December 10, 2007 4:00 AM PST

Why Dell needs a handheld

Why Dell needs a handheld
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Dell may no longer be the darling of the PC industry, but a tiny gadget could do wonders to help it win back the hearts of mainstream consumers.

It's been a rollercoaster of a year for the company, and now could be a good time for Dell to take another risk: offering a new handheld device. It could be a smartphone, or a portable music/video player that connects to the Web and a PC for downloading and transferring content.

It's a perfect opportunity for Dell to show it's not just a PC manufacturer, but that it's a consumer products company. Its competitors have made the transition--Apple dropped "Computer" from its name this year even before the iPhone madness ensued. And Hewlett-Packard has been steadily moving into the home with entertainment and communication-oriented devices.

There have been rumors that Dell would be launching a smartphone since Ron Garriques came onboard in February. Then a Forbes article last week got the rumor mill churning again. Perhaps more indicative that something is in the works, Dell purchased Zing Systems this summer, and trademarked and registered a similarly named online content portal.

So is there a handheld device coming in the future? Dell's not saying, though the biggest stage for a potential launch, the International Consumer Electronics Show, is in early January.

"(Dell needs) some cutting-edge, convergence, HD content-type products to become a relevant piece of the market, (to be more) than just a PC company."
--Stephen Baker, vice president of industry analysis, NPD Group

Dell is definitely setting itself up to do something new. The company has brought in a host of new executives, including Garriques, who found success reviving Motorola's handset business with its line of Razr phones. His hiring is part of the turnaround mode that Dell has been in for almost a year now, and the company has methodically begun to check things off the list: trimming its workforce, reassessing IT infrastructure and its ill-behaved accounting department, and refocusing on industrial design and consumer appeal. Not to mention switching up its sales strategy to include a real retail presence for the first time.

But there's more to do. Dell is bleeding market share to HP in its core PC business and is embarrassingly close to being overtaken by Acer for second place in the notebook market. Dell needs something, and a handheld device could be a buzz-worthy product that brings it a new level of consumer attention. (And if it wanted to add in some fun, multi-touch functionality, that would be good, too. We know it has the technology, as it demonstrated at Oracle Open World last month.)

In the meantime, here are some reasons why Dell needs a handheld device:

• It has nothing. Dell axed its Axim device earlier this year when the bottom fell out of the PDA market. While that was arguably wise, there was no follow-through with any sort of next-generation handheld, like a phone/Internet device--or anything at all. Even leaving out the iPhone from Apple, chief rival HP has the iPaq, which isn't the prettiest thing you've ever seen, but it is packed with current technology and has been well-received.

So Dell has been MIA. In fairness, there have been more pressing issues. But Dell's reputation and balance sheet could greatly benefit from an iPhone-like, or even an iPaq-like, device.

• Handheld devices are popular, but demand for smartphones in particular has skyrocketed in the last year. Smartphones now account for 12 percent of the U.S. cell phone market, according to data collected by NPD Group. Smartphones' share of the handset market doubled from 4 percent to 8 percent in one quarter at the end of last year. As consumers continue to expect all their gadgets to be mobile, Dell could get in on that demand. Plus, it has demonstrated brand awareness and a $4.5 billion marketing budget to play with for the next three years.

• A consumer-focused smartphone or handheld device that is done well would show a commitment to innovation. The company's historical business, PCs, isn't exactly a hotbed of creativity. The industry is more mature and is now mainly about cranking out products quicker and cheaper than the other guys. But smartphones, where there are many new technological possibilities, are essentially becoming small PCs. While leading-edge technical innovations have not been the hallmarks of Dell or the personal computing industry in recent years, it doesn't have to be that way, as Apple has demonstrated.

Making a consumer gadget is necessary for Dell if it wants to be a consumer products company and compete with Apple and HP. "They can't be just a PC company," said Stephen Baker, vice president of industry analysis at NPD Group. And a printer and ink business doesn't really count. "They need some cutting-edge, convergence, HD content-type products to become a relevant piece of the market, (to be more) than just a PC company."

The company's obviously not opposed to trying new form factors or device categories. Soon Dell will be selling its first tablet PC, and it recently reworked its humdrum desktop offerings with the very consumer-friendly XPS One. It also has experience trying new consumer electronics products: TVs, portable music players, and a home music player.

