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Kent Pribbernow of PocketFactory offers good insight to Dell's motives in the Pocket PC market.
"Dell first entered the PDA space in 2003, turning the industry on its ear by offering an astoundingly low-priced Pocket PC, instantly resetting consumer price expectations. Since that time Dell's offerings have increased both in numbers and in value. Yet in spite of the Axim's well earned reputation for “bang for the buck”, Dell's handheld sales and overall share of the mobile device space remains very low. Axim sales account for less than 1% of Dell's revenues. When you look at the fact the company is still offering traditional handheld devices, a declining segment, and its latest models are little more than a rehash of last years products, you have to wonder what how committed this company really is to this space.
Dell seems to be fighting this battle in much the same way that Microsoft has from the beginning with its mobile operating system; with one hand tied behind its back. Two things cripple Dell's potential in the mobile space. For starters, unlike its PC business, Dell doesn't actually build its mobile devices. No handheld vendor does. They are built and assembled overseas by Asian contract manufacturers. Dell simply brands these devices and resells them. This is important because it means that it cannot apply is legendary lean manufacturing process employed in its PC division to lower costs and raise margins. It is for that reason that current Axim handhelds vary little in terms of pricing compared to other competing models, other than those rare moments when Dell utilizes discount coupons to move inventory.
The second issue of even greater importance is the lack of retail presence. This factor alone hinders Axim sales more than any other aspect. A PDA is a consumer electronics product. As such, consumers generally want to touch and feel such a product before making a purchase. Something that is nearly impossible to do under Dell's business model.
My instincts tell me that Dell isn't going to stay in this game for much longer. Unless it moves quickly into higher growth areas like Smartphones, I see little hope for growth in Dell's current and future offerings, and I know the MBAs at Dell have to be thinking the same thing.
Dell's departure from the handheld market will have little impact other than to confirm what we already know; that traditional PDAs are a declining segment. Still, I see a great wasted opportunity here. The most popular mobile device in the corporate space is probably Research In Motion's Blackberry messenger. With Dell's already monstrous corporate installed base, the company could easily create a Windows Mobile powered Smartphone of similar form and function, just as HP has done, giving them a springboard into a fast growing market. Given it's close relationship with IT, I see the potential for Dell to change the rules in wireless handset distribution and marketing; extending its direct business model to subscribers and corporate customers, bypassing the middleman. In this case wireless carriers.
Is it time for Dell to get off the pot? Should Dell create an AximBerry? The time is right, and the market has already sailed in this direction. The question is whether or not Dell will be on board or waving from shore."
Kent Pribbernow of 
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