Unless you need a handheld device tomorrow, my advice to those who are looking for a PDA is to wait and see what Dell comes up with. While scant details are available, Dell officials have indeed confirmed that the company is about to dive into that market and that units could appear in time for the holiday buying season.

How can I recommend something that makes vaporware look like a shipping product? It's simple. Not counting printers, Dell has a very straight-forward model for doing business: It takes the same, relatively standard off-the-shelf parts (Intel processors, Microsoft operating systems, memory, displays, etc.) that its competition is using, integrates those parts into something that works well, puts that something in a cardboard box, and sells the same system everyone else sells--but for a lot less money.

Although Dell officials might not like the characterization, Dell can do this because Dell isn't a computer company. It's a bank (Apparently, Sun's Scott McNealy agrees, but in a very uncomplimentary way.) By the time Dell collects payment from its customers for the computers it has already shipped to them, Dell still has a few days to pay for the parts that went into those computers and, on top of that, is probably getting a discount that's typical for accelerated payment--a discount that can be passed onto the customer. Dell's direct model and mean, lean manufacturing and inventory control processes are what make this possible. In fact, companies that sell direct to their customers actually have a benchmark for this process called DSI (Day Sales in Inventory).

DSI refers to the number of days that elapse between the time a company receives its raw materials and the time those raw materials are shipped as part of a finished product. The lower a company's average DSI, the more cash it can generate off the float and any discounts, and the more money it can take off the price of its systems. Because Dell sells primarily through a direct channel, where its build-to-order products go straight from the assembly line's last conveyer belt to the customer, the company can keep its DSI very low. According to a Dell spokesperson, as of the second quarter, Dell's average DSI is now down to an astonishing four days. If Dell's average DSI is four, and assuming its terms for payment are a stingy 1/15 Net 30 (1 percent discount if paid within 15 days of invoice, no discount if paid within 30 days of invoice), Dell would still have anywhere from 11 to 26 days to collect interest on the money that it must eventually send to suppliers like Intel. Compare that to companies that operate in channels where they must keep finished product handy for weeks or months at time. By the time those companies sell their computers, they've already paid for the parts and the cost of holding that inventory is eating away at their bottom line. Now you know why everyone would rather be in the direct business.

What does this have to do with handhelds?

It's highly unlikely that Dell would dive into a high volume market like handheld computers unless it could apply the same model that has made it a success with the computers it already sells. Take that idea and combine it with the rumors about Dell's timing and choice of PocketPC as its operating system, and what you end up with is this: An Intel XScale Processor-based device (this is the default for all handhelds running PocketPC or PalmOS), with Microsoft's operating system (PocketPC 2002), probably some standard ports for enhancing it, and a price that the rest of the market can't even touch.

Price has been one of the biggest obstacles to acceptance of the PocketPC. But if Dell manages to undercut Hewlett Packard, Toshiba, Audiovox, and the rest of the PocketPC-clan, it may blow the entire handheld market open as it brings the capabilities of the PocketPC closer to the price range of Palm-based devices, and forces a price reaction from the rest of its newly acquired competition.

Already, HP appears to be girding for Dell's entry into the handheld market. This week, the company suddenly started offering specifics about a series of handhelds it plans to release before the year's end. In addition to merging the best ingredients from HP's Jornadas and Compaq's iPaqs into a high-end device with built-in wireless, telephony and biometric security for the enterprise market, HP has announced it will go after the $200-$400 midrange market as well. HP director of public relations Roger Frizzell told me, "We're going after Dell and the Palm-based devices." What's fascinating about this is that Frizzell didn't mention any other PocketPC vendors by name. Not only does the one he picked not have a handheld yet, but relatively few details about its price or design are available. Normally, when one vendor goes after another in a given segment, it goes after an established offering. If a pre-emptive PR strike from the leader in PocketPC-based devices isn't proof that Dell is going to upset the balance of power in the handheld market, I don't know what is.

What could stand in Dell's way from shaking things up? First, newbies in the handheld market rarely get their first handhelds right. Still, Dell has been standing on the sidelines taking note of all the design mistakes (many of which ZDNet has documented) that companies like HP and Compaq have made with their Jornadas and iPaqs. Another problem for Dell, if the rumors about selection of a Taiwan-based manufacturer are true, could be the additional time it takes to move inventory from Taiwan to Dell's customers. Dell had no comment on whether it was working with company in Taiwan, let alone whether it was just for industrial design, or for the entire manufacturing process. But, again, I highly doubt Dell would dive into the handheld market unless it knew for sure it could apply the same business model that's worked for it elsewhere.

Bottom-line? Whether or not you're waiting for Dell , I suggest postponing your next PDA purchase until at least the Christmas buying season. Business for information technology vendors is terrible right now, and that means there are likely to be bargains available during the holiday season, even if Dell isn't the one to shake things up. Even if Dell is, there's no guarantee that its brew will be more compelling than the other products (both PocketPC and Palm-based) on the market today. But it'll certainly be worth the wait to see what turns up.

Does Dell's reputation make the company a shoe-in for handheld success? What do you think? TalkBack below or write to me at david.berlind@cnet.com.