UPDATE 2-Dell reorganizes again, forms communications unit

Fri Dec 4, 2009 7:46pm EST

Related Topics

* Forms unit for communications and mobile devices

* New unit led by Ron Garriques, former consumer head (Adds analyst comment, details on new unit, background, byline)

By Gabriel Madway

SAN FRANCISCO, Dec 4 (Reuters) - Dell Inc DELL.O is forming a new business unit focused on communications and mobile devices, the second reorganization for the personal computer maker in the past year.

The new communication solutions unit will be led by Ron Garriques, the former Motorola Inc MOT.N executive who was head of Dell consumer business. Former PC leader Dell, now No. 3 in global sales, had announced last month that it would start making cell phones.

The smartphone market is dominated by the likes of Apple Inc's (AAPL.O) iPhone and Research in Motion's RIM.TO BlackBerry, but Dell and other PC makers are trying to establish a toehold in the fast-growing sector.

"This is further confirmation that leading PC manufacturers cannot resist mobile space despite high barriers to entry and low probability of success," said CCS Insight analyst John Jackson.

Dell spokesman David Frink said the change was announced internally earlier on Friday.

Dell formally announced its entry into the mobile phone market last month. Its Mini 3 smartphone is being launched in China and Brazil this year.

Although he declined to provide details, Frink said the new unit will focus on developing hardware and software for communications devices of "various screen sizes," including mobile Internet devices.

He said Dell was looking to allow customers to "connect anytime, anywhere" through computing products and services.

Dell hired Garriques away from Motorola in 2007 to lead its new consumer business, following the return of Michael Dell to the CEO post. Garriques' arrival touched off a wave of speculation about Dell's designs on the mobile products market, where it has not historically had much success.

Last December, the company reorganized into business groups defined by market segments from one defined by region.

Dell said Friday it consumer business also will be combined with its small-and-medium business (SMB) unit and will be led by Steve Felice, streamlining operations and reducing costs.

When asked about possible job cuts related to the reorganization, Frink said there "was nothing to report now."

The company, which relies heavily on sales of PCs to businesses, has had a difficult year as enterprise spending has dried up amid the global economic downturn. But analysts say the company stands to benefit from a surge in business demand for IT hardware next year.

Dell has been losing market share in PCs and was recently supplanted by Acer Inc (2353.TW) for second place in global rankings.

The company has been focused on profitability as it aims diversify its revenue base into higher-margin offerings.

Shares of Round Rock, Texas-based Dell closed unchanged at $13.46 on Nasdaq and rose 3 cents in after-hours trading.

(Reporting by Gabriel Madway; Additional reporting by Tarmo Virki in Helsinki; Editing by Carol Bishopric and Richard Chang) ((gabriel.madway@thomsonreuters.com; +1 415 677 2536))

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