Dell's smartphone shenanigans

19-08-2009

by Ralph Averbuch

The squeeze on Dell's core business means that it wants a piece of the smartphone action.

The round robin rumour mill was clearly evident in reports of Dell's iPhone 'killer'. Of course, the web does nothing to assist objective reporting. In fact, it seems to aid and abet a form of frenzied tail-chasing where various online news sources report on each other's reports. This variously leads to stories that Dell is simply presenting a working concept to China Telecom for possible future roll-out, all the way to reports that a handset release is imminent. As with most reports there are certainly grains of truth in there... it's just difficult to divine which grains are real and others imagined (or invented). Ultimately the rumours were partially confirmed when the FT reported that Dell is actually launching a smartphone. There could have been little doubt that Dell had every intention of getting in on the smartphone act. Strategically it offers no surprises as margins on PCs are being continuously eroded and that's unlikely to change. Meanwhile smartphone sales are going well in the face of a global economic downturn. Dell can also look to the huge success Apple has enjoyed, moving from a computer company to something of an industry darling with the iPhone, iPod, et cetera. Problem is, Dell's been here before. It tried launching a music player... and failed. But it cannot afford to back off from this challenge as it has to diversify away from PC manufacturing in order to protect future profits and growth. Dell launched its own netbook line as a defence against erosion of core business. The new handset is about reaching out to new markets, new consumers and, most important of all, new income streams. Perhaps they should have bought Palm and the new Pre handset with it, when the price was more palatable...

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