Dell recently showed signs that it intends to start creating smartphones to contend with the likes of Apple’s globally successful iPhone and the G1 from HTC. While Dell is one of the most highly successful companies on the PC market, it seems that their first attempt at a smartphone has fallen by the wayside after being rejected by several carriers as simply being too dull to even come close to the leading devices.
Dell has stated that their first attempt would be capable of running both Windows Mobile and Android, but this wasn’t enough to convince the carriers who prefer either simple phones that they can sell for free on contracts, or unique devices that will make headlines, and entice new subscribers away from the leading carriers and their top handsets.
In a research note published by Kaufman Bros. analyst Shaw W, he said, “From our conversation with supply chain and industry sources, it appears that it ultimately came down to lack of carrier interest and small subsidies, making it difficult for Dell to make a profit. In our view, the last thing Dell needs is to enter another money losing business as it seeks to preserve it’s operating margins of 5%-6%”. Wu noted that those figures compare to HP’s 11% margins and Apple and IBM at 15%. Wu went on to say “Dell is going back to the drawing board to design a cellphone with more differentiation, that could likely involve vertical integration of some sort including software and/or services”.
This is the first time Dell has ever dipped it’s toes into the smartphone world so it is hardly surprising that they failed to come up with an instantly viable and attention grabbing device.
The same was said about Apple when they first entered the smartphone sector, but they had over 5 years experience with the iPod, and decades maintaining successful software platforms building highly customized hardware.
If Dell is to succeed in this highly competitive battleground, then they need to do some serious R&D, and who knows, we could see them buy their way into the smartphone market, Pre could be a viable target for takeover. But for now it is back to basics for Dell, and maybe, eventually, they may come out with something of interest.