Dell is getting closer to releasing its long-rumored first smartphone, according to a research note by Kaufman Bros. analyst Shaw Wu. Investigations within Dell's supply chain point reportedly indicate that a Dell smartphone is "closer to reality" after roughly two years of discussions with those companies that might offer parts for the device. No specific launch window has been set.

Specifications are also unknown, though Dell has usually embraced Windows Mobile-based devices, both through its discontinued PDA-only Axim devices as well as its current catalog of third-party phones that favors the Microsoft platform.

Dell has publicly tried to play down rumors of its launching a phone but has stopped short of openly denying the claims, which have been fueled in part by its hiring a former Motorola cellphone chief to head up its home product business.

Wu suggests that a smartphone would likely be introduced to mitigate the effect of smartphones siphoning away notebook users but warns that Dell would have to make its effort truly distinctive to have a realistic chance at gaining significant market share. The two fastest-rising competitors in smartphones, Apple and RIM, build both unique hardware and software where less influential firms like HTC, iMate, Motorola and Palm are currently building devices based on device-independent operating systems like Windows Mobile and now Google's Android. Palm's attention-getting Pre uses the in-house webOS rather than either the old PalmOS or Windows Mobile systems found on its existing devices.

"For this reason, we [at Kaufman] believe Dell may need to consider an acquisition" of a software maker, Wu argues.