Differentiation in today's smartphone market matters. In that regard, Dell has learned a painful lesson: it ain't got not design chops. According to a Kaufman Bros. analyst, Dell shopped a smartphone to the wireless network operators and was told it was too "Dell-like." Dude, ouch.Kaufman Bros. analyst Shaw Wu issued a research note last week wherein he describes Dell's failed attempts at getting the wireless network operators to bite. It shopped not one, but two different smartphones -- one running Windows Mobile and the other running Google's Android platform. The carriers weren't interested. Wu said, "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."

In response, Dell is planning to make revisions to its smartphone. Wu notes that Dell is, "committed to the cell phone space as it appreciates the opportunity in smart phones and the longer-term cannibalization potential of PCs." So it is, "going back to the drawing board is designing a cell phone with more differentiation ... likely involve vertical integration of some sort including software and/or services."

Smartphones don't just have to perform well, they have to look good while they're doing it. Think design doesn't matter? Think again. Why do you suppose nearly every major phone manufacturer has aped the black and silver design of the iPhone? Because the iPhone looks good and consumers find it appealing.

One thing to point out, this report also pretty much confirms that a Dell smartphone is in the works, as the blogospherre has long assumed.