gates and Intel killing off every hint of true innovation beyond Windows and PC moribund architectures.
    brian.catt@...