Dude, Your Phone Is Dull

Antipathy toward a Dell smartphone is building and the device hasn’t even exited the rumor stage yet. When last we discussed the Dellephone, wireless network operators had reportedly been unimpressed, criticizing it as dull compared with current and upcoming handsets. Now comes further criticism in the form of a client note from Bernstein Research analyst Toni Sacconaghi Jr., who believes that Dell (DELL) will announce a smartphone in the next six months but will most likely bungle it.

According to Sacconaghi, the smartphone market isn’t a natural fit for Dell, which could see its efforts hamstrung by its historically lousy industrial design sensibility and lack of software development experience and wireless technology, not to mention unenthusiastic carriers hesitant to add a Dell phone to their lineups.

“We believe Dell’s foray into the smartphone market is risky and its success uncertain,” Sacconaghi writes. “In our view, the biggest risks are that (1) Dell invests a disproportionate amount in the initiative…; (2) the high margins earned on smartphones today collapse by the time Dell establishes itself in the market…; (3) it causes too much management distraction…; (4) the business simply fails.”

(4) the business simply fails.

A harsh prediction–especially when we don’t even know if the business will ever exist. Clearly, Sacconaghi doesn’t have much faith in Dell’s ability to execute on an initiative like this. And why should he? Dell’s track record in adjacent electronics businesses is littered with the corpses of PDAs, MP3 players and TVs.