Dell is developing a pocket-size Internet device using Google's Android operating system that could take on Apple's iPod Touch, according to a report from the Wall Street Journal on Monday.

Two people who have seen early prototypes of the device told the newspaper it looks like Apple's iPod Touch but slightly larger. And like the iPod Touch, the device isn't expected to include a cellular phone. The device is considered part of a new category of gadgets called mobile Internet devices, or MIDs, which are designed to fit into the market between a mobile phone and a laptop or Netbook computer.

The device could go on sale as early as the second half of 2009, according to the Wall Street Journal's sources.

Dell supposedly started working on the new device about a year ago as a way to compete against Apple's iPod business. The Journal also cited an unnamed source who said that Dell has considered selling the new Internet device through a cell phone carrier. Dell and other computer makers such as Hewlett-Packard already sell their Netbooks through cell phone operators.

Dell has long been rumored to be making a smartphone. And the company has also been rumored to be testing the Android software for its smartphone and possible for its Netbooks. With these developments in the works, it probably wouldn't take much to also develop a portable Internet device using the same operating system without the phone. That's what Apple did with the iPod Touch.

Source: CNET