(Updates with analyst comments, including statement about Dell's
disadvantage in the smartphone arena; other details.)
By Jeffry Bartash
Dell Inc. (DELL) on Friday officially announced it will enter
the wireless business before the end of 2009, starting with the
sale of its new Mini 3 smartphone in China and Brazil.
The Round Rock, Texas, company said the device, capable of
delivering third-generation, or 3G, wireless services, will be
based on Google Inc.'s (GOOG) Android software. More details will
be released as the phone becomes available at different carriers,
Dell said.
The computer company has long been rumored to be working on a
mobile device. It already sells laptop and netbook computers with
wireless technology built in.
"Our entry into the smartphone category is a logical extension
of Dell's consumer product evolution over the past two years," said
senior executive Ron Garriques, a former head of Motorola Inc.'s
(MOT) wireless division. "We are developing smaller and smarter
mobile products that enable our customers to take their Internet
experience out of the home and do the things they want to do
whenever and wherever they want."
In the case of China Mobile Ltd. (CHL, 0941.HK), Dell is
building on an existing relationship with the world's largest
wireless carrier serving more than 500 million subscribers,.
Earlier this year, Dell said it became the first PC manufacturer to
embed China Mobile's 3G technology and services into its
netbooks.
Claro is the Brazilian carrier tapped to offer the Mini 3. It
serves more than 42 million people in Brazil as part of the network
operated by America Movil SAB de CV (AMOV, AMX, AMX.MX).
So-called smartphones include a variety of features and tools
beyond ordinary voice calling such as email, Internet access and
texting.
Dell began to look seriously at developing a smartphone two
years ago when it hired Garriques. Then in August, Dell showed off
a small mobile device at an event in China in a hint that it would
soon enter the market.
While smartphones are the fastest-growing part of the mobile
market, competition is fierce. BlackBerry maker Research In Motion
Ltd. (RIMM, RIM.T), Apple Inc. (AAPL), Palm Inc. (PALM), Nokia
Corp. (NOK, NOK1V.HE), Motorola, Samsung Electronics Co. Ltd.
(SSNHY, 005930.SE) and LG Electronics Inc. (066570.SE) are among
the many large handset makers jostling for market share.
Looking To Emerging Markets
The late entry by Dell puts the company at a big disadvantage,
especially in highly competitive regions such as North America and
Europe, analysts said.
"Dell has a lot of experience with hardware, but they're not
really known for software or technologies that differentiate their
products from others," said analyst Charles Golvin at Forrester
Research. "They haven't given a lot of specifics, and with mobile
phones, you have to have something that makes the experience
desirable to the user."
That might help explain why Dell is starting off in China and
Brazil, large markets with huge growth potential where established
handset makers are still trying to stake their own ground.
The company is also hedging its bets, analysts said, in case
consumers' preferences over time shift from laptops to smaller
mobile devices for their primary means of Internet access. Laptops
are more expensive, much heavier and not very easy to use on the
move.
"It's clear that most laptops are wildly overpowered for mobile
users," said Tero Kuittinen, senior wireless analyst at MKM
Partners. "Everybody wants to have a spectrum of devices because
nobody knows what size [of device] will really take off."
The Mini 3 is expected to go on sale in China by late November
and in Brazil by the end of the year, Dell said. A company
spokesman said Dell has been working on the phone with China Mobile
for about a year.
Dell chose Android because of its easy customization.
"We feel there is a lot of flexibility with Android," spokesman
Matthew Parretta said. "Mobile operators like it because they can
easily customize the operating system in order to make it work
better with their wireless platforms."
Android has steadily gained momentum in 2009 as more companies
adopt the software for their phones. The newest device by Motorola,
the well-received Droid, is the company's first Android-based
phone.
The Google software allows phone customers to use a variety of
Google services such as Gmail, Maps, Calendar and Web browsing.
Shares of Dell recently traded 7 cents lower to $15.38.
-By Jeffry Bartash; 415-439-6400; AskNewswires@dowjones.com