CONTINUED: Good time to start fresh…
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42 comments

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Am I missing something?
Gillette makes razors, pens, and shaving creme. Bic makes razors and pens. I've *NEVER* heard anyone say, "Oh, I would *never* buy a Bic pen or a Bic razor, because they don't have shaving cream."

Nor have I heard people complain that, unlike Honda and Suzuki, Toyota doesn't make motorcycles.

Companies don't exist to "compete" with other companies. They exist to generate profits. He who lives by faddish products dies by faddish products, as Apple's up-and-down corporate history has proven. If I were a Dell stockholder, I'd rather see them make vacuum cleaners and popcorn poppers than cellphones.
Posted by Paul Ding (9 comments )
Reply Link Flag
Yes maybe you are...
eg Honda - a motor company. Goes out of its way to find things to put its motors in - cars, pumps, lawnmowers, weed whackers, boats, jets....

Dell - a technology/solutions company. Should go out of its way to show mastery of technology and solutions. A powerful handheld that does everything well would go far to get the Dell name out there again.

HP is bucking the PDA trend (DOWN) and taking a risk on new Ipaqs.
Posted by DoughboyNJ (77 comments )
Link Flag
Yeah, You are Missing Something
But it's all in the angle of view.

Why doesn't Gilette make shaving cream? Why don't Ford and Chevy make Motorcyles and Scooters? They would have one division that's doing well if they did.

There is no rule that says they have to, and no rule that says they don't.

Dell had a great PDA. Alas Dell didn't take the next step. PDA's are not dead. They are stronger than ever, just not as stand alone devices.

Should Dell have a smart phone? Only if they want to be in the computing business since real growth in the computer market is with all the new multi function gizmo's.

Dell could make an Archos 605 killer, they could make an iPod killer (they may not kill either one of them off, but the features would gain market share).

Dell does something that Acer and HP have not been able to do. Make things that just work and actually fix them if they don't. I'd buy Dell for that reason alone.
Posted by Renegade Knight (13748 comments )
Link Flag
Dell needs to include it all
Dell needs to have a new handheld that is a phone, has at least 128 megs of memory, micro SD slot, GPS with TomTom navigator software
Posted by robert1275 (46 comments )
Reply Link Flag
along with that
and make sure it's fast. I bought my smartphone from T Mobile and
it just seems slow. If they do do this, the phone needs to be able to
stand up to time
Posted by msimoens (23 comments )
Link Flag
Dell had it, and lost it
A better move for Dell, a bolder move for Dell, would be to buy HTC outright. Consider that the entire Axim series was built for Dell, and HTC makes some of the most advancedf handsets/ handhelds in the world, and you can see how this might vault Dell right to the top of an exclusive list of equipment manufacturers.

-Remo
Posted by Remo_Williams (488 comments )
Reply Link Flag
Windows based = loser
If Dell comes out with something, it will most likely be windows-
based and therefore something most other companies are already
putting out in the market - another commodity.
Again, it will be Dell trying to put on a different hardware face,
but the insides will be the same ol' crap.
Look at HTC, how painfully slow and unimaginative that company
is by using windows.
Posted by MaLvaDo39 (365 comments )
Reply Link Flag
Hit the nail on the head
This comment is right on the money. Software is ultimately what
determines user experience. What is a pure hardware company
going to do to differentiate itself? Add another button?

It's time we saw some real innovation in computing. If I were a
hardware manufacturer I'd be taking a serious look at Google's
Android platform right now. As an open source platform it will
give device makers a chance to truly innovate the user
experience. How HW makers rise to this challenge could make
or break them in the next few years.
Posted by shralpmeister (11 comments )
Link Flag
It's the implementation, not particular OS
I got an old Compaq IPAQ that runs Windows CE and the product is a thing of beauty (although bulky by today's standards) that runs every application you need, plays mp3 music and mpeg video, great handwriting recognition, syncs wonderfully with Outlook, and shows everything on a gorgeous color screen. You should try it before blasting a particular OS.
Posted by oxtail01 (308 comments )
Link Flag
CNET Needs Bottled Water
I have trouble taking this story seriously knowing that CNET doesn't even have its own brand of bottled water.

