Dell may be successful in its foray into the U.S. smartphone market if it manages expectations, but it may have difficulties standing out from the crowd, according to an industry analyst.
The computer maker is reportedly close to announcing a deal to bring Android-powered smartphones to AT&T. This comes after years of speculation that it would enter the mobile space, and a few months after it unveiled Android-powered smartphones for China Mobile. AT&T and Dell have not confirmed the report.
Dell can not comfortably ignore this space because the lines between smartphones and laptops are increasingly blurring as hardware and mobile data networks rapidly improve, expalined Jack Gold, principal analyst at J. Gold Associates. Computer makers such as Acer have already taken the smartphone plunge, while Nokia, the world's leading handset maker, recently introduced a 3G netbook.
"Nokia has to move upstream, and Dell and other computer makers have to move downstream," said Gold. "There's going to be a collision in the middle."
The smartphone market is becoming increasingly crowded, but the growing size means there could be room for new players such as Dell. IDC said 2008 smartphone shipments were up 27% from 2007 at 157 million units, and that number is expected to double by 2012.
Gold said Dell's first handset will not outsell Apple's iPhone, but could potentially match the sales of the Palm Pre, which analysts estimate has sold more than 700,000 units since its summer release. The first Dell smartphone will reportedly be an upgraded version of the Mini 3i smartphone that will hit China soon. It features a large touchscreen with an iPhone-like user interface.
Dell's entering the space could be a big blow to Palm, Motorola, and Nokia's U.S. ambitions. The computer maker has a recognized brand name and strong direct-to-consumer sales channels that may woo mid-tier smartphone buyers, Gold said. It also should not be difficult for Dell to create or outsource the design of an attractive Android-based handset.
Gold doesn't see Dell smartphones dramatically impacting the sales of Apple or Research In Motion, though. Dell's first handset will not draw away iPhone users who are in their own "cult of Mac," and the device will likely be aimed at consumers or "prosumers," so RIM's enterprise dominance should remain, Gold said.
Additionally, Dell may not want to compete against the BlackBerry in the corporate realm because Android is not yet enterprise-friendly, although that is expected to change with future software updates.
There are a few potential hazards for Dell though, as competitors such as HTC and Motorola are already rolling out Android-powered smartphones with tailored user interfaces and features. It may take time for Dell to sufficiently customize Android to make it appealing, and this could kill any early momentum it hopes to capture, Gold said. Finally, it is unclear how strong Dell's carrier sales channels are, which could hurt its chances of widespread handset adoption.
If the reports pan out, the move is another sign that Android is gaining momentum. Barring Apple, Nokia, and RIM, nearly every major handset maker plans to make a device using the Google-backed software, and other consumer electronics manufacturers also plan to use Android for tablets, netbooks, cable boxes, and other computing devices.
Wireless carriers appear to be on board and this is particularly important for the U.S. market. T-Mobile will soon have four Android handsets, Sprint will have two, and Verizon recently said it was partnering with Google to create a variety of mobile devices that will use the Linux-based OS.
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