As a result, Dell has gone back to the design lab to rework the device, according to Shaw Wu, analyst for Kaufman Bros. Dell's phone would compete against heavyweights including the Apple iPhone and Research In Motion's BlackBerry, both leaders in the U.S. market.
Carriers would be important to a Dell smartphone launch, because they would provide the subsidies to lower the price to where it's competitive. Smartphones, including the iPhone and BlackBerry, are sold at huge discounts in return for multiyear service contracts.
Dell's smartphone, which would run software from Microsoft and Google, wasn't seen as good enough to stand out among competitors, Wu said in a research note, according to MarketWatch.
"From our conversations with supply chain and industry sources, it appears that it ultimately came down to lack of carrier interest," Wu wrote.
Dell has yet to publicly acknowledge that it's working on a smartphone despite media reports, including a Jan. 30 story in The Wall Street Journal. Company executives were not immediately available for comment Monday.
Analysts have said that Dell would need a near-groundbreaking smartphone in order to compete in the fiercely competitive market. In an interview with InformationWeek, Gartner analyst Ken Dulaney said a smartphone would be "one of the riskiest moves Dell has ever made."
"If they don't have something that's spectacular, then it's going to be a problem," he said.
Along with Apple and Dell, other computer makers have targeted the smartphone market. Acer, for example, introduced its first line in February.
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