Dellephone? More Like Dullephone…

Ugly just isn’t going to cut it in today’s mobile device market. That’s what Dell is finding as it attempts to build a smartphone capable of holding its own against the RIM’s (RIMM) Blackberry, Apple’s (APPL) iPhone and Palm’s (PALM) upcoming Pre.

According to Kaufman Bros. analyst Shaw Wu, the PC maker’s first smartphone prototypes have been rejected by wireless network operators, which found them dull compared with current and upcoming devices. “From our conversation with supply chain and industry sources, it appears that it ultimately came down to lack of carrier interest and small subsidies, making it difficult for Dell to make a profit,” Wu explained in a message to investors, noting that prototypes running Microsoft’s (MSFT) Windows Mobile and Google’s (GOOG) Android both were dismissed by carriers for their “lack of differentiation.”

Apparently, Dell’s “nondescript and gray” aesthetic just doesn’t translate to the cellphone market.

Undaunted by such criticisms, Dell (DELL) has gone back to the drawing board in the hopes of designing a more appealing device and may even consider an acquisition to spur such efforts along. Said Wu, “Dell remains committed to the cell phone space as it appreciates the opportunity in smart phones and the longer-term cannibalization potential of PCs.”