Analyst: Dell smartphone was DOA

Dell's prototype smartphones were panned by wireless carriers and the company is going back to the drawing board to design a cell phone with more differentiation, according to an analyst.

Shaw Wu, an analyst at Kaufman Bros., said in a recent research note that Dell had shopped prototypes of devices running on Google's Android platform as well as on Windows Mobile to various carriers. But the carriers found the Dell offerings to be dull and apparently thought Dell's prototypes were not differentiated enough compared to products from HTC, LG, Motorola, Nokia and Samsung.

"From our conversation with supply chain and industry sources, it appears that it ultimately came down to lack of carrier interest and small subsidies, making it difficult for Dell to make a profit," Wu wrote. "In our view, the last thing Dell needs is to enter another money losing business as it seeks to preserve its operating margins of 5 percent to 6 percent."  

Wu noted that PC makers such as Dell may have advantages in the smartphone arena because smartphones are closer to PCs in terms of functionality than traditional cell phones. Indeed, many traditional PC companies, such as Acer and Asustek, have pushed into the smartphone market. Wu said Dell has not given up on its efforts and is going to try to rework its plans. 

For more:
- see this article [1]
- see this Wired article [2]

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