Dell has admitted it intends to focus on creating entertainment products but has declined to confirm whether it will be releasing another digital music player.
The Wall Street Journal had claimed the PC manufacturer was aiming to rival Apple's iPod by launching an MP3 player with Wi-Fi connectivity for £50 in September this year. However, a Dell spokesman wouldn't confirm the report and played down the significance of any particular device.
The company's strategy is to provide more entertainment options in all its products, including better ways to download and consume music and video on its laptops, said spokesman Bob Kaufman.
Dell is working with user-interface (UI) experts and engineers to study how people consume video and music in order to provide better entertainment options, he said. The UI experts and engineers come partly from Dell's 2007 acquisition of Zing Systems, which develops audio and entertainment devices and services.
Ben Bajarin, a director at Creative Strategies, agreed that the MP3 player itself is not what's most important to Dell. The company sees the music and video businesses as a way to create an ecosystem of complementary products, a bit like Apple has done with its computers and music players.
"Dell understands that software and services are a critical component of their long-term strategy. It looks as though they are looking to start testing the waters with that direction with a low-cost entertainment device as a start," he said.
And don't rule out the possibility of a phone from Dell, Bajarin said, although he advised the company against it. "Mobile is an enticing market because it is so large; however, it is highly fragmented, which makes it a tough market as well."
Dell has hired several former Motorola executives, which may convince the company it has sufficient expertise in this area to enter the market, Bajarin said.
There have been several signs that Dell will jump into the entertainment business. It has applied to register Zingspot as a trademark with the US Patent and Trademark Office. It describes it as "an internet consumer platform to allow users to access and purchase digital entertainment content". The company has also registered the Zingspot.com domain name.
But the company is entering a market where it has already failed once. Dell exited the music player business in 2006 when it stopped selling its $99 (£50) DJ Ditty, which never caught on and was criticised as being hard to use. Besides the iPod, it will compete today with Microsoft's Zune and many other products.