Dell Mini 3 Smartphone Strategy Aims High

During Dell’s fiscal third-quarter 2010 earnings announcement on Nov. 19, Brian Gladden, Dell’s chief financial officer, didn’t rule out the possibility of Mini 3, Dell’s newly revealed smartphone, arriving in the United States at some point.
On Nov. 13, Dell introduced the Mini 3, which runs Google’s Android operating system, and announced that it would debut later this year on Brazil’s Claro network, as well as on China Mobile.
“Our strategy is really a carrier-centric strategy. We’ve had relationships with customers like China Mobile. We’ve sold a lot of netbooks with 3G-enabled capability, and we understand how they work,” Gladden said, in response to a question about Dell’s smartphone strategy.
“They really came to us and said, -It would be a natural extension of your portfolio to have a great smartphone,’ and so we began working on that because it made sense in that carrier relationship,” he continued. “That’s sort of the same thing we’ve done in Brazil. These two carriers … represent a pretty big base, and an opportunity for us to have, you know, a reasonable start here in this space. And we’ll continue to be opportunistic, in terms of opportunities with carriers, where we can add value.”
Gladden implied that moving into the smartphone space wasn’t a major diversion for the company.
“When you think about the technology in our investment, it’s really a natural extension of what we’ve already done with our netbooks. So it’s not like it’s a massive amount of [research and development] and new technology investment required to enter the space,” he said. “So I’d characterize [our strategy] by saying we’re relatively opportunistic, and have a couple of great deals with carriers, and we’ll go from there.”
Dell has, however, filed an application with the Federal Communications Commission for the Dell Mini 3. Michael Morgan, an analyst with ABI Research, told eWEEK that the “application is toward the GSM/UMTS spectrum, making it a logical step that Dell would release the phone on the carrier they already have a relationship with … AT&T.”
During the earnings call with media and analysts, Gladden additionally said that Dell was very methodically trying to manage its profitability, and that it had walked away from some retail business because the “margins weren’t acceptable to us.” Speaking more directly in regard to the Mini 3, he said that the smartphone market offered opportunities for Dell to improve the margin rate of its consumer business. Though, as he had during Dell’s second-quarter call, he then quickly turned the conversation back to the enterprise.
“I would just emphasize the point that, from a priority standpoint … and where a lot of our investment is, it’s really around the enterprise and solutions, and that’s where you’ll see most of our focus,” he said.
When asked about the possibility of an Android-based netbook in the near future – given the investments’ similarities – Gladden responded, “We continue to look at the different operating systems, and as you know, we have an offer out with a Linux-based operating system. But we’ll continue to try others, and we’ll see how it works.”
Competitor Acer currently offers a netbook that boots both Android and Microsoft’s Windows XP. The Google OS has been well received, and research firm Gartner expects Android to be on 18 percent of all smartphones sold globally by 2012.