Mobile devices Toolkit
Story: Dell could start making phones
Is the move worthwhile for Dell?
If at all Dell start making phones, it is more likely to be defensive strategy on its part to extend the life to its standalone PDA products. Considering, Dell's Axim series runs on windows mobile its probably going to be a Giffy to add on a mobile chip in the device to bring out an converged device. HP and Palm has successfully made the transition from standalone PDA to a PDA-Phone (smart phone). It is obvious that, if Dell ever decide to make phone it is most likely to follow similar path as their PC (work with ODM/OEM). Hence, launching a phone doesn't look like much of challenge for Dell, however, making inroads in the highly competitive mobile handset market (where dozens new models in each week is common) is definitely a huge challenge. Also, considering the fact that mobile carriers have much say on which handset actually ends up on end users hand, Dell would face an uphill task as it has virtually no relationship with carriers (no, I'm not underestimating Garriques experience with them).
The biggest question that comes to my mind, is it worthwhile for Dell even considering entry in to an almost alien segment that is relatively saturated and high competitive?
Is it that lucrative to leave behind Dell's direct model? Should Dell be concerned about the mixed signal to market on its delivery mechanism? Does it really make a strong business case?
In my opinion, there doesn't seem to be much of a business case for Dell here since they don't 'make' products. They just sell. Unlike other handset vendors, they wont even design the product or develop applications. Dell's biggest market has been the US where direct selling to consumers wont work since they will be bound to sell through operators. It is unlikely to be different in the rest of the world as well. And globally, even by gaining 4% (being overly optimistic) market share of smart phones, they would be selling probably about 2.4 million handsets a year. And if they are just 're-selling' the product from a OEM, Dell's own revenue from it likely be very low. Supposing that they target a niche market with high end PDA phones, selling at $200- $300 per set. So, we are looking at $440 - 720 million in revenue?! I wonder if a company that made close to $60 billion a year would go through the hassle of tapping into a new arena for this sum!
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