Michael Dell recently said that some day, in the future, sometime later, definitely not anytime soon Dell may well make something that competes withe the iPhone:
“I think you will see us with small screen devices” Spoke Michael Dell
When asked specifically about smartphones like the iPhone the Right Honorable Mr. Dell said:
“You’ll see us with smaller and smaller devices that have capabilities of the devices you are referring to. Not in the near-term”

Dell’s success at copying small devices made by Apple hasn’t been the best, witness the much hyped then dropped Dell DJ. Recently Dell announced they were coming out with another .mp3 playerc player which will also fail miserably.

iPhone Matters did, in fact, break into Dell research headquarters and were able to snag this shot of the as yet unnamed Dell device:

via Reuters