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Analyst Opinion – Hunters have played the game for thousands of years: when you’ve wiped a given territory clean, it’s time to head off somewhere else in search of greener pastures. PC vendors, suffering from years of ever-thinning margins aggravated more recently by a devastated economy that’s collapsing demand for conventional computers, are starting to do the same thing. If they can’t make money selling desktops and laptops, the thinking goes, they’ll shift their attention to smartphones.
Just because you’ve spent years delivering cost-effective computers to consumers and businesses doesn’t mean you’re instantly qualified to do the same thing with smaller form factor devices. They may look like shrunken computers, but smartphones speak a completely different business language and require a fundamentally unique skill set to bring to market.
I’ll admit Apple seems to have pulled off the impossible: It overcame the Newton legacy as it extended the hugely successful iPod franchise into the iPhone. But Apple’s the only company with the brand image and innate relationship with a leading edge audience to have a prayer in this admittedly different, much more demanding market. Any company hoping to replicate Apple’s success will be entering a market infinitely more crowded than the one Steve Jobs & Co. faced barely two years ago.
One of those companies, Dell, has already tried and failed to crack the handheld market. Sure, its Axim-branded devices were basic, disconnected PDAs. But they exemplified the kind of thinking that most large vendors have always, sadly, brought to the party. Namely, they assumed their name would be enough to sell the device. So they cobbled together a me-too product and hoped for the best. Dell’s next effort, already rumoured to be in redevelopment, because it’s considered too boring for carriers, shows us how little the company understands the importance of innovative differentiation.
It’s the carrier relationship that most PC vendors never had to deal with previously. For better or for worse, carriers hold the keys to the kingdom, and using the relationship as a starting point is critical to establishing some sort of beachhead. You don’t build a better machine and assume the carriers will line up to stock it just like big box stores once did. Carriers are key to managing the ongoing subscriber relationship – another concept that’s been alien to sell-and-forget PC vendors. This isn’t a margin business. It’s a lot more complex than that, and I’m not convinced Dell gets it yet.
Dell isn’t alone. Acer has served notice it will go after the low-end smartphone market, while Netbook pioneer Asustek is moving in the same direction. All of this is great news for consumers, who over the next couple of years will benefit from wider availability of innovative phones that cost less than anything they can buy today. But when all is said and done, so many hunters will be entering the smartphone market that more than a few can be expected to starve along the way. No one ever said hunting would be easy or even fair.
Carmi Levy is a Canadian technology analyst and journalist covered with scars from his years leading IT help desks and managing software development projects for big bad insurance companies. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.
The opinions expressed in this commentary are solely those of the writer.