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.

But the same cannot be said for Martine Rothblatt, the entrepreneur who founded Sirius (SIRI) nearly 20 years ago. She feels Sirius’s chances for real success may have died years ago–dealt a mortal blow by the FCC, which delayed its launch, depriving it of the competitive advantage it might have had over MP3 players like the iPod and later free Internet radio services.

“There has been a huge growth in terrestrial alternatives,” Rothblatt told Fortune. “As we move from third-generation to fourth-generation cellular, there’s going to be ever more bandwidth available to distribute content totally via terrestrial cellular infrastructure. And that will leave fewer and fewer unique market attributes to satellite radio. Technologies have their ideal times and places, and in my opinion the better time for satellite radio was 10 years ago.”

So much for that first-mover advantage…

A grim assessment for Sirius, which had just seemed to be getting an edge on its daunting troubles. But Rothblatt has a point. Internet radio is gaining traction and once cellular networks evolve to the point where they can deliver it to cars and other devices, how can satellite compete? Howard Stern’s going to retire sooner or later…

PREVIOUSLY:

• Sirius to Shareholders: Put Down the Mylanta
• Call Me Mel “Save-My-Own-Keister” Karmazin
• Sirius-EchoStar-Liberty: Ménage-à-Blah
• Sirius: Give Me Liberty or Give Me Ergen
• A Bankruptcy Filing, Mel? Surely You Can’t Be Sirius…
• Sirius Rolls Out New 24 Hour Investor Keening Channel
• Sirius Debt Problems? Call EchoStar! No Upfront Fees!
• Sirius XM: The Beginning of the End or the End of the Beginning?
• Your Report Card Is Your Stock Price? Guess Sirius Is Making Straight $.13’s…
• Trade You 77 shares of SIRI for 1 Month of “Sirius Everything”

This morning the company announced slotMusic, a compact memory card-based music format that can be played on cellphones, PCs and some MP3 players. It relies on MP3s without digital rights management schemes and is backed by Universal Music Group, Sony BMG Music Entertainment, Warner Music Group and EMI Group, all of which apparently believe that more physical media is the best way to reinvent their business model in the era of digital distribution. Though as SanDisk VP Daniel Schreiber notes, they do have their reasons. “There’s a billion phones out there and a lot of them can play music and a lot of them have a microSD slot,” he explained. “We think there’s still a need for a tangible, physical product. People will appreciate walking out of the store playing music on their phones.”

Perhaps. But will they appreciate carrying that music around on a 0.6″ x 0.4″ medium that’s about the size of a fingernail? Seems easy to lose, doesn’t it (maybe Case Logic is planning a slotMusic binder)? And wouldn’t they rather carry around hundreds of songs, instead of the dozen or so stored on each slotMusic card? And what if the memory card in their phone is already in use, filled up with contacts, applications and other data? What then? And beyond this, haven’t iTunes and Amazon MP3 made consumers more accustomed to purchasing music à la carte? Why purchase a full album at $15, when all you really want are the only two good songs on it?

“The amount being paid to the music industry, even though their games are entirely dependent on the content we own and control, is far too small,” Bronfman said during an earnings call today. “There is what I would call a very paltry licensing fee per song. … I think the industry as a whole needs to take a very different look at this business and participate more fully and in a much more partnership way. And if that does not become the case, as far as Warner Music is concerned, we will not license to those games.”

Leaving aside, for a moment, the question of why Warner (WMG) agreed to a royalty scheme it apparently finds unappealing, you’ve got to wonder why the company persists in lambasting these new media that so obviously invigorate the industry and promote its music. And beyond that, you’ve got to wonder why Warner is doing it at a time when games like Guitar Hero and Rock Star are clearly becoming viable distribution outlets.

Of course, we already know the answer. Bronfman himself gave it to us in a speech last year. “We used to fool ourselves,” he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find, and as a result, of course, consumers won.”

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. …