Should Dell Smartphone Tackle BlackBerry or iPhone Fans?

If Dell is planning on debuting a smartphone at the GSMA Mobile World Congress in Barcelona in February, the company is doing a pretty good job of keeping a lid on leaks—for now. A Wall Street Journal report, published at the weekend, states that Dell is planning to release a smartphone that runs on Microsoft’s Windows Mobile OS as well as Google’s Android platform kicked the rumour mill into high gear.

The world’s No. 2 computer maker, based in Round Rock, Texas, saw PC shipments fall 16 percent in the fourth quarter of 2008 and may be looking to diversify its portfolio with a smartphone aimed at enterprise customers, suggests Roger Kay, president of Endpoint Technologies Associates. “If you look at the potential, the upside of this is quite high,” he said. “You do have one pretty good scenario, which is getting an appreciable chunk of the phone business.”

Kay said he thinks Dell might aim for the enterprise market, the same way the BlackBerry smartphones target business professionals. The company has found success in enterprise-level portfolio expansion before, such as servers. And while Dell never would challenge Apple in the portable digital music player market (remember Zing?), Kay said smartphones might provide Dell with more of an “open game.”

In considering the rumours over operating systems, Kay remembers a meeting he tried to organise in Redmond, Wash., last week to talk about Windows Mobile. “[Microsoft] said they don’t have anything to say, but they’ve got to do something in Barcelona,” he said. “If you’re looking at the relationships, the floodtide is swinging back toward Microsoft—Dell’s risk may be somewhat mitigated by Microsoft’s involvement.”

Although a touch-screen is among the purported features a Dell smartphone would have, Kay said that might not be necessary—or prudent. “I’m thinking a head-to-head with Apple would not work very well for them,” he said, referring to the iPhone. “They may want to dodge it because it puts them directly across from Apple. It’s also possible that the costs of a touch-screen would make them want to skip it.”

There’s also another reason Dell may find a touch-screen smartphone more of a hassle than it’s worth. Last week, Apple was awarded patent number 7,479,949—covering multitouch functionality such as pinch, rotation and swipe. While the argument over the legitimacy of one-touch or more multitouch patents is unlikely to be resolved anytime soon, Dell might be wise to consider the legal implications of employing touch-screen technology.

“There’s not an inconsiderable risk on the intellectual property front,” Kay said. “It sounds to me like [Apple COO] Tim Cook is getting ready to start suing people modeling their interface. I don’t think Dell would seek a fight like that.”

Although Kay notes the rumour mill is running “pretty strong,” he said there have not been many glimpses of flame through all the smoke. “If they’re going to bring it out in Barcelona, just wait for two and a half weeks and they’ll do it, and in the meantime they’ll stonewall, unless they get further leaks—at that point they might have to say something,” he said. “If it’s well-done and cool, there’s an opportunity in the marketplace. It’s not risk-free, but the cost of losing is less in proportion to the benefit of winning.”