Dell has a serious chance, but given the history of failed attempts on Apples crown, the odds favor Apple.
I know about as much about this rumored Dell handheld
gadget as you do, which means I don't know much. But this leaves me free to speculate about what it should be and whether Apple is vulnerable.
Actually every vendor is vulnerable, from Cisco to Oracle, from Microsoft to IBM, it's simply a matter of defining what those vulnerabilities are and determining if the challenging company has the right resources to take advantage of them.
Dell is one of the companies that may have these resources. Nokia, Microsoft, and even HP fill out the list of firms that could, if they used the right approach, take significant market share from Apple.
Apple is a premium vendor who is addicted to comparatively high margins and is used to getting them. To hold those margins they have had to cut deals with cell phone providers that those providers don't like. Thats why you often see AT&T aggressively marketing Smartphones that don't come from Apple.
Apple partners poorly, in fact they are kind of famous for really sucking in this area, which means they generally have to do things all by themselves. This does create a certain unique consistency in their offerings but it limits them in terms of breadth.
And their developers have a history of being somewhat disloyal because they often view Apple as disloyal to them. This is kind of interesting given the almost rabid loyalty of the Apple customer base.
Apple isn't particularly agile. This likely largely comes from Steve Jobs himself, but once they are on a particular course they don't seem to want to change it. This doesn't mean they don't alter products. But it often means they don't reverse what may have been a bad decision; instead they will worry it until the bad decision seems to look like it became a good one.
MobleMe was an example of that and slowed significantly Apple's ability to work with Exchange for email. Eventually they fixed it but the Palm Pre worked with Exchange on Day One because Palm took the better initial path.
Internally they appear to still be fighting whether to put a keyboard on the iPhone, something that Palm also figured out and had from the start. The lack of a replaceable battery is another problem.
Finally, and specific to the iPhone, they don't really own the solution. They have tried to contract around this but, in the end, the various carriers control a significant part of the user experience.
Historically this has been one of the few areas to draw nearly consistent criticism, as they have often picked unpopular carriers. Granted, in this instance, Palm actually did worse with Sprint. But in their case they only signed up for six months, five years.
Building an iPhone-Beating Gadget
I've often thought the iPhone was a strategically foolish product for Apple because it overshadowed the vastly more interesting, (given Apple's need for absolute control) iPod Touch.
It is amazing the number of people I know who have a cell phone, often a Blackberry, that they use as a phone and an iPhone that they have for status and because they like the iPhone. Given that appears to be a common usage model, then an obviously interesting product to go after is not the iPhone but a better iPod Touch. Offer an iPod Touch that could, for a vastly lower monthly charge, be used in concert with an existing cell phone rather than replacing it.
Next Page: Bottom Line: Can Dell Beat the iPhone?
Because Apple has an iPhone and people are unlikely to wed an iPod Touch with an iPhone, Apple hasn't turned that device into a compelling Smartphone accessory. Dell clearly doesn't have that problem. And, recall that before the iPhone, the Motorola Razor was the hot phone. This was a vastly smaller device and many of the folks who created it now work for Dell.
Physical design is important, as Dell learned painfully with their iPod competitor a few years back. Their recent Adamo laptop showcases they can do hardware designs that are attractive and differentiated. We just dont have any examples of small devices that have been designed this way. To be successful this product will need to be stunning to look at and not repeat the mistakes they or Microsoft initially made with their MP3 players.
User interface is also critical. Palm recently demonstrated with the Palm Pre that it is possible to do a better job with the UI than Apple does But Dell is not Apple. In addition, back end capability is what increasingly people are buying with these devices. A rich application store and set of web features is a requirement just to play in this space.
Finally the device has to do core features well: movies, video, email, and PDA functions. Palm isnt licensing their platform out. Microsofts Mobile platform isnt being used on devices of this class and wont truly be ready to compete until next year when Windows Mobile 7 ships.
This leaves Android. But, out of the box, Android isnt really capable of taking on Apple head to head yet (though it is close).
And to be successful, Dell will need to improve the user experience. Once again this isnt Dells strength. (HP has, with their TouchSmart product, shown more capability here of late. The only question is: can Dell step up to the challenge?
So, Can Dell Beat Apple?
Any company can be beaten and Dell has the resources to take the fight to Apple and win. The better question is, will they? Companies and individuals often look at a problem and then craft a solution based on what they are good at and want to do, or to limit risk, not based on what actually needs to be done. This is why so many challengers to the iPod have failed, starting with Dell and ending with Microsofts Zune.
To beat a dominant vendor you have to accurately assess what needs to be done and then do it, not set an easy goal and position so you can blame someone else for the failure. With Dell there is no doubt they can take on Apple, yet I question whether they accurately know the task ahead of them and are willing to do what needs to be done to achieve it. Given the history of failed attempts on Apples crown, the odds favor Apple.
This has implications that apply to other efforts, like Ciscos moves into the server space, Oracles Unbreakable Linux and Sun moves (Snorkel), Apples and Microsofts moves against each other, and AMDs moves against Intel. If you dont set the bar high enough and then drive people to exceed it, you are only left with finding folks to blame for the resulting failure. In this industry there are far too many people expert at finding people to blame and far too few who create magic.