The Dell Phone Does Exist

Posted by: Peter Burrows on March 24

And not just on the rumor blogs.

I spoke with someone yesterday who has seen a prototype of the device. It is based on Android, and has no physical keyboard—just a virtual one. I didn’t get any more details, other than that it has a “pretty nice” design.

My source didn’t seem that blown away, and neither, apparently, are the wireless carriers who have seen it, according to Kaufman Bros analyst Shaw Wu. If that’s true, that’s a problem. After all, we know what happens when Dell brings out a derivative, me-too product that follows in the wake of a breakthrough Apple product. That experiment has been run. Remember Dell’s one-time iPod killer, the DJ music player?

In fact, I was a bit surprised to see Michael Dell give such strong hints on March 23 that the company might bring a smart phone to market. Clearly, the company has to deliver more “smaller-screen devices,” as he put it. But Dell must know that he can’t afford another highly-visible bomb. The company is under huge pressure to prove it can innovate its way out of the strategic purgatory in which it is stuck—caught between premium players like Apple at the high-end, and ferociously competitive ones like Acer at the low-end. To try something totally new and have it fail would further erode investor confidence. That’s probably why we have yet to see a device based on technology obtained through the company’s purchase of Zing a few years back. At one point last year, Dell had big plans to create an ecosystem of hardware, service and content providers whose offerings would all work together—a kind of united front against Apple’s closed system. That ecosystem would have included two iPod-like device that could be used to stream and share various kinds of content. Once expected out in early 2009, I’m told those plans have been put on hold.

Will the same fate befall the Dell smart phone? I wouldn’t rule it out. “They could still cancel it,” says my source. “If Michael doesn’t think it’s a sure thing, he won’t do it. He can’t afford to fail here.”

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