July 26, 2002 12:40 PM PDT

Analyst: Dell may offer handheld this year

Dell Computer is likely to enter the handheld market later this year with a device to be manufactured by a Taiwanese contract manufacturer, a Wall Street analyst said this week.

Dell is looking for a manufacturer to supply about 1.5 million devices, First Albany analyst Walter Winnitzki said in a note to clients. Winnitzki cited sources as saying that Dell will turn to Taiwan's Compal for the device, which will likely go on sale in the fall and use a variant of Microsoft's Windows CE operating system.

The device, or subsequent devices, may include the option of acting as a cell phone as well as a handheld, Winnitzki said.

There has been increased speculation in recent weeks that Dell is looking to enter the handheld market.

Sources close to Dell told CNET News.com last month that although no decisions have been made, the company has been evaluating communicator-style handheld devices that combine the features of cellular phones and personal digital assistants (PDAs), in the manner of Handspring's Treo.

Dell executives have been bearish on the handheld market for some time, noting that it is still small in volume and has yet to find a focus.

However, the PC maker has been seen heading into a number of new markets to help fuel further growth. Dell executives have said the company is likely to enter the printer market later this year, and its has already launched itself into other new areas, such as projectors.

Dell spokesman Mike Maher said Friday that Dell is evaluating whether to offer its own handhelds "along with any number of products contiguous to ones we sell."

This would not be the company's first look at the handheld market. Chief Financial Officer James Schneider said in January that the company formerly had a business unit studying the handheld market but disbanded the effort in early 2001.

Dell currently resells handhelds from Sony, Palm, Handspring, Casio and Research In Motion, among others.


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