I remember back when Microsoft first came out with the Pocket PC operating system. It was at a time that Dell had its wagons exclusively hitched to the Wintel horse. For Dell's supply chain model to really work well, the markets that Dell served had to reach a certain critical mass. That's because Dell's supply chain model was really an arbitrage model and Dell was more a bank than it was a PC manufacturer. By the time customers received the PCs that they ordered direct from Dell, Dell usually had several days to go before it had to pay its suppliers for the parts that went into those PCs. On scale, the model worked brilliantly.
Even though Pocket PC was another Wintel product for Dell to capitalize on, Dell originally chose to sit the PDA market out because it didn't have the critical mass needed to churn its supply chain model. Eventually, Dell shipped the Axim -- an also-ran PDA that never wowed anyone (I still have one laying around somewhere).
Unfortunately, that attitude -- where a company waits for critical mass before it jumps in -- is a laggard's way of thinking. It leaves almost no room for innovation to jump on a hot market early.
When AT&T announced last week that it was all-in on the Android mobile operating system and that Dell would be one of its smartphone providers, I was reminded of how long it took for Dell to enter the PDA market.
Dell doesn't agree, but I feel as though once again, it's an inexplicably late entrance into a critically important market. Is my perception different from reality?
It's difficult to succeed in the domestic smartphone market without scoring a partnership with a major carrier like AT&T, Verizon Wireless, T-Mobile, or Sprint. Until last week when AT&T went public with its plans to support Android, Dell didn't have one of those. But should Dell be judged on its timing into the domestic smartphone market alone, or should its work on the global stage be taken into consideration?
Last spring, reports surfaced that Dell's first foray into smartphones would happen in China and would be based on a derivative of Android. By November, the news was official, with Brazil joining China on the list of "launch countries."
Brazil? China? Absent of a US entry, should either country be a feather in Dell's cap? Dell spokesperson Matthew Parretta thinks so. Parretta pointed out that Dell's partner in China -- China Mobile -- has more subscribers (502 million) than the US has population (304 million as of July 2008).
Parretta also pointed out that it didn't launch its device in China based on just plain vanilla Android. Dell was one of the only two partners (the other was Lenovo) that China Mobile hand-picked for the launch of its Open Mobile Phone "OPhone" platform. According to Parretta, Dell worked very closely with China Mobile to co-develop the derivative of Android found on the Dell Mini 3i (the phone sold in China).
But, domestically speaking, at least one report I found on the Web (that I haven't verified) claims that Dell brought prototypes based on Windows Mobile (surprise!) and Android to the major carriers and was sent home packing due to lack of differentiation. If that's true, then AT&T reconsidered or Dell went back to AT&T with something more compelling.
It's hard to know how long Dell and AT&T (or any other carrier for that matter) have been talking smartphones. Parretta wouldn't say, and, although rumors get out, phone manufacturers usually have to keep their lips sealed until the carrier is ready to go public with the news. This was particularly true in AT&T's case as AT&T didn't officially announce its support for Android until last week.
Even so, it's not like smartphones or even Android for that matter came out last year. Dell's failure to act in a timely fashion on the importance of smartphones to the markets it serves is why Dell finds itself in the position it's in now: with one device coming to the US market long after the bloom is off the rose.
A long time ago, before he was CEO of Palm, Ed Colligan taught me about the importance of the relationships with the carriers and how critical that was to the success of any company looking to bring phones or smartphones to the market. The telecom business is in many ways an old crusty business where relationships and history matter. Back when Palm's Treo was taking off in the market or maybe even before that when Research in Motion was starting to get traction with the enterprise market is when Dell should have noticed, acted, and started down the path of building those relationships with the carriers. It even could have jumped on Android when Google first started talking about it more than two years ago.
Or, it could have tried something bolder by launching an unlocked phone into the domestic market. Dell could have done a lot things (acquire Palm? RIM?). But it didn't.
That's not Dell. At least not the Michael Dell who at one point had a fire in his belly and was willing to take big risks. Dell waits for critical mass. And waits. Unfortunately, there's nothing that Dell's supply chain innovations can do now that the smartphone horse has left the barn without Dell (for the most part).
When I shared this opinion with Parretta, the Dell spokesperson responded "We entered when it was right for Dell."
Dell And Tabla-palooza Whereas Dell may be a laggard when it comes to smartphones, is the Austin, Texas-based company showing a better hand when it comes to tablets? Thanks to Apple which doesn't even have a tablet (yet), tablets are all the rage now and were one of the hottest categories of technology featured at the Consumer Electronics Show last week in Las Vegas.
The morning of the day (Thursday, Jan 7th, 2010) that I interviewed Parretta, Dell showed off a concept tablet (also based on Android) during a press conference at CES. "It's an area we're looking at. We're looking at and testing some different form factors such as the 5-inch concept tablet that we showed this morning at CES," said Parretta. "But it's just a proof of concept. We have nothing to announce in the tablet space."
As if to make a point that Dell is indeed an innovator, Parretta pointed out that Dell is using press conferences more and more to show-off prototypes and concepts.
But the fact remains that whereas other companies were at CES showing-off the tablets they aim to sell, Dell was only showing a concept. Even Microsoft CEO Steve Ballmer introduced tablet PCs during his keynote. And what were his props? Devices from HP, Archos, and Pegatron. Where was Dell?
Back in the day when its supply chain efficiencies could make up for lack of market timing, Dell had no trouble eating its competition alive. But in these all important mobile categories, the rules are different. Michael Dell needs to look at the buzz that Apple gets for completely unannounced products and ask, "Why isn't the market waiting in anticipation for our mobile products too?"
To stand up and be noticed, Dell needs to take bigger risks sooner and needs to keep taking them. Only then will it send a signal to the market that it takes these markets very seriously, that it's in them for the long haul, and that customers can count on it to build the best products based on serious market experience of the sort that Apple, RIM, and many others now have.
Is Dell what it needs to do to succeed? Is it an innovator? Or a laggard? What do you think? Let me know using the comments section below.
Related: Fritz Nelson asks Who is Dell these days?
David Berlind is the chief content officer of TechWeb and editor-in-chief of TechWeb.com. David likes to write about emerging tech, new and social media, mobile tech, and things that go wrong and welcomes comments, both for and against anything he writes. He can be reached at [email protected] and you also can find him on Twitter and other social networks (see the list below). David doesn't own any tech stocks. But, if he did, he'd probably buy some Salesforce.com and Amazon, given his belief in the principles of cloud computing.
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