Dell’s Listless Smartphone Debut

I can see why Dell wants to enter the smartphone market. The reasons are obvious: The market segment, unlike so many others in information technology, is growing robustly, and it offers relatively big margins to vendors that can differentiate their products from the pack.

What I don’t understand is why Dell’s initial foray into the market, as represented by the Dell mini3i for China Mobile, is so diffident and tentative. Dell isn’t entering the market with confidence and determination. Instead, it appears to be cautiously dipping its toes into the market waters, as inclined to return to its PC shed on the shores as to jump in and commit to the new venture.

Nothing about this first handset will create expectant buzz among consumers in China or elsewhere. It’s an undistinguished entrant, and it is easy to understand now why wireless operators in North America and Europe reportedly were indifferent to a smartphone Dell was said to have demonstrated for them a few months ago.

Maybe it’s unfair to expect design sparkle and aesthetic elegance from a Dell product. The company made its bones on bringing standardized products, such as PCs and file servers, to market cheaply and efficiently, not on redefining market segments or defining new ones with innovative features and unique product design.

Still, Dell must know that if it desires the market share and margins that the smartphone realm offers, it must do more than follow its standard formula of churning out me-too products at lower costs.

Or is that Dell’s game here? Does it think that the market will cleave into a high-end elite represented by Apple, RIM, and perhaps Palm (though I’m not convinced Palm is a confirmed long-term stayer) at the top and a welter of bargain-priced, lower-end vendors — employing commoditized operating systems such as Google’s Android and Microsoft Windows Mobile — competing for the affections of those who can’t afford or are disinclined to pay for higher-end alternatives?

If that’s Dell’s plan, how it defines itself as a player in the smartphone market, it can perhaps hope to ride some of the market’s growth, but it won’t be feasting on attractive margins. It will just be boxing itself into the same role it has played in the PC market, but with dimmer prospects for meaningful success.


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