Dell Starts At The Back Of The Line With New Smartphone

Dell (NASDAQ: DELL) is late to the smartphone market. Very late. It has begun to sell its new Aero handset with AT&T (NYSE: T). The Aero costs $99.99 with a two-year subscription plan. Without an AT&T deal, the Aero sells for $299.99, but still only works on the AT&T network.

The Aero is one of many that runs the Google (NASDAQ: GOOG) Android operating system. The leaders in the Android smartphone field are HTC and Motorola (NYSE: MOT), which have been in the market for more than a year. The Dell product comes with at 5MP camera with 8x zoom, which once again is not a special feature. The phone allows owners to watch video and Flash multimedia productions. In that way, it is different from the Apple (NASDAQ: AAPL) iPhone, which does not run Flash, but is similar to other Android-powered handsets. The Aero does not have more processing power or memory than some of its competition.

Analysts and customers will wonder why Dell has launched the product at all. AT&T already sells competing phones, some of which have received outstanding consumer reviews. Apple and Research In Motion (NASDAQ: AAPL) dominate the high-end of the handset business and larger rivals including Nokia (NYSE: NOK) and Samsung will push for market share in the profitable sector.

Dell somehow believes that it is important to launch a new consumer product. It should have decided otherwise. Its reputation with consumers has become tainted in many cases by scandals at the company and reports that it shipped millions of defective PCs.

Dell should stick to its core PC and server products, improve their functions, features, and design. It may be able to use its expertise there to gain lost market share. Any other business is merely a distraction.

Douglas A. McIntyre