Sources tell The Wall Street Journal that the MID uses an ARM-based chip, runs Google’s (GOOG) Android operating system and has been in development since last year. It does not have cellphone capabilities. The device could arrive at market before the end of the year, distributed via cellular providers, though a person familiar with the company’s plans tells The Journal it might be delayed or even scrapped entirely.

For Dell (DELL), whose track record in adjacent electronics businesses is littered with the corpses of devices like the Ditty and Axim, venturing into the MID market might be a tad risky. To succeed the company would have to overcome its lack of software development experience and wireless technology and develop an appealing device. No easy task for a company whose recent smartphone design was rejected as too dull by wireless network operators.

So, Dell’s ambitious return to the digital music player market? Not quite so ambitious.

The company has reportedly shelved for the time being its new “iPod Zune killer.” Intended to launch in concert with an online subscription service, the device was to use software developed at Zing, a company Dell (DELL) acquired last year, to retrieve and organize digital media. It was to arrive at market in September at a price below $100.

Obviously, it never did. And, according to people familiar with Dell’s plans, it won’t for some time. Dell has reportedly shelved the device for the time being, opting instead to focus its attention on the Zing software that was to accompany it.

So much for that “product lust” company CEO Michael Dell said the company would soon engender in the public.

The “postponement” of the device is likely a wise move given current economic conditions. Wiser still, given Dell’s previous foray into the MP3 market, which was about as ill-starred as such things get. Dell’s first MP3 player–the uncompelling, unpopular and unfortunately-named DJ Ditty–lasted three years before the company scuttled it. And, as I’ve pointed out here before, that was back in 2006, when Apple’s iPod wasn’t quite the cultural icon it is today. How long would a second Dell MP3 player last in a market that’s 71 percent-controlled by Apple (AAPL)?

It’s interesting the iPod has been out for three years and it’s only this past year it’s become a raging success. Well, those things that become fads rage, and then they drop off. When I was growing up there was a product made by Sony called the Sony Walkman–a rage, everyone had to have one. Well, you don’t hear about the Walkman anymore. I believe that one-product wonders come and go. You have to have sustainable business models, sustainable strategy.”

– In 2005, former Dell Chief Executive Kevin Rollins utters the words he would dine on a short while later

A glutton for punishment, Dell. Though its foray into the MP3 player market was about as ill-starred as they come (remember DJ Ditty (mascot at right)? Yeah, didn’t think so.), the company is gearing up for a second attempt. Unfazed by its Ditty disaster, Dell (DELL) has reportedly developed a second, ahem, “iPod killer.” Designed to connect to online music services via a Wi-Fi Internet connection, the device will use software developed at Zing, a company Dell acquired last year, to retrieve and organize digital media. The device will sell for less than $100 when it arrives at market in September.

Dell’s first MP3 player lasted three years before the company scuttled it. That was back in 2006, when Apple’s iPod was somewhat less ubiquitous than it is now. How long will its second player last in a market that’s 71 percent-controlled by Apple (AAPL) and dripping in iPod branding? History would seem to suggest not long at all, though Microsoft’s (MSFT) maligned Zune music player has managed to stick around for a few years. Perhaps Dell can steal a point or two of market share from its sad, little four percent. All aboard the FAIL-boat. …