Look out iPod, here comes Dell...again

That online music market must be awfully tempting catnip to Michael Dell.

The Wall Street Journal reported Wednesday that Dell for the last few months has been testing a digital music player that could go on sale as early as September. The story (which will surely serve as a nice trial balloon for Dell's marketers) says the music player could sell for less than $100. It will use Wi-Fi to connect to third-party music services.

Dell may get back in on the music action.

(Credit: Dell)

If that's deja vu you're feeling, you're not the only one. In 2003, Dell jumped into music biz with its own player. Three years later, it jumped out, with around a 3 percent share of the market. It was one of several disappointing and ultimately abandoned consumer efforts, including forays into televisions and handheld computing devices (though there are reports that Dell may get back into the mobile market).

Could it be different this time around? While it's hard to imagine Dell posing a real threat to the iPod's more than 70-percent share of the digital music player market, never say never. The software behind Dell's device came from Zing, a small company Dell acquired a year ago, according to the WSJ. Dell's music software could also come pre-installed on new Dell PCs. An excerpt from the story:

Software would connect the device to an online subscription service that Dell expects to launch later this year. Through licensing agreements with online music providers, Dell's new service will let consumers download songs and move them between devices like PCs and cell phones. While the device Dell is testing is focused on playing music, Dell's new service also would allow movies to be downloaded and displayed on PCs, for example. Pricing for the new service hasn't been determined.

There are plenty of potential partners for Dell, of course. The company already has ties to music services from Pandora and Rhapsody. And MySpace Music, a major music service that's expected to launch in September with music from at least three of the four major record labels, could also be a major partner, though the Journal article doesn't mention it.

Then again, Dell could decide to do nothing at all. That's what trial balloons are for. But it's hard to imagine Dell or any other PC maker sitting by forever as Apple becomes more and more entrenched in home entertainment.