Dell Ups its Stake in the Mobile Market, Sort Of

In one of the more ho-hum announcements in recent memory, Dell Inc. (NASDAQ: DELL) and Spain’s Telefonica S.A. (NYSE :TEF) today announced a strategic alliance to “develop future products and services designed around enhanced data-first experiences,” etc. The announcement offers no specific information, but is long on buzzwords and vague declarations such as, “Deliver next generation solutions first.”

The press release does not say that the two companies will develop and sell a smartphone in the US. It does not say what kind of services the two companies will develop.

Dell did unveil a phone in China, and is reportedly working on a smartphone using Google’s (NASDAQ: GOOG) Android operating system. It’s possible that the Dell-Telefonica deal involves getting the Spanish company to carry that phone, when it is finally released.

What Dell appears to be hoping for is a coat-tail effect among its corporate customers as they move from desktop hardware to mobile hardware. The problem for Dell is that it has probably waited too long.

The adoption rate for mobile internet devices is more than twice as fast as desktop internet adoption. Analyst Mary Meeker at Morgan Stanley notes that desktop internet subscribers in the US peaked at about 50 million more than four years after 1994 release of the Netscape browser. Mobile internet subscriber totals have hit 57 million in just over two years since the release of the iPhone and the iTouch. And the number is still following a hockey-stick growth pattern.

If Dell were serious about the mobile market, it would probably have figured out long ago that Apple Inc. (NASDAQ: AAPL) was onto something with that iPhone thingy. Apple’s latest gadget, the iPad, is also a roaring success and is bound for even greater success. The mobile market is about to explode with new gadgets, and Dell is destined to be no more than just another bit player.

Dell’s shares have gained more than 2.5% so far today as the company basks in the glow of Intel’s (NASDAQ: INTC) outstanding quarterly earnings and guidance. If the PC market picks up in the second half of 2010, as many analysts expect, Dell will certainly face price pressure from low-price competitors like Acer and Lenovo.

Dell’s delayed entrance into the mobile market will come back to haunt it. Maybe not next quarter, or even this year. But failure to have skin in the fastest growing segment of the computing market consigns the company to playing in the low-margin, slow-growth desktop space.

Paul Ausick