02 February,2009 07:14 AM IST | | Balaji Narasimhan
Dell is also getting into the mobile market. What is the reason behind this?
According to reports from the Wall Street Journal, the company could come up with a cell phone sometime soon. And not any phone Dell apparently wants to come up with a smart phone that will see it pitted against the likes of Apple's iPhone and RIM's Blackberry. One of the proposed models may even have a touch screen.
And Dell is not the only company coming up with new cell phones. Nokia, the grand daddy of cell phone companies, is unveiling three new phone models, including the Nokia 6700 classic, the successor to the Nokia 6300.
But worldwide, as all people know, there is a slowdown in all areas, cell phones included. In November 2008, Barclays lowered estimates for cell phone sales in 2009 from a 3 per cent growth to a 5 per cent decline.
In December, IDC also came out with figures that predicted a slowdown. It said that there would be a 2.2 per cent cell phone sales contraction in 2009 in the global mobile phone industry.
What's up?
But still, companies like Dell are getting into this area. One wonders why.
One reason could be because, while cell phones are slowing down, smart phones are growing, albeit slowly. IDC says that, while smart phones grew 27 per cent in 2008 and accounted for around 12 per cent of all cell phones, this growth will slow down to 8.9 per cent in 2009. On the contrary, feature phones grew just 4.9 per cent in 2008 and are expected to contract by 3.8 per cent in 2009.
But even betting on smart phones is not very safe. IDC says that the smart phone market grew a massive 75.7 per cent in 2008 in the US, but will only grow 3.1 per cent in 2009. How safe is it to bet on this? And insofar as Dell is concerned, does it not face some danger from established players, especially Apple's iPhone?
Waiting to rebound
One reason why some companies are entering this market may be because they are all waiting for 2010, when the overall market is expected to rebound. In fact, IDC predicts a 7.7 per cent rebound for the global mobile phone industry in 2010.
Significantly, Dell could also be trying to make money from cell phones because PC sales worldwide are down and let's face it, cell phones are a lot hotter than PCs any day.
Some truth in this assertion may be there because Dell hired Motorola's former cell phone chief Ron Garriques to look after consumer products. Until now, Garriques couldn't work on cell phones because of a non-compete agreement, but this expires in February 2009.
So, you can expect some action from Dell in the coming days.
QUICK TAKE
>>Dell is getting into smart phones
>>This area is dominated by seasoned players, especially Apple with its iPhone
>>Dell may want to diversify from PC sales, where it lost its top status to HP two years ago
