Dell Streak Pricing May Determine Its Fate

 
 
By Michelle Maisto  |  Posted 2010-08-11
 
 
 

For the Dell Streak, pricing, more than features, may make or break its sales success.

Dell recently announced pricing for the Streak, its Android-running device that will be available for presale Aug. 12 and begin selling the following day. With a two-year contract from AT&T, the Streak will retail for $300. Unlocked without a service contract, the price jumps to $550.

The Streak features a 5-inch touch screen, a 1GHz Snapdragon processor, 3G and WiFi connectivity, a 5-megapixel camera, microSD-expandable memory up to 32GB and turn-by-turn navigation from Google. In name at least-if one agrees the Streak is a tablet-its most direct competitor is the Apple iPad, which features a 9.7-inch multitouch display, a 1GHz Apple A4 processor, and various memory and connectivity options. Pricing for the most modest iPad model-with WiFi connectivity, no AT&T service and 16GB of memory-is set at $500, while the most decked-out version (3G from AT&T, 64GB of memory) stretches to $830.

And still, there's talk around the Web of the Streak being a bit pricey. Part of that debate is fueled by the device's size, which is somewhere between a tablet and a smartphone.

"The retail pricing for the Dell Streak superphone is toward the top end of our expectations," analyst Neil Mawston, with Strategy Analytics, told eWEEK. He added that three factors may be at play.

"First, Dell wants to skim off the Dell enthusiasts who will be willing to pay top dollar just to be the first to get their hands on a new Dell device. Once this early-adopter sub-segment has been maximized, Dell and AT&T could lower the price a few weeks later and target secondary-adopters who like Dell but are a little more price-sensitive," Mawston explained. "Second, Dell wants to position its flagship superphone as a premium device, and using premium retail pricing is one way of building that perception."

The third factor is that AT&T, like any carrier, has a limited budget for device subsidies. With the Streak, said Mawston, it may be acting "cautious not to initially over-subsidize what is arguably an experimental form factor from an emerging mobile brand."

Analyst Avi Greengart, with Current Analysis, also cites a number of factors at play.

First, "the Streak is being sold as a phone with a voice and data plan, not a tablet," Greengart told eWEEK. "As a phone, the Streak is $100 more expensive than a typical high-end smartphone. However, it is worth noting that Apple has proved many consumers will pay $299 for a phone - the iPhone 4 32GB version is sold at that price."

Second, the Streak is being sold through Dell.com, not AT&T proper, which may have affected the subsidy model.

"The Streak is not being sold where consumers shop for phones - at carrier retail stores. Nokia, Sony Ericsson and Google (with the Nexus One) have all tried selling phones directly to consumers over the Internet," said Greengart. "It doesn't work."

This straddling of the fence between tablet and smartphone is no accident, says Ken Hyers, an analyst with Technology Business Research. Dell considers the Streak a hybrid device, Hyers explained, with the large screen and Web capabilities of a tablet, but a smartphone's calling capabilities and measurements small enough to fit into a pocket, albeit a large one. However, he said, consumers are more likely to compare it to smartphones.

"I don't think too many people make an either/or choice between a smartphone and a tablet - the people who want an iPad probably already own an iPhone," Hyers told eWEEK. "But for consumers that want a new smartphone but wish it came with a bit larger screen, the Streak is probably a good deal - though that deal will get better if they don't mind waiting a little bit." The Streak's $100 premium over many competitors will turn off some consumers, he explained, but the more savvy will know that "if they just wait a few months, that cost will probably fall more closely into line with smartphone prices."

However, in the end, size may still partially dictate the Streak's success.

Greengart said he hasn't yet got a review unit in hand - though he expects one next week - and so can't say for certain. But for now, he said, based on specs, "it seems that the Streak would be too big to use as a phone, and too small as a tablet."

 
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