Analysts wary as Dell focuses on fastest-growing market to try to breathe new life into its mobile offerings.

Amelia Riley Swan
  • 7 september 2011

Photo: Reuters

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This article titled “Dell plans partnership with China’s Baidu on tablets and mobiles” was written by Charles Arthur and agencies, for on Tuesday 6th September 2011 11.15 UTC

Dell plans to partner China’s top search engine Baidu to develop tablet computers and mobile phones, targeting the Chinese market now dominated by Apple and the Chinese computer company Lenovo.

China is one of the fastest growing markets for tablets and is home to more than 900 million mobile phone subscribers. Analysts said the tie-up could be Dell’s way to revive its flagging tablet business.

Baidu has already announced that it is developing versions of Google’s Android mobile operating system which it has tailored to its own use. Android can be altered to remove Google’s search and apps as the default – which Baidu, as the largest search engine in China and a bitter rival of Google, would seek to do.

But analysts were not hopeful about Dell’s prospects. “I suspect this is just Dell, who has a lot of problems on the mobile and tablet front, grasping at straws to get any kind of publicity that it can to make its product more attractive,” said Michael Clendenin, managing director of technology consultancy RedTech Advisors. “Ultimately in China, I still think it is Apple’s game, still for the iPad and iPhone.”

Dell declined to give a timeline for the launch of the devices, but local Chinese media on Tuesday quoted sources saying that it may be as early as November.

“We have a partnership with Baidu and you know we have the Streak 5 tablet, so the partnership will be in that space,” a Dell spokeswoman told Reuters on Tuesday, adding that both companies were also cooperating on the mobile handset front.

Dell’s Streak 5 is a 5in Android-based smartphone-like tablet (or tablet-like smartphone) which was discontinued in the US last month.

The Dell tie-up underscores Baidu’s efforts to widen its product offerings and leverage its near-80% share of the country’s search market, the world’s largest.

Baidu launched a new mobile application platform last week and offered a glimpse of its upcoming mobile operating system which it hopes will serve a growing number of users accessing the internet from smartphones and tablet computers.

Baidu said it already had partnerships with Dell and other device makers and declined to comment on the new tie-up. Dell said the partnership with Baidu involved the company’s new mobile platform.

A Dell-Baidu tieup would be the latest in a series of developments re-shaping the mobile devices market.

Last month, Google said it would acquire Motorola Mobility Holdings for $12.5bn (£7.7bn), in a move that could put Google into a lower-margin manufacturing business and pit it against as many as 38 other handset companies that use Google’s Android software.

Google has not said whether it will divest the manufacturing element of Motorola Mobility: it has indicated that its main aim is to gain patents owned by Motorola to fight lawsuits against Android coming from Apple and Microsoft.

“Dell has got nothing to lose, they don’t have a big mobile presence, so by partnering Baidu, they will probably get some momentum for their mobile products,” said Sandy Shen, a Shanghai-based research director with Gartner.

Dell has chosen China to launch new products before. In 2009, Dell announced it will enter the smartphone market starting in China before moving into Brazil.

Dell said in June it had chosen to launch its new 10in Android tablet in China this summer, passing up on a US and European launch, in a sign of the market’s growing importance to the company.

Dell’s China sales grew 22% in the first quarter while its retail presence in China exceeds 10,000 sales points. The Far East is Dell’s strongest growth market, reflecting general trends in the personal computer market where North America and Europe have seen slowdowns in sales of Windows PCs, a key market for Dell. Tablet sales are still seeing strong growth in those areas, but principally for Apple’s iPad.

The deal is unlikely to have an impact on Apple’s quest for the hearts and minds of smartphone customers, analysts said. Technology heavyweights have failed so far to take a significant bite out of the iPad’s success.

Hewlett-Packard Co said it would kill its TouchPad after just seven weeks on shelves, joining Dell’s Streak 5 in the tablet graveyard. Weak sales for many offerings suggest others are likely to follow. © Guardian News & Media Limited 2010

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