Dell to Try Smartphone

Dell Inc. (DELL - Analyst Report) is planning to enter the smartphone business. The renowned personal computer (PC) manufacturer is planning to launch a smartphone, which will run on Google’s (GOOG - Analyst Report) Android mobile software and will be connected through telecom giant AT&T’s (T - Analyst Report) network. We believe that Dell is following the footprint of another computer maker, Apple Inc. (AAPL - Analyst Report), whose flagship smartphone iPhone generated substantial business for the company.

Currently the smartphone market is dominated by players like Apple, Research In Motion (RIMM - Analyst Report) and Nokia Corp. (NOK - Analyst Report). Both handset and PC-makers have understood the business potential of the smartphone and Dell is also in the process of grabbing its share. Rumor has it that Dell could launch the phone as soon as early 2010.

As per the projections of the technology research firm iSuppli, global shipments of smartphones are expected to rise 235.6 million units in 2010, an increase of 27.9% from 184.2 million units in 2009. On the other hand, opportunity and competition co-exist in the smartphone market, so Dell is expected to face competition from players like Samsung, Sony Ericsson (SNE - Snapshot Report)/(ERIC - Analyst Report) and Ace who are trying to grab majority share of this growing market.

This is a good strategy by PC makers to venture into the domain of mobile phone manufacturers, as mobile phone manufacturers like Nokia have entered the netbook market with Nokia Booklet 3G. Again, this strategy by Nokia to enter the netbook was a counter move, to combat the growing popularity of the iPhone introduced by Apple. So we believe competition will be cut-throat in the smartphone segment, since the business domain of PC manufactures and smartphone manufacturers will overlap more in the days to come.

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