Will Dell Succeed with New Device? Doubtful

According to some sources, Dell Inc. (DELL) (Analyst Report) may be launching an iPod "Touch-style" pocket-sized Mobile Internet Device (MID) sometime in the second half of 2009. The gadget is expected to tap the Internet and will run on Google Inc.'s (GOOG) (Snapshot Report) Android software.

The device will feature a bunch of services such as music, videos, and connectivity similar to the iPhone. It is expected to be slightly bigger than Apple's (AAPL) (Analyst Report) iPod Touch but may not have a cellphone. The source also commented that the production could be delayed or scrapped completely. Dell declined to comment on any plans for future product releases.

During March, in a conference call, Dell accepted that it plans to offer a handheld device but did not provide any specific details. "The company was exploring smaller-screen devices," said CEO Michael Dell.

We believe this may not be successful, as Apple has created a niche market for its iPhone and the entry in the music player market will be tough for Dell. We also do not expect Dell to catch up anytime soon with competition due to its long track record of failing new product launches (see Digital Jukebox - DJ Ditty music player line and the Axim PDAs). Dell has struggled to keep pace with the consumer market due to intense competitive pressure, particularly in the low-priced desktops and notebook market.

Dell's products lack features desired by consumers and the retail distribution of large competitors, such as Hewlett-Packard (HPQ) (Analyst Report), Microsoft (MSFT) (Snapshot Report) and Apple. Dell has been losing shares to H-P in the consumer market over the past few years. We believe this is largely the result of more "consumer friendly" devices and a growing retail distribution channel of H-P. Dell also lacks the product diversity enjoyed by H-P. Also, Microsoft's new product named Zune HD is expected to provide strong competition to Dell due to enhanced multimedia capabilities and an Internet browser.

Dell's U.S. Consumer business revenue declined 12.0% during fiscal 2008 and 7.5% during the first quarter of fiscal 2009. Dell is also losing market shares to H-P, Apple, Research In Motion (RIMM) (Analyst Report) and Nokia (NOK) (Snapshot Report). As per Gartner's preliminary forecast for the fourth calendar quarter of 2008, Dell's market share dropped to 13.2% from 14.2% in the year-ago quarter.

We maintain our SELL rating on Dell's shares with a new six-month target price of $8.00.

Comments

[JamesApple:]

If all the business enterprises got is blackberry for business, then the sky is the limit for Dell to exploit them for developing true enterprise devices. Rim is email only phone, nothing else.

Jul 02 06:11 PM

[analysis101vp:]

Who in their right mind would pay any attention to what Zacks has to say or even to what S&P has to say. The last time Zacks rated Dell a sell was when it was around $8.50 a share. That would cost its listeners as much as 60% gain in less than 2 months. Large investors obviously didn't care much for Zacks reasoning. They probably looked at the many other reasons that Dell could go up much higher, the biggest of which being its valuation. The company still earns lots of money and adds to their huge cash on hand. Currently standing at about 40% of its market cap. Cost listeners 60%? Ouch! Do yourselves a huge favor and don't listen to ridiculous zacks stock recommendations and target prices.

Jul 02 06:58 PM

[geotopia:]

As a consumer (of IT products), I find Dell a much more compelling brand than HP or Acer, but outside of Desktops, Servers, Flat Panel Displays and Network Switches (apparently not doing so well), I have a hard time seeing Dell succeed in this newer category of Mobile Internet Devices. Dell has improved their distribution and they've always been good at ODM products, but this new category has a reliance upon innovative new GUIs and Dell has virtually no [successful] experience in that realm.

Jul 03 09:54 AM

[brewer:]

Zune HD, funny I had not heard about that since if was released. Do yourself a favor and get an iPod or iPhone touch instead.

Why doesn't Dull just sell the Zune instead? They are normally very happy just repackaging Microsoft's garbage.

Jul 03 11:56 AM

[JamesApple:]

Enterprise supercedes internet devices in that enterprise consumes more than internet services just like enterprise services supercedes web services. Enterprises are still being underserviced by what IT and commercial tech can offer. Star Trek is far from reality, email does not substitute workflows, messages do not substitute work processes. The automotive segment went the farthest in deploying technologies in their business models, look at their carmaking robots and then you may get a glimpse of what I thinking of impending Dell enterprise devices. Don't think too highly of our iPhones and Pres, they are toys compared to the Toyota or GM carmaking robots.

Dell, deliver us from the archaic blackberries.

Jul 03 01:31 PM

[Hayweed:]

How is a generic box maker going to make an innovative mobile internet device. The answer is poorly or not at all. Since I am short Dell all I can hope for is that they make this attempt or buy Palm. Either way it is a bloodbath for Dell shareholders. Michael Dell could make generic PCs in his dorm room but what else has he done. PC box making is moving to China and Dell has no value add to the consumer. Why buy a dell when you can buy some generic PC like an Acer for cheaper.

Ba-bye Michael Dell

From 1997

When it comes to the state of Apple Computer, everyone has an opinion.
And at the Gartner Symposium and ITxpo97 here today, the CEO of competitor Dell Computer added his voice to the chorus when asked what could be done to fix the Mac maker. His solution was a drastic one.
"What would I do? I'd shut it down and give the money back to the shareholders," Michael Dell said before a crowd of several thousand IT executives.

PS: Hay Mikey, Please give the money you currently have back to the shareholders as soon as possible. Steve Jobs must laugh at Michael Dell's half ass quote every day.

Jul 04 12:02 AM

[JamesApple:]

Dell has a long history in custom building servers for enterprises, now it's time for Dell to custom build enterprise devices that fully exploit the custom built Dell server capabilities and integration. Unlike the old archaic and severely handicapped email-only blacknerries and BES.

Dell will beat blackberries hands down.

Jul 04 01:32 PM

[JamesApple:]

 

JamesApple:  Comments (194)
Following
Dell has a long history in custom building servers for enterprises, now it's time for Dell to custom build enterprise devices that fully exploit the custom built Dell server capabilities and integration. Unlike the old archaic and severely handicapped email-only blacknerries and BES.

Dell will beat blackberries hands down.

Jul 04 01:37 PM