Over at CNet's News.com Erica Ogg writes on why she thinks Dell needs a handheld. I'd disagree.
She makes two points in the article and they're basically that Dell needs either a handheld product or a smartphone to break the stereotype of "PC Maker" (an oversimplification of what she said but it gets the gist). The problem with a handheld is that Dell already ran from that market so I don't think people are going to put a lot of faith in their products the second time around. As far as Smartphones are concerned they'd be entering a market where there's intense competition and which plays to their every weakness. I can't imagine a scenario in which Nokia, Apple, et al wouldn't eat Dell for breakfast.
What I think Dell does need is a product that actually innovates. Dell has locked itself into commodity products with penny margins (PCs, Switches, Monitors, etc...) and if it ever wants to be more than that it needs to start showing the consumer that it can do something else. The XPS line is a nice start but in the end it's just the same old thing in a slightly more attractive package. They need more.
If I were Dell I'd do a few things...
- Focus on creating some innovative Enterprise products. That is still where Dell's greatest customer base is and there's a lot of room to innovate there. A revolutionary storage product or patch management system are just two examples of places where Dell could make an impact and beef up its margins.
- Focus on "End-To-End" support of their Enterprise customers. When Lou Gerstner took over IBM almost everyone thought the company should be split up. Gerstner realized that just the opposite was true and that IBM could make its money by providing customers with everything they needed and the consulting to make it all work. If Dell can fill a few holes in its Enterprise offerings (see above) it could provide the same service for customers that can't afford IBM's pricey solutions.
- Create or Buy a consumer brand. Dell needs to diversify into consumer electronics but the name "Dell" doesn't cut it as a consumer brand. For proof of this look no further than their dismal performance in the markets they have tried to enter. Dell TV's really aren't that bad and they're cheaper than equivalent competitors but few people buy them because Dell is just too intertwined with "work" in most people's minds. If Dell is going to succeed in the consumer market it needs to find a name with a consumer feel to it.
- Focus on making existing consumer products complete solutions. Dell already has a decent TV business so rather than jumping into something it knows nothing about (smartphones) or something it has failed at before (handhelds) they should work on building on what does work. If it were me I'd be looking at home entertainment systems. Use some PC magic to make a MultiMedia system/DVR that works really well and combine it with a decent surround sound offering (all under a consumer brand of course). If Dell could find a way to capture just a fraction of the "Living Room Market" they'd be very well off.
This post grew into more than I initially thought it would so I'm going to cut if off here. But if I could throw out one more piece of punditry it would be this. If I were Dell, I'd buy Creative Labs. Creative Labs has a nice "consumer-ish" ring to it and would serve Dell well as a new brand. Plus they have a great speaker division thanks to Cambridge Soundworks. Heck, they'd even give Mrs. Ogg her entry into the handheld market.
The companies really do compliment each other and, if you think about it, I think you'll find it makes a lot of sense.