Having failed in the markets for MP3 music players and for high-definition televisions, Dell now says that is going to try its hand at smartphones. We hope that Dell’s board and management are asking how this foray into consumer electronics will be different than Dell’s previous efforts. Otherwise, it won’t be.

Unless it asks itself tough questions, Dell will again fall victim to what’s known as the Red Queen Syndrome, so named for the queen in “Through the Looking Glass,” who says, “It takes all the running you can do to keep in the same place.”

Most of the coverage of Dell’s decision to buy Perot Systems for $3.9 billion says the move makes strategic sense, because the big players in the computer industry have large services businesses, and Dell will now have a much stronger services offering. Some writers also note that Dell paid a steep price: nearly 30 times estimates for Perot Systems earnings this year, and a 68% premium over where Perot stock traded before the takeover announcement. But no one seems to have tried to assess whether the price is so high that the deal shouldn’t have been done. The answer is that the price is likely way too high–the deal will make Dell shareholders poorer. How is that strategic?

When we remodeled our homes some years back, we decided that the most expensive words known to man were, “While we’re at it. . . .” In doing the research for our book, though, we realized that the words, “Well, we have to do something,” have caused far more damage.

Executives convince themselves that, no matter what, they have to achieve some stock-price goal, some market-share goal, some profit goal. So, they lay out a strategy that might work and roll the dice, even when the odds are stacked against them. In other words, they take what they think is their best bet even though an objective review would show they aren’t making a good bet. Often, they lose.

Sometimes, they lose billions—making us feel a bit better about those bad thousand-dollar decisions we made while remodeling.

There are some curious ideas being bruited about in the computer industry these days. It seems that cash is burning a hole in the pockets of healthy companies such as IBM and Cisco. Rather than have the cash sit around earning basically nothing at today’s low interest rates, the companies have decided to start looking for acquisitions. While that can be a splendid strategy in the right circumstances, the combinations being discussed don’t make much sense. Shareholders would be better off if the companies followed Oracle’s example and declared a dividend.

As reports surface that Dell is considering entering the market for smart phones, we think the company is smart to not just hunker down and hope that problems in its personal-computer business go away. They won’t go away, not any time soon.

The whole industry is under such pressure that even Intel and Microsoft are feeling it. And, before demand plunged, the industry was moving away from Dell. It had thrived in a time when people mostly used desktop computers and purchased them based on how much computing power they provided for a given price. Now that laptops are ascendant, customers are much more concerned with how the computers look, with how the keyboard feels and with other subjective measures. But Dell barely has a presence in the retail channel, so customers have little opportunity to try Dell’s laptops. Besides, Dell has never shown great strength in the kind of design that catches a consumer’s attention the way Apple does.

Which brings us to the Red Queen–and why the move into smart phones is likely to be a bad idea.