How Much Will Killing the Streak 7 Hurt Dell?
According to new reports, Dell (NASDAQ:DELL) has confirmed that it will stop selling Dell Streak 7 in the U.S. [1] The Streak 7 follows the same fate as its predecessor, Dell Streak 5, which was discontinued in the U.S. four months ago. Many are seeing this as Dell’s silent nod to the fact that Android tablets have failed to lure customers in a market dominated by Apple‘s (NASDAQ:AAPL) iPad while others believe the move is due to an increasingly competitive market place – with new entrants like Amazon‘s (NASDAQ:AMZN) Kindle Fire – which is making Dell’s survival in the tablet market difficult. [2]
Dell, on the other hand, is stating that it’s committed to the mobility market and will continue to sell products in the U.S. as well as the other parts of the world. The axing of Dell Streak 7, however, means the company has no other Android tablet offerings in the U.S. Below we discuss the potential impact of this move on the company’s stock.
We currently estimate that tablets make up nearly 2.3% of our $21.15 Trefis price estimate for Dell.
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Potential Downside to Dell
In spite of being a very small player with hardly any market share in the tablet market, we estimate Dell’s tablet sales to increase in the future primarily as the overall market grows. However, with Dell taking off all of its Android tablet offerings from the U.S. market, this may have an impact on its other businesses as well.
And while Dell’s Windows 8-based tablets are yet to hit the market, the recent events ensure that consumers are wary of Dell’s future tablet offerings. This early dent in Dell’s tablet strategy could also turn out to be a major blow to the computer maker’s plans to make the most of the flourishing tablet computing market and might hurt its stock in the long run.
If Dell fails to compete in the tablet market, forcing it take off all of its offerings, there will be a downside of 2.3% to our $21.15 Trefis price estimate for Dell or even more due to any associated losses.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:- Streak 7 is no longer available online, Dell [↩]
- Dell kills its Streak 7 Android tablet in the U.S., venturebeat.com [↩]