Dell is planning its first foray into the handheld market and has been negotiating with several Taiwanese OEMs (original equipment manufacturers) to produce a higher-end product to pit against rival devices from Toshiba and HP, reports this week indicate.

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

Although Dell spokesman Cody Pinkston declined to comment on the rumours, he did confirm that the company has publicly stated that it is looking for opportunities in new markets like handhelds and mobile projectors — in fact it has plans to start selling Dell-branded projectors in the US next month.

Dell already resells a number of PDAs (personal digital assistants) from vendors including Sony, Handspring, Palm and HP.

But, despite the recent launch of the Jornada 728 HP is said to be planning to phase out its Jornada range, in favour of 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 so it 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 to aim its handheld at corporate customers, and as such would want to launch a high-end handheld with wireless connectivity, perhaps using an Xscale processor.

"Dell is very much 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.