Why Dell will beat HP, but not Apple, in smartphones

why dell will beat hp but not apple in smartphones jobs

Who can outsell Apple in smartphones? Besides Nokia, which wins internationally, the answer has proven to be, in the short term, no one. But with the emergence of Windows Phone 7 and the rising popularity of Android, both Dell and HP will find themselves competing for the spot below Apple that RIM seems to be rapidly losing a handle on.

Will either company manage to overthrow Apple? If not, which will claim the seat beside the Cupertino giant? It’s a complicated question.

When it comes to marketing strategy, Dell is using the same approach as HTC to launch its new smartphones, while HP, on the other hand, is trying to emulate Apple’s approach to the market. Apple is arguably the most profitable vendor in the segment, while HTC is the strongest and most agile on the Android and Windows Mobile platforms.

Two other factors make this situation interesting: Dell is vastly larger than HTC, and HP, at least in this segment, is overmatched by Apple. It’s kind of like looking at what might happen if HTC and Apple were more equal.

Now, the real fight won’t be until next year, when the true HP-designed products hit the market, but let’s look at how this might play out.

Apple vs. HTC

Apple pretty much does everything but build the phones it produces. The company even uses its own ARM processor now, and controls access to the phone tightly. You may think it is “your” phone, but Apple clearly has more control over it than you do, and it is through this control that the company actually provides what most seem to believe, including me, are superior experiences.

Apple is a marketing-driven company. This means that products are designed to show well, and if Apple execs make a mistake, it tends to be because they’ve let design get to far ahead of engineering, which can result in an attractive product with initial problems. Steve Jobs, for instance, at one time tried to get his engineers to make Apple motherboards more attractive. The result didn’t end well. We saw similar issues with the very attractive — though limited — initial iPhone (2.5G in a 3G world) and Antennagate. Apple has the most profitable smartphone currently in the market.

HTC is almost the polar opposite. It controls comparatively little of what goes into the phone, the designs are often specified by the carriers, Google, or Microsoft, and it uses core software from others. HTC does have a unique user interface, but it doesn’t apply it consistently and it leaves the application store experience largely up to others. Currently, the Sprint Evo 4G by HTC, at least according to Best Buy, is the phone that is the most popular of the Android phones, and it is outselling the iPhone there.

Apple is suing HTC for patent infringement, which does point to a potential problem with the HTC model, at least with respect to the Android and ChromeOS platforms. This aside, both models are clearly successful.

HP vs. Apple

HP is an engineering driven company. Engineers design and build the products first, and then toss them over to marketing to sell. This tends to result in a wide spectrum of different offerings and very little marketing dollars to spend on any one of them. In addition, Todd Bradley the executive who leads HP’s PC unit, is no Steve Jobs. He is more like Mark Hurd, in that he is very focused on costs and operations, but he has never been known to really understand the value of marketing. For instance, he recently replaced his Apple-trained marketing executives with a guy from Sears who has a cosmetics background. Bradley did run Palm for a while, but even though the company had the potential to produce an iPhone-like offering, Bradley’s reign was defined by mediocre products, and didn’t come close to that potential. At HP, he effectively killed off the PDA, and most don’t even know HP makes smartphones; even employees at HP use iPhones instead.

Dell vs. HTC

Both companies are engineering-driven, and both have learned to use technologies from Microsoft initially to create successful offerings. Dell actually does more of its own marketing, and has been compared to Apple in the past when it comes to product placement, which is putting products into TV and movies. I’ve seen the Dell Streak in several shows, and clearly the iPhone is a common fixture. Given most of the Android phones kind of look alike, it is hard to say whether anyone is placing HTC phones. However, this goes a long way in just pointing out that Dell appears to potentially more capable than the vastly smaller HTC. Dell did try to run against the iPod, but they weren’t successful.

Dell vs. HP

HP has the potential to be the more successful model. Getting Palm’s patent portfolio, which may exceed Apple’s in the space (based on reviews a few of us did when Apple was threatening to sue Palm a few years back), they’ll be able to hold off an Apple legal attack as well. However, to do the Apple thing, they will need to step up to the product approach, marketing, and total user experience that Apple promises, and to date, no one has been able to do that. This is not saying that it can’t be done, only that it historically hasn’t been, and HP is not a company that is known for being marketing-driven and its products are rarely compared closely and favorably to Apple’s. HP can build both smartphones and tablets that could give Apple a run for its money, but can and will are two vastly different words. So far, it has never actually executed at Apple’s level across a product line.

Dell is vastly closer to HTC in terms of structure and execution. In Best Buy, you’ll find the Dell Streak well-placed on end caps, and they are selling. However the Evo 4G is outselling the Streak, and the Samsung Galaxy, not the Dell Streak, is trending there, which means HTC continues to outperform Dell on point products. Dell doesn’t have the patent defense HP does, suggesting that if Dell were successful, at least with its Android products, Apple might take a bite out of the company. Microsoft indemnifies, so it would be safer, if Dell were hugely successful, to base that success on Windows Phone 7, due to Apple’s likely legal response. However, Microsoft’s tablet offering is far from cooked, and Google’s is conflicted between the Android and ChromeOS platforms, and folks are watching tablets even more than smartphones at the moment due to the success of the iPad.

Who Wins?

HP has more potential with both smartphones and tablets, because it has more control, but it hasn’t demonstrated the skills needed to be successful in this segment. In fact, it has failed repeatedly in it. Dell’s bar is lower, but its long-term risks are higher, and its lack of control may result in products that don’t differentiate well enough against similar offerings from other Google and Microsoft licensees. HP is more focused on software, and the battling with Oracle at the moment. Dell is focusing more tightly on the mid-market than on devices. This suggests that both lack the tight focus needed to perform at Apple levels.

Calling this one is hard, I can say one thing though: In my meeting last week at Best Buy’s mobile phone group (best place to go if you want to see all of the phones shelved), one of the lead executives carried a Dell Venue Pro (my own favorite of the new Windows Phone 7 offerings) and wasn’t convinced the Palm products would ever do well thanks to the HP-Palm history. This might be the edge that Dell has: Folks in key positions believe it can succeed, and thanks to Palm and HP’s history here, that HP can’t. Belief is a powerful thing, and if my very small sample is representative, then Dell wins in the end against HP. But Apple should be the bar for both companies, and beating Apple will require a lot more.

The views expressed here are solely those of the author and do not reflect the beliefs of Digital Trends.

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