PC maker Dell has been rumored to be working on a smartphone for months. Now a new report suggests the company may be planning an initial roll out in China, instead of North America, by the end of the year.
Dell is working with a Chinese manufacturing and an operating system design company to create its new smartphone, according to a Reuters report.
Dell’s move to get a piece of the fast growing smartphone market is no surprise but analysts are cautious about the company’s plans.
"The risk with Dell’s move is potential lack of differentiation versus other competitors including HTC, Lenovo, Acer, Asustek etc," says Shaw Wu, an analyst with Kaufman Bros. in his latest research note. "In addition, our industry and supply chain sources indicate that carrier subsidies in China are much lower, if any at all, making profitability more difficult."
Suggestions that Dell may offer up a smartphone first flared up at the beginning of the year when some analysts said the company could make an announcement at the 3GSM or the Mobile World Congress event in Barcelona in mid-February.
Despite a weak economy, global smartphone shipments could go up by as much as 11 percent to about 192 million units this year, says research firm iSuppli. And with the success that Apple has found in the business, more PC makers are looking to find a foothold in the smartphone business. Asus, for instance, has partnered with GPS handset maker Garmin to create new handsets.
Meanwhile, there have been few signs of a Dell smartphone. A prototype of the device has never been seen publicly. Some reports have suggested that the company has had trouble convincing telecom carriers in North America to pick up its phone, potentially delaying its plans.
Through it all, Dell has chosen to stay mum. The company is working with handset manufacturer Chi Mei Communications and a Chinese software
company Red Office to design the smartphone OS, says Reuters.
It’s a move that could backfire, warns Ashok Kumar, an analyst with Collins Stewart. "Dell’s product needed to be a ‘wow them’ smart phone in order to differentiate itself from an already crowded market," wrote Kumar in a report. "The early verdict appears to indicate that Dell’s handset is more like a me-too product with a cost structure that offers little advantage over established players like Apple and Nokia."
Dell may be determined to launch a smartphone but clearly the company’s choices are increasingly limited. If Dell can’t get its device out soon, this could end up as a stillborn project.
See also:
Dell Plans a Smartphone of its Own
Photo: Sony Ericsson P1i (r3k4hsttUb/Flickr)
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