Michael Dell: Stay Tuned for Smartphones

Dell will neither confirm nor deny that it is working on a smartphone, but it’s CEO dropped some strong hints this week during a speech in Tokyo.

“For the last three years, we have integrated 3G radios into our notebooks,” Dell said. “We already have agreements with many mobile carriers around netbook devices, so it wouldn’t be unreasonable to expect that we would have smaller mobile Internet devices or smartphones in the future.”

Dell’s comments were the closest the company has come to publicly admitting it is working on a smartphone. But his remarks come on the heels of several unconfirmed reports that Dell shopped its smartphone prototype to several carriers, which rejected the unit on the grounds that it didn’t have enough differentiating features.

Indeed, Kaufman Bros wrote a research note on Dell’s need to go back to the drawing board with its smartphone. “From our conversations with supply chain and industry sources, it appears that it ultimately came down to lack of carrier interest,” Kaufman analyst Shaw Wu wrote.

Despite the negative feedback, the Commercial Times in Taiwan is reporting that Hon Hai Precision Industry Co., which is a contract manufacturer of electronics, received an order from Dell to begin manufacturing its smartphone.

Dell said during his speech that he is watching the development of ecosystems that have been created around mobile devices – specifically the application stores, of which Apple led the movement and Microsoft, Nokia and Google have since made public their intentions.

With that in mind, it’s no surprise, then, that some are speculating that Dell might move down the path of acquisition to enter the smartphone space more quickly.

Rumours are beginning to circulate that Dell is setting its sights on acquiring Palm, which hasn’t come out with a new phone offering since the Treo five years ago. It’s much-hyped and much-anticipated Pre, meanwhile, is still on track to be released in the first half of the year.

Palm needs a winner with Pre. The company just announced its sixth consecutive quarter of losses, with Palm revenues for third-quarter 2009 falling to around $90 million (£61.8 million).