A Dell Android smartphone on the AT&T network will have to undercut the competition on pricing, and the hardware maker will need to nurture a tight relationship with the No. 2 carrier's distribution channels to be successful, according to an industry analyst.

The industry has seen "Delldroid" rumors come and go -- but a fresh batch of reports citing sources close to the company suggest that Dell (NASDAQ: DELL) is planning to deliver an Android smartphone next year.

A Dell spokesman declined to comment, but if reports are true, it would mark the PC giant's first foray into the smartphone market, after several fits and starts, and it would likely be AT&T's (NYSE: T) first handset based on Google's (NASDAQ: GOOG) open source mobile platform.

To make a successful entry into the sector, Dell will need to focus on how it works with AT&T's sales channels, according to Jack Gold, an analyst with J. Gold Associates.

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