Dell Seeks Different Approach to Smartphones, Tablets

Despite a shift to IT services, Dell is looking to sell lots of PCs both in the United States and abroad. The company is also eyeing a different approach to smartphones and tablets.

AUSTIN, Texas - When it comes to the burgeoning world of smartphones and tablets, Dell isn't looking to become the market leader anytime soon. However, the company is trying a different approach to this market by targeting business users instead of consumers.

For years, Dell grew its business on the backs of clients, specifically PCs and servers. While Dell always offered a mix of consumer PCs-a portfolio that has been revamped in the past 18 months-the company focused on selling desktops and then notebooks to enterprises, large businesses, local, state and federal governments, educational institutions and health care providers. And for the most part, that strategy worked. IDC in April said Dell was the second-largest PC vendor in the world in the first quarter, behind rival Hewlett-Packard.

Now, Dell is looking to focus on both the smartphone and tablet markets with the same approach. During the company's June 29 investor conference here, Jeff Clarke, Dell's vice chairman for global operations and end-user computing, told analysts that the company plans to target "prosumers"-those who use the same technology for work and for personal use-and business users.

However, Dell is not solely focused on devices. Indeed, the company has only released a handful of smartphones and one tablet-the Android-based Streak-and most of these have been offered overseas. Dell executives also confirmed that the Streak 10 Pro, which will also use Android, is launching in China first before the United States.

Still, by targeting prosumers and business clients, Dell is hoping to sell additional services and software on top of the actual devices itself. Or, if customers want to stick with a more traditional BlackBerry or even an iPhone, Dell can still sell services, such as mobile-device management, security and data management.

"It really is about participating in the growth markets," said Clarke. "It's about participating in the growth markets in the mobile space in a very, very different way. It's not about being another consumer player in smartphones and tablets. It's about taking our company's core strength in the middle market. It's about targeting our tablets and smartphones for those usage models. It's about building a set of solutions and services around that, and that includes device management, security management."

Overall, Clarke wants the customers totally connected to Dell from the smartphone and tablet, through the PC and into the data center with the company's servers and storage. This strategy also allows Dell to sell its data center technology to those telecommunication and other businesses that have to support all the data that these mobile devices are generating each day.

The day before the conference began, CEO Michael Dell echoed those same sentiments during an informal discussion with analysts.

"We are very much focused on that business and offering a total solution to customers not just devices," said Michael Dell. "We're looking to offer systems management, application development, security and other types of integration."

To make sure the world knows it's serious about this plan, Dell began trading in its BlackBerry devices early this year for its own Venue Pro smartphone, which runs Windows Phone 7. Almost all Dell employees in the conference here had one.

Indeed, Dell doesn't have much a stake in the growing smartphone and tablet markets to warrant a big device push right now. In April, ABI Research estimated that Apple's iPad controlled about 85 percent of the global tablet market, with Samsung a distant second. Right now, the Android tablet market, which includes Dell, remains fractured.

A better indication of what Dell might do in the tablet market may come next year, when Microsoft releases Windows 8, the next version of its operating system that is optimized for tablets and can run on ARM-based devices.

"I think [Windows 8] will help in tablets," said Dell. "I think there is a large user group of Windows users looking for a tablet."