Dell may go directly to retailers with upcoming handset

Round Rock (TX) – It’s being reported that Dell may forego selling its new handset at U.S. and European carrier outlets, and instead go directly to retailers. This news follows last month’s revelation that many carriers at the Mobile World Congress 2009 were unimpressed with Dell’s latest handset.

Dell’s handset was designed to be the iPhone killer. It was to pack so many features that it would immediately begin to steal market share away from iPhone in every regard. However, when the U.S. and European carriers got their hands on the device, they passed – sending Dell “back to the drawing board” to come up with “more differentiation”, according to a Kaufman Bros analyst.

Earlier this year we learned that Dell had been working on at least two designs, one with a full touch-screen and no physical keyboard, the other with a slide-out keyboard design, according to the Wall Street Journal who apparently got a sneak-peak. They also mentioned that the design team spent a great deal of time with suppliers last year, to see what technology they could economically line up in mass quantities.

According to a CNet article, Despite carriers telling Dell to go back to the drawing board, Dell apparently believes they have a winner on their hands as there are reports coming out from Ashok Kumar at Collins Stewart that Dell will deal directly with retailers, and without going to the drawing board first, and also willing to face the consumer market where customers are used to buying reduced-price handsets with their subsidy factored in to the cost of the long-term contract.

Kumar wrote in a research note today, “The carriers, who see products from all the leading handset vendors, have decided to pass on Dell’s handset. Some carriers are citing a noncompelling product with a road map that lags competition.”

In addition, there are rumors of talks between Dell and carriers on the Chinese market, that Dell may be able to launch its handset there by year’s end.

The reality here is this looks to have gone from bad to worse for Dell. Unless their product is truly the iPhone killer, asking consumers to pay the full unsubsidized price for the handset up front, with no carriers in direct support, in a market that’s declining due to the worldwide economic recession, at a time when the next-gen iPhone is right around the corner, seems like little more than another way for Dell to lose money.