Report: Dell to move into handheld market

Dell Computer Corp. is planning its first foray into the handheld market and has been negotiating with several Taiwanese original equipment manufacturers (OEMs) to produce a higher-end product to gun against rivals Toshiba Corp. and Hewlett-Packard Co., reports this week indicate.

Research released Thursday by analyst firm Ars Inc. speculated that Dell would soon place a large order for branded handhelds based on Microsoft Corp.’s Pocket PC operating system (OS). Although the report, written by Ars handheld PC analyst Sam Bhavnani, cites rumors in Taiwan, an Ars representative said that Bhavnani has had regular communications with a Dell handheld product manager.

Although Dell spokesman Cody Pinkston said Friday that the company would not comment on rumors or speculations, he did say that Dell has publically stated that it is looking for opportunities in new markets like handhelds and mobile projectors. The Austin, Texas, company just recently began selling branded projectors.

Dell already resells a number of personal digital assistants (PDAs), including Palm OS-based handhelds from Sony Corp. and Palm Inc. and Pocket PC-based devices from Casio Computer Co. Ltd., NEC Corp. and Hewlett-Packard (HP).

However, HP is phasing out its line of Jornada handhelds now that it has acquired Compaq Computer Corp. Instead, HP will push Compaq’s iPAQ line of handhelds. Given that Dell and Compaq are long-time rivals, it is unlikely that Dell would want to resell Compaq-designed handhelds and may be looking for a similar branded PDA with which it can compete.

“The ‘new HP’ is clearly the target here,” said Ars senior analyst for mobile computing Matt Sargent, who worked with Bhavnani on the report.

According to the Ars report, Dell is most likely looking to round out its product line aimed at enterprise customers, and would want to produce a high-end handheld with wireless connectivity, perhaps based on Intel Corp.’s new XScale processors.

“Dell is very much of an Intel house,” Sargent said. “And since iPAQ is so dominant, to evolve this marketplace they will probably use Intel at a very high end.”

Both Toshiba and HP will soon have new XScale-based devices on the market, according to Ars.

But Dell’s strong brand name and positive relationship with Taiwanese OEMs may allow it to offer a similar product at a lower cost, the researcher noted.

Taiwanese OEMs might be willing to strike a particularly attractive handheld deal with Dell in the hopes of gaining future notebook manufacturing contracts, Sargent noted.

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