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Is Dell plotting a mobile move?

Speculation is mounting that Michael Dell, the man behind one of the world’s most successful PC brands, is looking to move into the mobile space.

Just days after Dell poached Motorola’s handset guru, Ron Garriques, to run its new global consumer group, rumours suggested that part of Garriques’ role would be to smooth the transition into the fiercely competitive mobile space.

Dell made its name by building customised PCs, which it sold direct and it has been suggested the company could use its expertise to good effect in the handset space.

Industry analyst Dean Bubley, of Disruptive Analysis, told telecoms.com, “it should not be too difficult for Dell to make a Windows-based smartphone. Lots of Chinese vendors are doing it and the company has plenty of resources,” he said.

As phones become more like PCs, it seems reasonable that they should come with the same user defined options available to customers specifying a computer on Dell’s, or a similar company’s, website.

Dell sells its PCs direct and Bubley pointed out that such a strategy would raise a number of supply chain issues in the operator/retailer channel but he argues that “it shouldn’t be impossible for an Expansys-type distributor to work with the manufacturers to make phones more modular.”

There also seems to be something of a shift away from handset sales through operators. Handset manufacturer Motorola recently told telecoms.com that it predicts that the number of mobile phones sold directly through retailers or through an operator intermediary, rather than through operators themselves, is going to increase “enormously”.

“The flexibility around the [handset] propositions that we’re offering needs to increase proportionally, because I think that’s where the innovation is going to come from,” said Alan Wright, head of strategy and new business development at Motorola.

Heavyweight handset vendors have also taken more interest in the direct to consumer market of late. Last year, Nokia launched a central London store and accompanying website where it sells SIM free phones. Apple is expected to do something similar when it enters the mobile market with the launch of the iPhone later this year.

But there is still the question of how well such an approach would be adopted by the consumer market. On the one hand there are those consumers who understand that subsidies are not ‘free’, so it is more likely they would rather buy a phone that costs more and choose the operator that suits them best.

On the other hand, it could be argued that the compelling need for users to have complete ownership of the phone would not override the sometimes generous subsidies given by operators.

But these attitudes would be largely unique to a region or country. In some markets, such as South Korea, it is illegal for operators to subsidise handsets. While in markets like North America, where handsets are often heavily subsidised, consumers may well opt for a reduced price device.

However, Bubley points out that prepay users, which form the bulk of the global mobile subscriber base, are not used to subsidies at all and often have to pay full price for higher end devices.

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