Dude, Your Phone Is Dull
by John Paczkowski
Posted on April 29, 2009 at 11:35 AM PT
Antipathy toward a Dell smartphone is building and the device hasn’t even exited the rumor stage yet. When last we discussed the Dellephone, wireless network operators had reportedly been unimpressed, criticizing it as dull compared with current and upcoming handsets. Now comes further criticism in the form of a client note from Bernstein Research analyst Toni Sacconaghi Jr., who believes that Dell (DELL) will announce a smartphone in the next six months but will most likely bungle it.
According to Sacconaghi, the smartphone market isn’t a natural fit for Dell, which could see its efforts hamstrung by its historically lousy industrial design sensibility and lack of software development experience and wireless technology, not to mention unenthusiastic carriers hesitant to add a Dell phone to their lineups.
“We believe Dell’s foray into the smartphone market is risky and its success uncertain,” Sacconaghi writes. “In our view, the biggest risks are that (1) Dell invests a disproportionate amount in the initiative…; (2) the high margins earned on smartphones today collapse by the time Dell establishes itself in the market…; (3) it causes too much management distraction…; (4) the business simply fails.”
(4) the business simply fails.
A harsh prediction–especially when we don’t even know if the business will ever exist. Clearly, Sacconaghi doesn’t have much faith in Dell’s ability to execute on an initiative like this. And why should he? Dell’s track record in adjacent electronics businesses is littered with the corpses of PDAs, MP3 players and TVs.
Comments
Dell’s latest attempts at design remind me of the days when automakers attempt to make station wagons less boring by attaching faux-wood paneling to their sides.
Here’s our latest plastic laptop! And hey, how about a fake leopard-skin applique to go with it?
Posted by Michael Long at April 29th, 2009 at 12:25 pmLets not forget that Dell would have to find a carrier like Sprint, Verizon, etc. to partner with to carry the phone. This is not a company well-known for playing nice with others.
Posted by Chris Trygstad at April 29th, 2009 at 12:47 pmI hope they do it. I need something new to mock, and the Zune is too old and everybody agrees with me. Of course, it couldn’t be any worse than the Garmin phone, could it?
Posted by David Owens at April 29th, 2009 at 2:10 pmBernstein Research analyst said
as a risk “2) the high margins earned on smartphones today collapse by the time Dell establishes itself in the market…”
Margins are coming down?
Thats not good for Apple.
Level set:
Posted by Jeff Stevens at April 29th, 2009 at 2:52 pmAllthingsAPPLE will never ever say something good about a competitor. It’s in the bylaws.
@Jeff Stevens
What you don’t think that low margins won’t affect Rim, Palm, HTC and all the other smartphone makers? Just bad for Apple?
To paraphrase, the analyst was probably referring to the subsidized margin, which will affect the carrier more so than the phone manufacturer.
Posted by Ben Ames at April 30th, 2009 at 8:28 am