Can A Dell Smartphone Succeed?

Apparently Dell is jumping on the smartphone bandwagon. News hit yesterday that they're developing their own smartphone. I think this is an incredibly odd move destined for failure.

Why would Dell want to get involved in smartphones? The Financial Times explains:

"With the iPhone, Apple brought a lot of new people to the brand, and captured some of the highest margins in the industry," said Rob Enderle, a US tech industry analyst. With sales of PCs and traditional mobile handsets falling in the first half of this year, that has made smartphones one of the few bright spots.

Dell too wants to capitalize where it can, and right now electronics companies aren't profiting much off computers -- they're making more on smartphones. Here's some detail on Dell's smartphone via PC World. Initially it's targeting China.

The biggest downside to the Mini3i is that it is a 2G phone with no 3G or Wi-Fi capability. Reported specs on the Mini3i include a 3.5-inch touchscreen with 360 by 640 resolution, mini USB port, SD card slot (no word on maximum storage size), and a 3.2-megapixel camera. Netease also says the Mini3i has no physical keyboard, and runs an Android-based operating system designed by China Mobile called Open Mobile System (OMS). The translation of Netease's page is a little unclear, but it appears the Mini3i may also come with built-in GPS.

Can Dell's smartphone compete with the iPhone in the already crowded U.S. market? I highly doubt it. Let's consider its track record in the mp3 player space competing against Apple's iPod. It attempted to capitalize on that craze too, but never held a candle to Apple. In fact, it finally conceded defeat around late 2005 or early 2006 by pulling out of the mp3 market entirely, and nobody noticed.

I'm not sure what makes Dell believe they can create a smartphone that people will want to buy. Its strong suit has never been new technological innovation -- it's been creating relatively inexpensive computers that appeal to broad range of consumers. So unless it can figure out some way to make a smartphone comparable to the iPhone that is also incredibly cheap, then there's little hope of success. And since the iPhone's price is already down to $99, I'm not sure how much cheaper Dell can really go.

If I were Dell, I'd focus on a different, but also growing, market within consumer electronics: netbooks. It is currently a player in this market and calls its version "Minis." Given Dell's success in the personal computer space, by trying to enhance the technology in its netbooks and drive down their prices, it could easily become a leader in the market. Currently companies with much weaker brand recognition like Acer and Asus draw huge market share. The moment Dell offers better, cheaper netbooks than those companies, it will rule that market.