China Mobile (CHL) will be the first mobile operator to sell the much-talked-about Dell (DELL) smartphone. The Mini 3i, as its is called, is a slim, touch screen smartphone to be supported by China Mobile’s new OPhone and Mobile Market platforms.
The 3.5-inch widescreen is intended to create a big-screen experience, adding to the clarity of images and videos. The Mini 3i is compatible with lot of applications like e-mail platforms and office productivity software. This new smartphone was produced through a year-long collaboration with China Mobile and also Dell is making substantial investment in smartphones.
Dell’s entry into the smartphone segment looks like a logical progression, as the company is already manufacturing and rolling out reasonably priced netbooks in the market. However, Dell is a late entrant into the market, unlike its peer Apple Inc. (AAPL), which has already grabbed a large share of smartphones such as iPhone 3G and iPhone 3GS.
As per the technology research firm Canalys, third quarter 2009 worldwide smartphone shipments grew 4% year on year, to 41.4 million units. Nokia (NOK) maintained its worldwide smartphone leadership position with a 40% share of the market, up from its year-ago position, but down 5% from the previous quarter. Research In Motion (RIMM) was in second place, with a market share of 21%, almost flat sequentially.
Apple’s market share was 18% in the third quarter, up from the 14% share in the second quarter, with significant improvement in the iPhone 3GS supply across many countries. HTC retained the fourth position with a 5% share.
Dell’s third quarter results were not very encouraging, with revenue, gross margin and EPS declining on a year-over-year basis. Dell suffered from the PC market slowdown. Although there are signs of recovery in this market, the smartphone market is expected to witness much stronger growth rates. Therefore, Dell’s decision to enter this market at this point is a big positive. Although initial revenue may not be substantial, the company would benefit from the growth trends, if its smartphone is well accepted.
We believe that there is no reason why Dell phone should not gain popularity, considering Dell’s history of innovation — although the success rate could vary as competition is intense. We believe that even if Dell is able to capture a small share of the smartphone market, the additional growth opportunity would be substantial.
China Mobile was a natural choice for Dell to launch its smartphone in the country. China Mobile has a registered capital of RMB 51.8 billion and assets of over RMB 700 billion. The company is aggressively developing the mobile communications industry in China and the company Listed among the Top Fortune 500 companies.
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