Sunday, November 15, 2009

Dell to Launch Smartphone In China, and Later, Brazil

By JUSTIN SCHECK

Dell Inc. laid out plans to enter the smartphone market, starting in China and moving later into Brazil.

The move, which was expected, marks the computer maker's first foray into one of the hottest markets in the tech sector—high-end cellphones that have plenty of computing capability, allowing access to email and the Internet.

Dell said it plans to start selling a phone known as the Mini 3 in China this month. The phone will be sold by China Mobile Ltd., the world's biggest cellular carrier, and will run on Google Inc.'s Android operating system, as customized by China Mobile.

[                    DELLMINI                ]

Dell Mini 3 Smart Phone

The phone will debut in Brazil later this year, a Dell spokesman said, and will also be based on the Android system, which Google designed and offers free of charge to phone makers.

While the move isn't a surprise—Dell said in August that it was working on the project with China Mobile—it marks one of Dell's biggest departures from its core business in PCs and servers and a step in the company's turnaround effort. The company, based in Round Rock, Texas, was the No. 1 PC maker three years ago but now ranks third, after losing ground to competitors Hewlett-Packard Co. and Acer Inc. Dell's founder, Michael Dell, returned as chief executive in early 2007 and has launched such strategies as using retail stores rather than relying only on direct sales.

Mr. Dell sparked speculation that the company would move into the phone market by hiring Ron Garriques, a former executive at cellphone maker Motorola Inc., to head the new consumer division. Since then, the company has hired engineers with phone experience and worked with outside phone developers to build prototype devices, say people familiar with the matter. Dell has also established relationships with cellular carriers by selling netbooks—low-end portable PCs—through them.

"Our entry into the smartphone category is a logical extension of Dell's consumer product evolution over the past two years," Mr. Garriques said, in prepared remarks.

Rob Cihra, an analyst with Caris & Co., said smartphones are an attractive market for PC makers because sales are continuing to grow, despite the recession. Global smartphone shipments in the third quarter grew 4.2% from the same period in 2008, according to market research firm IDC. The segment is dominated by Nokia Corp., which has a market share of almost 38%, followed by BlackBerry maker Research in Motion Ltd. at 19% and Apple Inc., which makes the popular iPhone, at about 17%.

Mr. Cihra said he is skeptical that Dell can stand out in such a crowded market. One reason is the use of Android, whereas Apple and RIM have proprietary software that allows them to charge higher prices and offer unique features. By relying on Android, he said, Dell is "almost ensuring that it's going to be an also-ran product."

News: online.wsj.com

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