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Dell and Google Take On the iPhone

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Hey, Apple (Nasdaq: AAPL  ) ! The dominoes are falling quickly these days, and the Android army is knocking on your door right now.

Even Apple's iPhone partner AT&T (NYSE: T  ) has jumped onto Google's (Nasdaq: GOOG  ) Android bandwagon. The Wall Street Journal says that an AT&T Android is coming early next year, and it will be built by PC maker Dell (Nasdaq: DELL  ) .

We have known about Dell's plans to build smartphones for some time, and the company announced an Android-based phone in China this summer. So it's no surprise to see an Android with Dell's logo stamped on its forehead. But AT&T has not shown much of a desire to sell Android phones, retrenching behind the exclusive iPhone deal instead. That's why I'm flabbergasted by Dell's choice of network partner.

Then again, AT&T did recently allow eBay's (Nasdaq: EBAY  ) Skype service to route phone calls through the iPhone's 3G Internet connection rather than forcing users to find a Wi-Fi connection. Are these small tremors in AT&T's previously unshakeable iPhone foundation early signs of the company moving away from Apple in general?

AT&T's exclusive deal with Apple is set to expire as early as next year, and you might soon be able to buy iPhones from competing network providers like T-Mobile or Verizon (NYSE: VZ  ) . In fact, letting the iPhone get away might even be in AT&T's best interest. Ma Bell's 3G network is straining under the load from overly enthusiastic iPhone users and their hunger for high-bandwidth video streams. Of course, replacing or augmenting the iPhone with other highly capable smartphones from Dell, Samsung, or Motorola (NYSE: MOT  ) probably won't reduce the network load by much. Time to start rolling out the next-generation 4G network, AT&T?

The flood of Androids has started in earnest and won't let up anytime soon. Google expects to have at least a dozen models on the market by the end of the year, which leaves plenty more announcements in the coming months. In three years, IT research firm Gartner believes that the plethora of Androids will surpass Apple's single-phone business model in worldwide unit sales.

And the first batch of dominoes is falling today.

Google is a Motley Fool Rule Breakers recommendation. Apple and eBay are Motley Fool Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (4) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 08, 2009, at 2:55 PM, accelerando wrote:

    Another silly, superficial analysis by the used to be pretty sharp folks at the fool.

    None of these phones exist. None of the folks signed up to build them has ever built anything as totally sexy as an iphone, not remotely close. No one has the apps which are perhaps the greatest externality situation ever, or at least since windows -- the more apps, the more iphones, the more iphones, the more apps.

    By the time a dell/att/google phone comes to be, the iphone will have such a lead that they will be uncatchable -- actually that is already true -- the iphone has the developers. End Of Story.

    But of course articles like this will help depress the price of aapl over the short-term and allow, perhaps, shorts to get out with their shirts.

  • Report this Comment On October 08, 2009, at 3:20 PM, TMFZahrim wrote:

    Hey accelerando, I appreciate your feedback but:

    * None of these phones exist.

    The G1 has been out for a year, the MyTouch since July. Many of the others have been released in Japan, Europe, and elsewhere and are just taking their time coming to America.

    * None of the folks signed up to build them has ever built anything as totally sexy as an iphone, not remotely close.

    Guess that depends on your definition of "sexy." Once upon a time, Motorola's Razr was the hottest ticket in town.Long time ago, but I think it's a valid example. Cover up company logos and show the iPhone/Galaxy/N79/Storm/Hero to your teenage kids and they'd take any of the above. Apple is a master of design, but the competition has started to copy its playbook.

    * No one has the apps

    Right, Apple has the biggest app catalog now, and an early lead could become a sustained advantage. But we'll see. Apple is also pretty good at raising the ire of its own developers...


  • Report this Comment On October 08, 2009, at 5:13 PM, Tim1T wrote:

    This article makes it seem as though the herd of new Android smart phones will eventually run over Apple. Of course, we've heard that prediction before.

    It's true that the Android platform has some real value -- far more than the Microsoft Mobile platform. But having every company out there building Android phones is actually a weakness rather than a strength.

    The key to market share is delivering as much perceived value as Apple has if not more. And having a dozen companies all reinventing the wheel will create more smoke than fire.

    Anders seems to believe the Motorola or Dell can come up with a sexy design, that's probably correct. But Apple's value isn't in the look, or even the App Store.

    The Apple advantage has been ownership of the entire package: design, a high level feature set, an advanced OS/interface, and App Store, developer kit, etc. all working together in concert.

    With the Android, Dell and Moto don't own the OS or the developer kit. Their main thing is the hardware. And Google doesn't create the hardware. It's true that Google and the open source developers may be able to keep the Android OS competitive with the Apple OS. But will Dell make the most of that OS?

    Dell couldn't even create a competitive MP3 player. I can't see how their smart phone will be much smarter.

  • Report this Comment On October 08, 2009, at 7:52 PM, Smorgasbord1 wrote:

    I haven't read Gartner's article, but its 3 year timeline is telling. What did Gartner, or anyone else for that matter, say about the phone market 3 years ago?

    I'll bet no-one predicted the situation we have today, if only because the first iPhone was still months from being announced!

    As for copying Apple's playbook, only those comparing laundry lists of features think anyone else is closing in on Apple. Anyone who's actually used the phones knows that Apple's usability and feature integration lead is enormous. While computer users will put up with a lot in the pursuit of raw CPU power, phones need to just work, which means that the interface needs to be obvious. The others keep making amateur mistakes - like the latest smartphone that requires you to return the Inbox to read the next message.

    As for teenagers, actually go play the "cover the logo" game. I dare ya.

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