If CNET wants to increase its credibility and readership then it should consider adding bottled water to its lineup.
Posted by Fat Drunk and Stupid (32 comments )
Reply Link Flag
Son...
Fat drunk and stupid is no way to go through life...
Posted by Lite Rocker (42 comments )
Link Flag
I don't know about this.
They've tried other markets but their products aren't competative. I have an Axim and it's alright but not great. It was low-cost compared to what else was on the market at the time but isn't really that good. Also had a Dell DJ that I almost never used. It has 20x the storage of my iPod shuffle but it isn't a good product. Poor workmanship and horrible software. Even if they came out with a good product, who would buy it? Most people I know who own Dell products will never buy from them again because of hardware failures and poor tech support.
Posted by umcrouc0 (53 comments )
Reply Link Flag
2 things
first, this is just stupid. see other comments by many...

second, even if we accepted that it was a good idea, before Dell
could actually make something, they would need an R&D deot.

face it, Dell is nothing more than a cheap little crap company
that takes other peoples stuff and drops it in a box to ship to
ship to you. and people are finally catching on. Dell will be
dead in 4-5 years, and their cheap ugly crap boxes and affair
with MS will die with them.

...don't let the door hit you in the @$$ on the way out. good riddance to bad rubbish.
Posted by shane--2008 (343 comments )
Reply Link Flag
Seize the Verizon opportunity
Agreed: Dell could make some real inroads here. And first up, it should seize the opportunity from Verizon to open its network in 2008 by making a device that could be used on Verizon Wireless networks. Just got the new HTC XV6800 from Verizon, waiting forever for it to come out. They sorely needed a Windows Mobile 6 device and FINALLY got it. Dell could have had it quicker and less expensive. (The earlier idea about buying HTC: not bad, either!)
Posted by technopro nonprofit (1 comment )
Reply Link Flag
Dell should just make one simple smart move for a change
just buy creative for chump change and push it through their distribution. Products are pretty darned good but lame marketing and no presence in key markets - all things Dell can bring to the table. They could even leave the team in Singapore to handle the handheld devices.
Posted by bytemeal (2 comments )
Reply Link Flag
Not Dell's Business Model
Dell didn't get big through design and innovation. They got big by
cutting out the retailer, and the retailer's markup. That is (or rather
is still mostly) Dell's business model.

They have no significant R&D experience. And what they do have is
more geared toward packaging and production. A shift in their
hiring practices might be a good sign that something interesting is
coming, as opposed to wishing it were so.
Posted by Mystigo (183 comments )
Reply Link Flag
HTC should be contracted to make Dell handhelds
HTC makes phones for many different phone providers. Their devices are some of the fastest in the market for Windows Mobile 6 (WM6). Especially the HTC WM6 devices released over the past few months. Dell should simply contract through them for branding purposes.
Posted by robert1275 (46 comments )
Reply Link Flag
It's not in Dell's DNA
Dell has never been much more than a low cost assembler. Dell is a logistical specialist, not a R&D powerhouse. Even now, Dell laptops and other portable hardware are designed and built by their Asian partners (Asus, etc). Dell was founded on the principle of getting commodity components and assembling and delivering them at the lowest cost. They never started by designing anything. Their logic boards were designed by Intel, back when Compaq was using gold connectors and innovative memory bus designs on their custom logicboards.

Dell simply isn't capable of being an Apple, or a Sony or even HP/Compaq in it's heyday. Some people were born to be architects, and some people were born to be construction workers. Dell's a construction worker.
Posted by mike.gw (942 comments )
Reply Link Flag
Dell is a construction company
Mike - I couldn't of said it better. Dell is a construction company.

One point that seems to be missed - Apple doesn't do just hardware, it's the software that makes their products innovative.
Dell could have HTC build them a phone running windows mobile, but what would be the reason for buying it? Remember Dell did try to compete with the iPod.
Posted by ralph spoilsport (17 comments )
Link Flag
...for a construction worker...
they seem to be very popular. Every business I've visited has dell machines, every home I've visited also has a dell machine and I've seen plent of axim pda's being actively used, so I don't consider the pda market dead and burried.

If they want to stay a construction worker, let them. Have someone else build a Dell Smart Phone and Dell will just make it affordable.
Posted by thedreaming (573 comments )
Link Flag
Keep with the Dell model, with a twist...
If Dell could contract a cell phone to be designed that would run any cell phone OS, and be open to all networks, and be unlocked, it could then keep it's business model, and package a "have it your way" cell phone that ran Windows, RIM, Symbian... add a camera... add a better camera... add GPS... Add a memory card... add a micro-disk... etc. Base unit unlocked and very basic and cheap. Each upgrade adds to the cost. This is how Dell got popular, and it could work in cell phones too, if the buyer could get an unlocked, unbranded cell phone made to order.
Posted by bob1960 (55 comments )
Reply Link Flag
This has been a topic....
...on several boards. Not Dell per se, but the need for more handheld choices in the market. With what many feel is the imminent demise of Palm, the market has a vacancy for a real performance handheld.

