BY Gabriel Madway

Dell Inc plans to launch a smartphone with Google's Android mobile software on carrier AT&T's network as soon as early 2010, the Wall Street Journal reported, marking the PC maker's first foray into a cut-throat U.S. cellphone arena.

Dell will become the latest tech manufacturer to try and establish a footprint in a fast-growing market dominated by Apple and Research in Motion. Its envisioned phone would also give Google's fledgling mobile platform, which vies with Apple's and Microsoft's, a boost.

Smartphones -- or cellphones that come with an array of complex functions from email to multimedia -- have exploded onto the corporate and consumer market as users increasingly access information and entertainment on the go.

Worldwide factory shipments of smart phones are expected to rise to 235.6 million units in 2010, up 27.9 percent from 184.2 million in 2009, according to iSuppli. That is a far cry from a 12.3 percent decline projected for cellphones overall in 2009.

But analysts warn that the world's No. 2 PC maker would face a tough challenge in a market already crowded with competition. On Wednesday, Korea's Samsung announced it, too, would begin selling an Android phone through Sprint Nextel's network.

Others including Taiwanese rivals Acer Inc and ASUSTeK Computer Inc are moving into smartphones, which tend to carry higher margins than PCs.

Dell has been coy about its plans, although such a move has been rumored ever since it hired Ron Garriques from Motorola Inc in 2007 to lead its consumer products division.

Dell confirmed last summer it was developing mobile devices for China Mobile Ltd, but the company would not say what type of devices or elaborate on timing.

They've been working on a phone for awhile, said Kaufman Bros analyst Shaw Wu. But it's going to be really hard for them to differentiate from what's already on the market.

The Wall Street Journal, citing people briefed on the matter, reported that Dell's Android phone for AT&T would come with a touch-screen and a camera.


Dell spokesman Andrew Bowins declined to comment on the Journal report but said: We are deeply engaged with our operator partners around the world to deliver mobile broadband enabled computing devices.

He added, We haven't announced anything around voice or Android although we continue to explore opportunities in those areas with operators around the world.

Google declined to comment, as did AT&T. But a spokesman for the telecoms giant, Michael Coe, said: We expect to sell Android phones in the future.

Forrester Research analyst Charles Golvin said a partnership between Dell and AT&T would make sense given the flurry of news around Android smartphones.

It's pretty natural that these other guys are going to jump on the Android bandwagon... From AT&T's perspective, it's a gap that they're looking to fill. Get an Android phone, get one that's different than the one everybody else is offering.

But Golvin cautioned that Dell does not have a strong track record moving into areas where it has little experience. Other analysts noted that Android is generating plenty of momentum.

The goal here of Google is to make the Android operating system a real alternative to that of Apple, Research In Motion's Blackberry and Palm, said C.L. King and Associates analyst Lawrence Harris.

Also Wednesday, Samsung Electronics announced its first Android phone, the Moment, which will be carried by Sprint Nextel. It will be available November 1.

Google is gaining some traction with its fledgling software. On Tuesday, it announced it was partnering with Verizon Wireless to co-develop multiple phones based on Android. They plan to bring two phones to market this year. Verizon Wireless is a venture of Verizon Communications Inc and Vodafone Group Plc.

Other Android phones include Motorola's recently announced Cliq, and HTC's Hero, slated for U.S. release next week.

(Additional reporting by Ritsuko Ando, Anupreeta Das and Ian Sherr; Editing by Edwin Chan, Leslie Gevirtz)