Michael Dell says his company is kind of working on the iPhone-killer

Chicago (IL) – Dell’s rumored smartphone probably does exist after all. That is, if you believe the ambiguously
crafted words of the company’s CEO, Michael Dell, who said that yes, Dell
is kind of working on the iPhone-killer after all. The phone is already
contracted for manufacturing, but it hasn’t yet entered the production
phase because carriers have yet to give it the greenlight. Michael Dell also said
that acquiring other established phone makers is on the table as well,
echoing some analysts who suggest Dell buys itself a ticket into the
mobile arena by acquiring Palm.

“It is true that we are exploring smaller screen devices,”
Dell said at a speech in Tokyo yesterday — warning that the company has yet to make an announcement. While Dell’s “smaller screen devices”
may indicate a tablet PC or a netbook as well, most of us have no doubts
that Dell is eyeing the smartphone market. The huge slump in the computer
sector, combined with the smartphone market’s unusual resilience to the
recession, gives PC makers many incentive to expand their business into
the mobile phone market.

Michael Dell indicated that it’s not
just devices themselves, but the entire ecosystems built around smartphones
may translate into new revenue streams. Companies like Apple
have shown that software and an accompanying distribution service
(App Store) can stimulate hardware sales, creating a convincing
proposition for developers, accessories makers and a reason to buy for end users. Other
mobile platforms have also followed Apple’s move by announcing their own
application stores, including Nokia and Microsoft who both pledged to open their respective application bazaars for business in the coming months.
But does Dell have
the expertise and engineering ingredients to come up with a stylish
smartphone that everyone will want?

According to the CEO, Dell packs vast experience with 3G technology in portable devices as an important advantage. “For the last three years we have integrated 3G radios into our notebooks,” Dell noted. “We
already have agreements with many mobile carriers around notebook
devices so it wouldn’t be unreasonable to expect that we would have
smaller mobile Internet devices or smartphones in the future,”
he said in a nod toward the rumored Dell-branded smartphone.

phone almost entered the manufacturing phase. Taiwan-based Commercial
reported yesterday that world’s largest contract manufacturer of
electronics, Hon Hai Precision Industry (also known as Foxconn), has already received orders to build Dell’s smartphone. However, it appears the actual manufacturing was probably halted as carriers rejected Dell’s phone, citing the “lack of differentiating features” as reported by Kaufman Bros analyst Shawn Wu.

PC vendor didn’t comment on the Commercial Times article or on Wu’s
report. Some analysts suggest Dell should acquire the struggling Palm set to
launch the webOS-powered Pre handset slated for a June 30 arrival on Verizon’s network. Dell would not confirm this beyond saying that
acquiring other phone makers remains an option if that’s what it takes
to enter the game, but he also noted the company is not exploring that avenue presently.