I agree that the best idea is to build it/them to handle multiple or at least a choice of OSs. That would be great, but it will have to hit good, reasonable price points or it will fail miserably. Even Palm was able to do $99, $199 and $299. Dell should be able to macth them and even enter a high end piece. Otherwise, it's an entire market segment that they are going to lose by default.
Posted by Voodoo101 (25 comments )
Reply Link Flag
Dell is the antithesis of innovation and risk taking
their only contribution to the tech world was their distribution model. They were an efficient buy low, sell high company, who really places no value on designing new things, they prefer to wait for a market to become large, and then use their size and brand name to sell into it. They are incapable of leading, and since their distribution method no longer provides any advantage, their days are numbered, just as the mini-computer vendors disappeared with the rise of the PC.

Every successful company needs good sales people, and Dell definitely had that, but in world where technology changes rapidly, if you don't have anyone who understands technology, how to use it, and its' implications, you can't compete in the long run.
Posted by kgsbca (185 comments )
Reply Link Flag
Smartphone = BS
I guess if I was an important manager at some corp a smartphone would be an important tool. Something like a Nokia E90 or a Blackberry.
But for the consumer the smartphone is a waste of time. A decent mid range phone like a Nokia 6300 is about as much as the masses need. I mean 99% of what matters in a mobile is making calls and sending texts.
I really resent the concept of making the phone a pocket computer. It doesn't matter if the OS is WM6, Linux, OSX or Symbian. All this stuff is not going to make voice and texting any better.
You know if look at what a smartphone costs SIM free, you are looking at £150 for a HP ipaq 514 all the way up to £500 for a Nokia N95. I mean I could buy a nice little laptop for that amount of money.
I think that Technology has just become like the Fashion industry rather than been an engineering trade. I have a nice Hi-Fi with a NAD Amplifier, NAD CD Player, Monitor Audio speakers etc. But most people these days have a lame micro Hi-Fi or an even more lame ipod with ipod speakers. Thats because most people out there believe what the marketeers and advertisers tell them.
Dell should not even think of making a handheld. They should invest more in R&D, improve their customer service and bring their consumer products up to the standard of the business products. They should look at computer services for growth. They are not a consumer orientated company. If they made a smartphone if would make them a laughing stock because it have nothing that isn't out there already. I mean if companies with the pedigree of Siemens, Ericsson, Sony, Panasonic and now Motorola fail in this market then how can Dell succeed. There is only one really successful handset maker: Nokia. Samsung is also a success and LG is up and coming, but the rest are just a non entity.
Posted by Jamie_Foster (77 comments )
Reply Link Flag
Luddite
I will agree that business is a prime Smartphone market, but as a Consumer, I like the fact that I can carry one device that provides phone, music, email, IM and GPS elminating the need to carry multiple devices with me. I carry a HTC Wizard and have been extremely happy with it's multi-capabilities. Don't presume to know what I need in a phone based upon your own expectations.

As to your music statement, I will partially agree that the consumer has "dumbed down" in terms of quality with MP3 and AAC, but put the use in context. For portable music in less than ideal listening environments (Planes, Trains, Automobiles, City Streets), who cares about THD or S/N Ratio. Are you going to strap your fancy Hi-Fi (does anyone still use this term?) on your back along with a stack of CD's?
Posted by MadLyb (1161 comments )
Link Flag
The Apple Way
The story is based on the premise that to turn Dell into an Apple
would be easy. That is far from the truth. According to "The
Apple Way" by Cruikshank <a class="jive-link-external" href="http://www.shorelibraries.govt.nz/TopPicks/NewReleases/book" target="_newWindow">http://www.shorelibraries.govt.nz/TopPicks/NewReleases/book</a>
-review.php?dbcn=b21511159
Apple spends 8% of its revenue on R&#38;D, while Dell only 1.5% (if
my memory is correct). Well that's easy ? just ramp Dell's
expenditure up to 8%. Doesn't work that way either. Apple has
(and has had) innovative people from Woz, to Alan Kay, to
Jonathan Ive and so many more. Innovation is the core of Apple's
culture, this just isn't in Dell's bones. As for those who say Apple
just follows fads ? well the Apple Way will disprove that ? how
can you follow a fad if you set it.

