Dell to sell smartphone, starting in China, Brazil

SAN FRANCISCO Fri Nov 13, 2009 4:20pm EST

Customers examine Dell laptop models at a Dell outlet in Hong Kong October October 21, 2009. REUTERS/Bobby Yip

Customers examine Dell laptop models at a Dell outlet in Hong Kong October October 21, 2009.

Credit: Reuters/Bobby Yip

SAN FRANCISCO (Reuters) - Dell Inc is entering the smartphone market, with its first device to launch in China in late November, followed by Brazil toward the end of the year.

But the world's No. 3 personal computer maker gave scant details on the long-rumored new phone, which is called Mini 3 and uses Google Inc's Android software. The company also declined on Friday to give a timeline for launching smartphones in additional markets.

A source had told Reuters in October that Dell plans to sell a phone in the United States on AT&T Inc's network.

Dell is the latest tech name to bet on a smartphone market dominated by Apple Inc's iPhone and Research in Motion's BlackBerry.

Dell said the Mini 3 will be targeted at the consumer market rather than enterprises. China Mobile, the world's largest mobile carrier by subscribers, and America Movil's Claro will carry the phone.

Dell's phone would also boost Google's fledgling mobile platform, which vies with Apple's and Microsoft's platforms.

FOREIGN LAUNCH

In a blog post, Dell said it was launching in China and Brazil because of their large subscriber bases and because of existing telecom partnerships in those countries.

Avi Cohen, managing partner of Avian Securities, said Dell likely opted for a launch in two foreign markets following a lukewarm response from U.S. carriers. He said the challenge for the company will be to differentiate itself.

"I think it's going to be difficult for anybody without a big wealthy software and app base of support to get customers interested, at least in the U.S. and Europe," Cohen said.

In addition to running on Android software, the Mini 3 is based on the OPhone platform, a lower-cost technology developed by chipmaker Marvell Technology Group Ltd.

Given the headstart enjoyed by its rivals, analysts said, Dell faces serious roadblocks to success.

Hapoalim Securities USA analyst Kevin Hunt said it was tough to see how Dell could have any advantage over established phone makers using Android, including HTC Corp, Motorola Inc and Samsung Electronics.

"They could have modest success. I wouldn't see it being a big driver," Hunt said, also noting that Dell is unlikely to make much higher margins in phones than it does in computers.

It was Dell's first official announcement about the phone, although details have been trickling out for months.

GLOBAL STRATEGY

Dell noted it has existing agreements with other telecom providers, including AT&T and Verizon in the United States and Vodafone in Europe, which will create more opportunities for the company.

"This is a global strategy," said Dell spokesman Matt Parretta, who declined to say more.

Additional details on Mini 3 models will be announced when the devices are available in stores.

Worldwide factory shipments of smartphones are expected to rise to 235.6 million units in 2010, up 27.9 percent from 184.2 million in 2009, according to iSuppli.

Shares of Round Rock, Texas-based Dell closed 5 cents lower at $15.40 on the Nasdaq. (Reporting by Gabriel Madway in San Francisco and Ritsuko Ando, Franklin Paul and Sinead Carew in New York; Editing by Derek Caney, Tiffany Wu, Gary Hill)

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