Why Dell wants a smartphone in China

Earlier this year there was a great deal of speculation in the press about Dell entering the smartphone arena.

Earlier this year there was a great deal of speculation in the press about Dell entering the smartphone arena. The PC-giant had hired the ex-Motorola executive behind the development of the popular and successful RAZR mobile phone and rumors swirled about whether the Dell smartphone platform would be built on Windows Mobile or Google's Android. It seems that perhaps the speculation should have been around *where* Dell might roll out a smartphone rather than *what* smartphone they might roll out. Apparently Dell has its sights on China, and for good reason.

The battle is on in the United States between mobile device manufacturers like Nokia, Palm, RIM, Apple, and a handful of smaller players. With an estimated 270 million or so mobile subscribers there is money to be made. However, due to the nature of the exclusivity agreements that seem to be standard between mobile service providers and mobile device manufacturers, Dell would need to negotiate an arrangement with only one carrier, reducing the potential pool of customers to less than 90 million at best.

By focusing on China Dell can sidestep the tough competition going on in the United States, and possibly evade some of its history of strategic mis-steps in trying to branch out beyond providing laptop and desktop PC's. In China Dell still faces the issue of negotiating exclusivity with a mobile service provider, however by negotiating with China Mobile Ltd. Dell opens a market with a single mobile service provider that has a subscriber base almost double the entire United States market. Dell can establish itself with an audience of 450 million subscribers and let Apple and Nokia fight it out for a share of the 270 million United States subscribers.

There is an obvious question of why Dell is venturing into mobile devices at all. It has been knocked off its pedestal as the #1 PC manufacturer by HP and faces an increasing possibility that Acer could steal the #2 spot and relegate Dell to third place. Apparently Dell has some work to do in devising tactics and strategy to remain competitive in its core market. Perhaps the recent decision to drop the Mini 12 netbook from the product line has something to do with Dell's attempts to retain the #2 spot.

Dell, both the corporation and Michael Dell, its founder, has been relatively successful in the highly competitive arena of personal and business computer systems. It's possible that Dell is not crazy for venturing into the mobile handset market, but crazy like a fox for staying a strategic step ahead of where the market is going. Netbooks are gaining in popularity and denting laptop sales. Technology continues to converge computing, communications, entertainment and productivity into smaller and smaller devices and users have come to expect a great deal from their mobile devices.

Selling printers or digital cameras may not have done much for the overall success of Dell, but mobile phones are different. Today the mobile phone is a separate market from the PC or laptop, but the pace of technology and the demands of users will see those lines blur very soon. A smart phone is essentially a laptop computer squeezed into a handheld device and is a natural extension of Dell's core market. Jumping into the smartphone market seems like a sound strategic move, and testing the waters in China is just plain brilliant. Now Dell just has to develop a mobile device that actually delivers something worthy of being branded a Dell to capitalize on that strategy.

Tony Bradley is an information security and unified communications expert with more than a decade of enterprise IT experience. He tweets as @PCSecurityNews and provides tips, advice and reviews on information security and unified communications technologies on his site at tonybradley.com.

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Tony Bradley

PC World (US online)
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