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Can Dell Figure Out How To Make A Cell Phone?

So, is Dell going to make a cell phone or not? In a recent interview with CRN, Michael Dell spoke about the possibility of his company developing a mobile device, but he didn't seem to know what kind of mobile gadget to make.

In fact, Dell seemed pretty uncertain about how to enter the mobile phone space at all:

When you look at the space that exists between, let's say, a cell phone and a PC, there are all sorts of products that are put out there, proposed, experimented. Some of them have gone on to relatively nice success. But many haven't. It's sort of an area of great experimentation.

Nobody knows exactly what the right device is. It's not a two-inch screen, it's not a 15-inch screen. There are all sorts of tests in there. There are some reasonably successful products. It's an area we're paying increasing attention to. I wouldn't look for anything in the short term for us there, but we are certainly looking at it, as there is dramatic growth in next-generation wireless broadband networks. People want to take the Internet with them. It's something that's very interesting to us.

C. Enrique Ortiz argues that Dell has no idea how to develop a cell phone:

But while Dell doesn't know exactly what the right mobile device is, and believe me it is not a 15 inch screen handset, other companies do know, and are attempting to define the industry. That is the reason Dell will never make it in this space. First, unfortunately for Dell, the company doesn't get what a mobile handset should be. This is compounded by the fact that the company will continue its wait-and-see approach to things, being a follower, instead of "leading and innovating". Let's face it, Dell is not an innovation company, Dell doesn't invest on true R&D; Dell is a logistic/supply-chain computer company. And to survive in this space, innovation, and owning the innovation is of great importance. Lastly, to become a successful mobile handset vendor, it requires certain kind of personality/culture... Dell company doesn't have the culture and understanding of the mobile/wireless space to make it happen any time soon.

I disagree with Ortiz on a few key points. While the wireless space may be about innovation, it's also about scale and the supply chain. Don't believe me? Remind me who the number one handset maker in the world is? It's Nokia. And while Nokia spends a lot on R&D, it's also a supply chain powerhouse. In fact, one could argue that it's Nokia's ability to dominate the chain and keep costs low that keeps it at the top of the market. Sure, other handset makers innovate, but they can't play the cheap cell phone game the way Nokia does, and that's why they're not number one. I could see Dell's expertise in this area giving it potential, especially in the smartphone space.

I also think Dell could lean how to be a wireless company and that it could conceivably acquire the right culture -- or Palm -- to make it in the wireless business.

What do you think? Can Dell make a successful mobile phone?

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