Dell is discontinuing its communications solutions group and parting ways with Ron Garriques, the chief executive who has run the unit since 2007.
Garriques will leave the company effective January 28, 2011, according to a Wednesday filing with the U.S. Securities and Exchange Commission. He will continue to work with Dell as a consultant from Jan. 31, 2011 through Dec. 31, 2011. Garriques will receive two lump sum payments of $US3.15 million each for his consulting work, in addition to a $US1.4 million severance payment, according to the filing.
According to a Dell spokesperson quoted in The Wall Street Journal , Dell made the decision to eliminate Garriques' unit because it no longer sees mobile devices as a consumer-focused initiative.
Garriques' departure comes as Dell prepares to bring several smartphone and tablet devices to market early next year. "He made a decision to look at other opportunities as we integrate the former communications solutions group into our core operating structure," a Dell spokesperson told Reuters.
Dell showcased its Windows Phone 7-based Venue Pro smartphone at the Windows Phone 7 launch in October, and is expected to bring more devices running Microsoft's OS to market next year.
The Dell Aero smartphone debuted in August to criticism over its outdated Android 1.5 OS, exclusive AT&T network, and limited functionality.
Dell will report third quarter earnings on Thursday. Dell reported revenue of $US2.9 billion for its consumer unit for the second quarter of 2010, down from $US3.2 billion in Q1. Garriques' mobile unit netted a loss of $US21 million during that span, according to Dell's Q2 earnings report.
Garriques was previously head of Motorola's mobile phone unit and came to Dell with the goal of transforming its struggling customer business. Dell released the Android-based 5-inch version of its Streak device earlier this year, and a 7-inch version is expected to launch soon. But with the departure of the chief executive in charge of marketing its mobile devices, those plans could change.
Before Garriques' arrival, Dell's consumer solutions group had been part of its consumer and SMB unit. The company's main structure will now re-absorb the unit, dividing up marketing responsibilities currently belonging to Garriques' group among three other units: large enterprise customers, public sector customers, and midsize business customers. The company in September revealed plans to develop enterprise solutions aimed at health-care customers for its Android-based Streak device.