Dell Reorganization Puts Focus on SmartphonesBy Jessica Davis | Posted 2009-12-07 Email Print
Dell's reorganization to emphasize smartphones will require the PC and server maker to become the master of a vastly different go-to-market strategy that typically involves partnerships with wireless carriers. Meanwhile, Dell also says it will roll its consumer division into its small business and medium business division.
For the second time in less than a year, Dell is reorganizing its business
divisions, this time adding a communications division to head up its smartphone
initiative and combining its consumer and SMB divisions into a single division.
A Dell spokesman tells Channel Insider that the combination of the consumer and SMB divisions will simplify the company's operations and reduce costs, but won't impact the company's fledgling 2-year-old PartnerDirect channel program.
"We believe the synergies between consumer and SMB will allow us to
streamline how we go to market, reduce costs and build a value proposition for
customers in both segments," Dell spokesman David Frink tells Channel
Members of Dell's channel organization could not immediately be reached for comment.
But the differences in the go-to-market strategy for smartphones compared with PCs and servers, and combining the consumer and SMB divisions into a single business unit certainly raise plenty of questions.
Dell’s increased focus on smartphones and other mobile devices comes after the company announced earlier in the year plans to offer its own smartphone, first in the Chinese market. Dell was to release its Android-OS-based Dell Mini 3i smartphone in partnership with China Mobile late last month.
Go-to-market strategies for smartphones typically involve telecom carriers rather than VARs, systems integrators and solution providers, and initial reports on Dell’s move into the smartphone arena say that will also be a key to Dell’s strategy.
Dell’s reorganization puts Ron Garriques at the head of the new communications division, moving him from his previous role where he was leading the consumer division. Garriques joined Dell in 2007 from Motorola to lead what was then a newly created global consumer division.
Now Dell’s new division that combines the consumer business and the SMB division will be led by Steve Felice, who currently leads the SMB division. Before Dell’s previous reorganization almost a year ago, Felice led the company’s Asia Pacific and Japan division.
Dell’s most recent reorganization comes at the end of a year when PC and server sales plummeted as smartphone sales remained one of the only technology categories on the rise. Gartner’s most recent forecast calls for a 29 percent year-over-year growth in smartphone sales for 2009 compared with PC sales, which are forecast to grow just 2.8 percent in unit shipments during 2009 and see revenues from sales decline by 11 percent. For the third quarter, server sales fell by 17.1 percent year over year, according to Gartner.
It’s no wonder that Dell and other PC and server makers are eyeing the smartphone market. But those vendors may find challenges ahead because while their manufacturing expertise may very well be in computing hardware devices, there's still a lot to learn in the smartphone sales model.
Gartner says that it doesn’t expect the share of any single PC vendor to rise above 2 percent in the smartphone market during the next three years.
"PC vendors should realize that while convergence of technologies offers an opportunity to enter into the smartphone arena, the business models, go to market and positioning of products is very different from the PC market," said Roberta Cozza, principal research analyst at Gartner.
"PC vendors will find it difficult to simply use existing supply chains and channels to expand their presence in the smartphone market. The smartphone and notebook markets are governed by different rules when it comes to successfully marketing and selling products."
At the end of 2008 Dell announced that it would reorganize—dumping its divisions based on geographies in favor of divisions based around customer end markets, including government, enterprise, small business and midsized business, and consumer. The reorganization also led to the elevation of Greg Davis, North America channel chief, to lead the company’s global channel organization.