Those rumors about Dell making a smartphone just got more support. According to a report from DigiTimes, Quanta Computer is building a Windows Mobile device code-named "fly" that will ship under the Dell brand. So maybe Dell is working on a smartphone after all. But what about the story that Dell might buy Palm?

Here is a look at the story:

The sources claimed that the Dell PDA handset project, codenamed "Fly," will develop a model using the Windows Mobile 6 Professional platform and supporting HSDPA. It probably will feature a QWERTY keyboard, though feature details have yet to be determined, the sources said.

Quanta, which is the biggest notebook supplier for Dell, is actively developing products for the PDA handset and 3G phone market, and it currently supplies handsets for Hewlett Packard (HP) and O2. Although the size of Quanta's handset business is smaller than High Tech Computer (HTC), its position as an ODM without its own-brand business or collaboration with telecom carriers has allowed it to win the Dell PDA handset project, the sources commented.

While Dell is fighting to fix its core business, it seems logical for the company to seriously look at the smartphone market. And frankly, given Dell's experience with PDAs as well as its manufacturing scale and relationships, it almost makes more sense for Dell to build rather than buy. Dell has reach into both enterprise IT and small businesses, both of which are big users of the BlackBerry, and it has the online retail distribution channel. And Dell already works with carriers to offer embedded wide-area cellular data on its notebooks.

And let us not forget, Ron Garriques, the former head of Motorola's mobile phone business, recently left Motorola to join Dell.

What do you think? Is Dell really planning to enter the smartphone market? And if so, will it build its own smartphone, or buy a smartphone maker like Palm?