Netbook Innovation: Dell + Litl + Boxee

While my brain is unusually active on ideas, I rarely write them down. Back in May in my post The Dell Dilemma – I wrote about how Dell needs to innovate. At that time I had an idea to propose, I never got around to writing about it. The idea can be best expressed by the seeing what this Litl startup has done. Dell needs to innovate their PC and Notebook lineup to better compete with HP. John Gruber of Daring Fireball makes very good arguments on why PC companies need to out of the box innovation here and here – and gives example of what Litl has done.

For now, Dell is trying to mimic IBM and HP with the acquisition of Perot Systems to compete with them. I think that is, culturally, a much more difficult move for Dell, not to mention it is not their core competency.

Dell should learn from Litl or may be even acquire them and come out with dual function notebook or webbook.  I would, though, enhance the Litl platform in the following ways:

1. A Dual-Mode machine = PC + Media Player

2. Install a Android-based OS (or may be even Ubuntu Karmic!) – increase the PC functionality on the current design of Litl

3. Make it a dual boot OR rather a dual-mode machine by providing a “dock” that has the HDMI connections to the TV

4. When the machine is docked, it would work as a Entertainment Netbook (the SW would switch upon docking)

5. Bundle a nice remote with the package (and of course the Dock)

5. License Boxee software and have it pre-loaded on the Book

6. When Undocked – it works like a PC with support for Google Docs or Open Office

Future editions could bundle the Amazon Kindle or Barnes & Noble Nook support to make it work like an e-Reader. The bottomline, though, is that Dell’s operational and supply chain expertise could bring down the cost of manufacturing and marketing and introduce a new category in the Computing Market.

The Dell Dilemma

I write this as Dell is about to announce their latest quarterly results on May 28^th. Dell’s struggles in the past few years are well documented in blogs (technical and financial) and their own financial results, even after the comeback of Michael Dell the struggle has continued. Here is a sampling:

1. Dell’s current revenues are steeped in PCs & Notebooks. The financial year ending January 31^st, 2009 had 60% of its revenues in Mobility & PCs – Mobility accounting 31% of the revenues.
2. Even though there are some predictions in the market that the business have quit slashing their IT budgets – it is difficult to envision how Dell is going to come out at the top. Year over year revenues are stagnant at $61.1 billion and the profit is down from $2.94 billion to $2.47 billion.
3. Dell still seems to be dabbling with no clear sense of strategy and direction. Dell has done business selling flat panel TVs and handheld devices.
4. And recently has been attempting to introduce a Smart Phone! Doing a Google Search on “Dell Cell Phone” results in the first entry indicating that they have been mulling a cell phone since 2007! But as you search and read on you find out that carriers have more or less rejected the Dell Cell Phone citing it as too dull. Oh and as I write this and run various Google searches I come across a post which says the Dell’s Cell Phone is Dead!
5. Dell also has recently launched the Adamo series to compete with the Macbook Air from Apple. It has been slow on the Netbook market trend as well. And, of course, like many others, Dell is also rumored to be tinkering with Android based Netbook!
6. Dell is going to face an interesting challenge on the server front thanks to Cloud Offerings by the likes of Amazon and Google in addition to the traditional competition from Sun, HP, and IBM. Not to make things easier even Cisco has entered the Server Market recently!
7. Net-net this lack of direction is well summarized here!

So what is Dell to do, IMHO:

As a recent investor in DELL and watching their stock price meander with no direction, I was prompted to write this post.

Dell needs to make radical changes on what and how they build their products. They need to enter product categories that allow them to create a Blue Ocean or Purple Cow. Simply speaking they need to out-compete their competition – introducing just another Smart Phone or a Netbook is probably not going to be a game changer.

The down-turn in the industry is a good time for Dell to re-invent itself.