Rumours about Dell entering the smart phone market have persisted ever since the company axed its Axim PDA. Now, the rumours are getting louder with industry analysts predicting that the company could be making an announcement at Mobile World Congress next month.

One of its competitors, Acer, has already announced its intention of launching a new range of phones at the show and now several analysts have looked for Dell to enter the smart phone business due to its background in PDAs and because of its 2007 hiring of Ron Garriques, who had been the head of phone development at Motorola.

Garrigues was hired to head all consumer product development at Dell, and had to sign a non-compete agreement that would prevent him from working on any phone until February of 2009, noted Kevin Burden , an analyst at ABI Research. "That deadline for Gerriques is fast approaching," said Burden. "We all knew Dell would get into smart phones at some point."

But Burden said that Dell could go all the way to the brink of announcing a smart phone and then pull back if the economics are not right. The same thing happened with the Axim PDA, he noted, citing the firm's decision to postpone its launch from 2000 until 2002. Burden said he had first-hand knowledge of that decision, having worked as a consultant to many manufacturers, including Dell, at the time.

"Dell has never been first to market with anything," Burden noted. "They sit back and look to see when the market has sustainable volumes and squeeze ... to get prices down."

Andy Kitson, an analyst and blogger at Juniper Research, said Dell might balk at the cost of designing and developing a smart phone. The Wall Street Journal reported , based on information gathered from unnamed sources, that Dell has already created two smart phone prototypes running the Windows Mobile and Android operating systems.

Independent wireless and telecom analyst Jeffrey Kagan said the rumours of Dell's entry and Acer's announced plans to join into the smart phone market comes at a good time . "The market is lousy compared to great times, but for smart phones, the market is still decent," he said.

Burden said that successful forays into the smartphone business against the likes of Apple with the iPhone and RIM, maker of various BlackBerry devices would depend in large part on which carriers end up selling the devices in the US. When asked which carriers are likely to sell Dell or Acer smart phones, Burden said "who knows? Selling mobile phones is lot different than selling PCs directly as Dell has done, and the only effective way is through a mobile agreement with an operator to get good volumes of sales."

But Burden agreed with Kagan that smart phones are one of the few products expected to grow in sales in 2009, meaning manufacturers of all types of computers and handsets will try to sell them. He noted that ABI projects that smart phones will make up 17 percent of mobile device sales in 2009, up from 14 percent  last year. The total number of mobile devices sold in 2009 will be 2.5 percent less than last year, ABI added.