Kaufman Bros. analyst Shaw Wu claims Dell's first attempt at creating a smartphone was an epic fail. Wu explains Dell had build prototypes of Windows Mobile and Android smartphones, but none of the carriers the PC giant showed it too had any interest. The smartphones were reportedly too Dell-like, and would be hard to sell due to a lack of differentiation.
He asserts that Dell showed a prototype to the carriers, but that they weren’t all that impressed. “From our conversation with supply chain and industry sources, it appears that it ultimately came down to lack of carrier interest and small subsidies, making it difficult for Dell to make a profit,” he write. “In our view, the last thing Dell needs is to enter another money losing business as it seeks to preserve its operating margins of 5%-6%.” (Which he notes compares to Hewlett-Packard at around 11%, and Apple and IBM at 15%.)
Wu says that he understands that Dell built prototypes using both Windows Mobile and Android, but that the carriers knocked the offerings for “lack of differentiation” versus current and coming products from HTC, Samsung, LG, Nokia, Motorola and others. He adds that the unveiling of the Palm Pre didn’t help, “generating interest from carriers as a viable competitor.”