As reported by Reuters, Dell is apparently planning to enter the smart phone market as early as March this year. The company has been designing smart phone prototypes for over a year. Going further it was reported that if indeed Dell does launch a smart phone it would be based around Google’s Android operating system. TMV believe it important to analyse the rumour in terms of the impact it may have on an already crowded smart phone market and then the music business on a more general level.
The fact that Dell hired Ron Garrigues, former Executive Vice President of Cell Phones at the Motorola bemouth, obviously adds gas to the fire of rumours. It has been reported Ron has been tied to a non-compete agreement, which expires in February 2009.
As we all know the smart phone segment is an already crowded market with the likes of the G1 Nokia, Samsung, LG, RIM and the iPhone all vying for market share. Reinforcing this move on dells part is the fact that this particular segment is the fastest growing segment of phones on a global level – apparently set to rise by 8.9% in 2009.
Now lets drill down and analyse the potential impact of a new entrant like Dell into the smart phone market. Firstly until recently Dell was the number one PC manufacturer globally a mantle it lost to Hewlett Packard in 2006. Every since it lost that coveted mantle Dell has been determined to look at new innovative products to drive the company’s growth.
With an already crowded market will Dell be able to pick up significant market share within year one of launch? TMV believes it may be an uphill battle, especially with high levels of brand awareness in terms of the current incumbents. Reinforcing this is the fact that most incumbents like RIM, iPhone LG, Samsung and Nokia have released their first and /or second generation touch screens onto the global market. Many have managed to fix glitches in product design and are close to providing end products that meet user needs.
On the flip side Dell’s market leading retail proposition may enable it to offer devices at very competitive prices. What the rumours do not make clear is weather the mobile devices the company is seeking to bring to market are self-builds or just retagged tier one manufacturer phones. However, the rumours alluding to an Android phone could also point to a strategic tie up between Google and Dell.
Think about it the logic of such a partnership is made in heaven; low-cost market entry via Dells low overhead retail distribution proposition. Couple that with the largest search engine company and its unabashed desire to enter the mobile market in a big way and you have one hell of a market-smashing proposition. TMV believes if the rumours are true it will bring a whole new dynamic to the smart phone segment, including serious price competition.
In terms of the music business, a new product such as the one, rumoured to be launched by Dell will have a dynamic link to the music business via current android phones having a direct link to Amazon MP3. A music play (no pun intended) will no doubt have a critical part to galvanise the launch of such a device by Dell. TMV see a music proposition as a critical element to success for such a device. A dynamic music partnership like no other; Amazon MP3, Dell and Google (android). Keep your eyes and ears pealed and please do feel free to comment on any news you hear along the grapevine related to Dell launching a mobile handset.
On a note of caution TMV also believe it will be necessary that Dell release a phone without the setbacks its tier one competitors experienced when launching their first touch screen devices. If Dell is unable to achieve this then TMV believes the device released by Dell will be a flop.
Remember it is a Motorola executive heading Dells foray into mobile. Whilst Motorola do well in emerging markets TMV has been clear that in the user experience stakes Motorola has gone down hill since the launch of their first generation RAZR handsets – especially in western markets.
