Dell and Baidu team up for tablets, mobiles

A man uses a tablet computer during the Baidu 2011 technology innovation conference in Beijing.

(Reuters) - Dell Inc and China's top search engine Baidu Inc plan to jointly develop tablet computers and mobile phones, targeting the Chinese market dominated by Apple Inc and Lenovo.

China is one of the fastest growing markets for tablets and is home to more than 900 million mobile phone subscribers, but analysts were skeptical that the partnership would unseat Apple as the dominant force in the market.

"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 media reported on Tuesday, quoting sources, that it may be as early as November.

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.

The company 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.

Baidu has built on its dominance of China's search market significantly since Google's high-profile exit last year citing hacking and censorship concerns.

Baidu's Nasdaq-listed shares are up nearly 50 percent so far this year, giving it a market value of around $50 billion.

BUSY SPACE

A Dell-Baidu tie-up would be the latest in a series of developments reshaping the mobile devices market.

Last month, Google said it would buy Motorola Mobility Holdings for $12.5 billion, putting Google into a lower-margin manufacturing business and pitting it against as many as 38 other handset companies that use Google's Android software.

"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 research director with Gartner.

Dell has chosen China to launch new products before. In June, Dell said it had chosen to launch its new 10-inch Android tablet in China this summer, passing up on a U.S. and European launch, in a sign of the market's growing importance to the company.

Dell's China sales grew 22 percent in the first quarter while its retail presence in China exceeds 10,000 sales points.

In 2009, Dell announced it will enter the smartphone market starting in China before moving into Brazil.

o