Dell Launching a Smartphone: Bad Idea from the Get-Go?

With a failing PC business, Dell Inc. (DELL) now plans to enter the mobile phone market. Rumor has it that Dell will launch its first mobile phone -- in the Chinese market exclusively -- within the next two days.

Not much information is known about the phone, either on the hardware or the software front, but according to some sources, it will be like an iPhone with a large touch-screen and without a physical keyboard.

The phone is anticipated to be based on Google’s (GOOG) Android operating system with either China Mobile (CHL) or China Unicom (CHU) to be its carrier partner. However, Dell has refrained from commenting so far, but it expects the offering to be part of its long-term consumer strategy.

Dell has struggled to keep pace with the consumer market due to intense competitive pressure. If Dell launches the phone, it will have to face stiff competition from Apple (AAPL), Research in Motion (RIMM) and Nokia (NOK).

In our view, Dell may not be able to surpass competition as it lags in all respects. In general, Dell’s products lack what is desired by consumers who are more focused on features such as multimedia capabilities, style and ease of use. Dell is struggling to keep up with the retail distribution capabilities offered by large competitors. Neither can it can compete with Apple due to its large brand following in the iPhone market.

Although Dell expects some revenue generation from the phone, we have our doubts of its success. There may be no buyers. Despite choosing China Mobile, which is one of the largest mobile carriers with a large number of subscribers, Dell’s revenue generation will be minimal due to its small market share compared to large rivals. Hence we maintain our Underperform rating on the stock.

Comments

[doubleshortetf:]

Let's see...

Here are some examples of Dell hardware trash bins:

1. Pocket PC
2. MP3 player
3. Plasma TV

Did I miss other blow-ups?

Granted Dell's core expertise would have been the case on Pocket PC but MP3 player and TV?

And compete against other big boys like Nokia, Samsung, Apple, RIMM and LG among others? I mean what does Dell know about mobile phones?

And what's this I heard that ALL US carriers refused to carry Dell phone.

PS - Time to short Dell?

Aug 12 02:41 PM

[Prudent Man...:]

Toys for tots!

Aug 12 02:46 PM

[ScroogeMcduck:]

Microsoft will be next there always late to the game.

Aug 12 03:00 PM

[doubleshortetf:]

MSFT has messier hardware failures including talking toy!

1. Bailed out of wireless router gears
2. Bailed out of Sidewinder game controllers
3. Pioneered than bailed out of remote control with touch control and LCD
4. Bailed out of 900Mhz wireless phone tied to Windows
5. Bailed out of sound card which was MSFT's 1st hardware product
6. Bailed out of photo viewer with floppy disk
7. Bailed out of decent speakers made by Philips
8. Failed miserably with, get this, Activemates Barney, Arthur and Teletubbies. Talking Barney which for some reason reported to turns itself on. My daughter's Arthur did this Twilight Zone stuff.


On Aug 12 03:00 PM ScroogeMcduck wrote:

> Microsoft will be next there always late to the game.

Aug 12 04:03 PM

[Jasper M:]

Can just see the mockery among kids, as a friend dejectedly reports their disappointment over their parent's choice of a their new phone:
"Dude . . . you're gettin' a DELL ?!?"

Aug 12 04:23 PM

[Tom B:]

Who do you want to dial today?

Press or say "2" to continue in Hindi.

Press or say "1" for Dell computer support.
Press or say "2" for Dell telephone support.
Press or say "3" for Google technical support.
Press or say "4" for China Mobile support.
Press or say "5" for app store support.
To repeat these options, press or say "6".

Your call is important to us. Please stay on the phone with your credit card handy. You might wish to plug in your power adapter.

Aug 12 05:15 PM

[cheaperCDs:]

On Aug 12 02:41 PM doubleshortetf wrote:
> Here are some examples of Dell hardware trash bins:
> 3. Plasma TV

I didn't buy one, but at least for a while, they were VERY low priced plasma TVs, and as far as I remember, were fairly highly rated.

Aug 12 05:35 PM

[Hayweed:]

Staying short Dell as Mikey keeps floundering at the helm.

Aug 12 06:38 PM

[jack dee:]

"With a failing PC business"

where a story starts like this you really have to figure the whole thing is a POS.

Dell does not have a "failing PC business" . launching any new products that might have higher margins is the best thing they can do....

Will it work? well the world is a lot bigger than people here in the USA seem to think , there are billions of people who dont give a rats if the phone is made by apple or dell.

more people on earth have never heard of Apple, dell, HP then have.

Aug 12 08:21 PM

[Techtrader10:]

One market Dell has always done well in, is the inexpensive side of any product. For the people that don't have the throw away money, Dell has filled a niche. Since this is a China only phone, it might be a good market for them.

Aug 13 11:26 AM

[BMWTwisty:]

"Dell smartphone" - oxymoron

Aug 13 02:31 PM

[Paul Harper:]

you got it, basically what everyone seems to miss here is that it's an Android phone, so DELL just need to make something that sticks nicely together.
More importantly, it's a phone for the China Mobile version of Android, which is tethered to their app platform.
500lb gorilla with twelvety hundred million subscriibers ... & lets not forget the deal already in place regards mini-notebooks on 3G

stupid DELL for succeeding where Apple have failed.


On Aug 13 11:26 AM Techtrader10 wrote:

> One market Dell has always done well in, is the inexpensive side
> of any product. For the people that don't have the throw away money,
> Dell has filled a niche. Since this is a China only phone, it might
> be a good market for them.

Aug 15 04:45 PM