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Digital Life

Dell Halts U.S. Smartphone Business

Dell Halts U.S. Smartphone Business
March 29, 2012 12:18PM

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As analyst Avi Greengart sees it, Dell's U.S. distribution strategy was wrong -- badly wrong. Dell attempted to sell directly to consumers without carrier relationships. What's more, he said, Dell had one unique product, the Venue, on an operating system that consumers weren't all that excited about.

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Dell has put the kibosh on its smartphone sales stateside. The PC maker will instead focus on selling mobile devices in emerging markets, at least for now.

Specifically, Dell is ending sales of the Venue and Venue Pro smartphones in the U.S. According to AllThingsD, Dell is planning to introduce other mobile devices in the U.S. and other markets in near-term but the company is not offering definite plans.

We asked industry analyst Avi Greengart of Current Analysis for his take on the decision. "I think Dell sees barriers to entry lower in other nations, so they can compete based upon price rather than on access to carriers," he said. "But China is a challenging market as well, so they certainly have their work cut out for them there, too."

Dell's Dismal Failures

Dell has not done well in the mobile market. Dell killed its Dell Streak tablet, which came in 5-inch and 7-inch models, last year. The Dell Streak joined HP's TouchPad as two of the tablet failures in 2011 while Apple continued to dominate the scene with its category-defining iPad.

At January's Consumer Electronics Show, Dell told Reuters it plans to re-enter the tablet market later this year. Dell's chief commercial officer, Steve Felice, told Reuters in an interview that the company better understands how consumers value the ecosystem as much as the tablet hardware. And Dell will push stronger into the consumer arena with its next effort.

Most analysts agree that success depends largely on the operating system and the apps. Dell didn't perform too well using the Android operating system. There has been some speculation that Dell will roll out Windows Phone devices. But the application ecosystem is yet lacking for Microsoft products, despite a $24 million investment Redmond and Nokia are making into an app development program in Finland, announced this week.

Dell's Missing Link

Beyond operating systems and apps, though, Dell needs to do something more to find success in the smartphone and tablet market -- something it has yet to do well: develop relationships with the wireless carriers and get shelf space in stores.

As Greengart sees it, Dell's U.S. distribution strategy was wrong -- badly wrong. Dell attempted to sell directly to consumers without carrier relationships. What's more, he said, Dell had one unique product on an operating system that consumers weren't all that excited about.

"The most shocking thing about this decision is that if you ask the man on the street, they wouldn't know Dell sold smartphones," Greengart said. "Those of us who have been following the industry for a while heard Dell make this decision a year ago. Everyone else is going to be like, 'Wow, I didn't know Dell even made cell phones,' which shows the wisdom of the decision not to do it anymore."

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