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Dell Could Release Smartphone in February

UPDATED: They're back. Rumors of Dell's (NASDAQ: DELL) foray into the smartphone market are once again in the news, thanks to a Wall Street Journal article that said the PC maker has been working on prototypes for the past year.

The number 2 PC maker, which is struggling to stave off a continued erosion in PC market share, has prototypes built on Windows Mobile and the open source Google Android platform, with launches expected as early as next month, the Journal reported.

In addition, Web site Apple Insider pointed to recent statements by analysts for Kaufman Brothers that suggest Dell could be making a splashy smartphone announcement at the 3GSM conference in Barcelona in February.

Dell spokesperson David Frink told InternetNews.com that the company does not comment on rumors or speculation.

According to the WSJ report, Dell is developing high-end handsets featuring the touch screen and no keyboard approach, just like the Apple iPhone. The second reported device includes a keyboard that slides beneath the screen.

Despite the recession, smartphones are selling, well, like smartphones these days, according to a recent Gartner study. The research firm reported worldwide sales hit 32.3 million units in the second quarter of 2008 -- a 15. 7 per cent jump over the second quarter of 2007.

If only PC makers could cite similar sales stats. Dell has lost market share since it was toppled from its #1 perch by HP in 2007, according to Gartner Research.

Dell's smartphone strategy would mostly copy the one forged last year by top PC player HP, said analysts.

HP launched its 3G HP iPAQ 912 Series Business Messenger using Windows Mobile 6.1 in September, 2008. It was HP's second smartphone offering in the past 22 months.

"Their [Dell] enterprise base is very strong so I would predict that's where they would be headed logically," Philippe Winthrop, a director and enterprise mobility analyst for Strategy Analytics, told InternetNews.com.

If Dell moves into market, said industry analyst Jeff Kagan, it would need a groundbreaking handset to be a success even with an enterprise base it would sell into.

"It would have to come up with a pretty hot new device that goes beyond traditional smartphones. There are no guarantees on success," said Kagan.

Don't Forget Acer

When number 4 PC maker Acer launches a smartphone this month during a GSM conference in Barcelona, it could face different challenges than Dell, according to industry watchers.

First off it would be brand new to the US smartphone game and has no direct-to-market revenue stream like Dell, one analyst explained. Acer sells its systems exclusively through the channel.

"They certainly have the wherewithal to make and sell such a device and they want to be a full mobile product supplier, from high-end notebooks down to smart phones and everything in between," Jack Gold, of J.Gold Associates, told InternetNews.com.

Gold predicted Acer will rely on the Android platform for mobile development given its open source nature. He noted that many Taiwan handset equipment players have joined the Open Handset Alliance as it lets them leverage Linux.

An Acer spokesperson said more details of the smartphone launch will be revealed at the Feb. 16th GSM event.

"They [Acer] could potentially do a Windows Mobile device, but that would have a smaller market window of opportunity as most Microsoft devices appeal only to the business community," said Gold.

Updates prior version to include Jeff Kagan's full name on first reference and includes Acer's confirmation of its smartphone launch this month.