Hewlett Packard is more innovative (but even they got stack
machines from Bob Barton at Burroughs <a class="jive-link-external" href="http://en.wikipedia.org/wiki/Robert_%28Bob%29_Barton" target="_newWindow">http://en.wikipedia.org/wiki/Robert_%28Bob%29_Barton</a>)

Dell just happened to choose the path of least resistance to get
its market share. Dell is just lazy.
Posted by Ian Joyner (66 comments )
Reply Link Flag
Dell is ALWAYS behind the rest of the pack
And always will be. If Intel (or AMD) doesn't wrap it up in a tidy OEM package for them to deliver they'd be out of business.
I often wonder if they have ANY project researchers there, if they do then they are either inept or hindered by the layers of bureaucracy that is Dell.
Even if they came out with a really nice product why would anybody in their right mind buy it only to have them decide it's not their niche and get out of that market like they have done so many times before?
Posted by fred dunn (793 comments )
Reply Link Flag
Meanwhile, in the server room...
The most common x86-type server brands in the server room are Dell (PowerEdge, usually) and HP (ProLiant), IBM and Sun.

Out of those, HP is too proprietary (just try to use non-HP RAM in an HP server... I dare you). Meanwhile, IBM and Sun are too expensive. This leaves Dell as the most common server type out there for all business sizes, because quite simply, it's the cheap little server line that could.

/P

/P
Posted by Penguinisto (5042 comments )
Link Flag
Dell Should Acquire Motorola
MOT is relatively cheap right now, they seem to be positioning themselves for an eventual sale, and Garriques certainly knows where the value is in MOT. With phones becoming the new personal computer and cell networks starting to open up, the time is right for Dell to make this move.
Posted by pbookman (42 comments )
Reply Link Flag
Not Dell, but maybe Nokia....
The way the FCC and the phone carriers seem to make life so much more difficult than it should be in the US, it would make more sense for some company like Nokia to purchase Motorola and let them deal with that market while they have fun expanding in the European and Asian markets.
Posted by bob1960 (55 comments )
Link Flag
Handheld?
Sure Dell can follow the same business models as Apple.
Even copy their products down to the specs.

But nobody will ever love Dell like they do Apple or for that
matter have a cult. Can you imagine that though a Dell cult?
Ridiculous.

But the only way they'd probably be able to do it, is they'd have
to start over from scratch, right down to the meglomaniacal
brand name which has already been tainted with the words
cheap, affordable, big, ugly and Walmart.

Plus, they don't even do their own software which they rely on
Microsoft for that, and we all know how Microsoft "innovates",
years behind the competition.

But what I'd probably do, if I were Michael Dell, is I'd probably
shut the whole operation down and give all the money back to
the shareholders. That would be the prudent thing to do while
its still early.
Posted by ServedUp (413 comments )
Reply Link Flag
Dell is a manufacturing company not a design company
Dell has no creativity, so I don't see them having any success coming up with products anyone would want.
Posted by detrick12 (1 comment )
Reply Link Flag
depends on niche or mass-market strategy
The latest research suggests that there is a sizeable opportunity for laptops with built-in mobile broadband. This is where volume growth will be concentrated in years to come.

See <a class="jive-link-external" href="http://www.gsmworld.com/news/press_2007/press07_59.shtml" target="_newWindow">http://www.gsmworld.com/news/press_2007/press07_59.shtml</a>

It appears that mass-market consumers are more interested in PCs than in special purpose mobile internet devices. They also want simple and ready to use notebooks (i.e. built in mobile broadband).
Posted by mobilebroadbandPC (1 comment )
Reply Link Flag
Did 'did' have handhelds
Axiom and the DJ....a PDA and a MP3 player.

Personally, I think they need to retool and re-release the Axiom to be the "best" PDA out there, not a competitor.

Apple, albeit lacking in the Quality Control department, at least tries to make "must have" products. Dell specializes in making "competitive" products on price, not design.

Sooner or later, they'll pick up on it. I don't have anything against Dell, in fact, I'm hoping they make something that scares the hell out of HP/Sony/Apple/etc., making them drop prices and design better products. Competition is a good thing when the motivations are in the right place.
Posted by close5828 (230 comments )
Reply Link Flag
 

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