Dell is reportedly developing its own mobile internet device (MiD), which will run Google's Android operating system.
Citing sources who have seen the development plans, the Wall Street Journal reported that the gadget would be similar to Apple's iPod Touch, a small mobile computer which connects to the internet but doesn't make calls.
Last year, Dell scrapped plans to take on Apple in the music player arena, while previous rumours have suggested Dell was developing its own version of the iPhone.
At a conference last September, chief executive Michael Dell said the PC manufacturer was looking at creating smaller gadgets. "I think you will see us with small screen devices," he said at the time.
"You'll see us with smaller and smaller devices that have capabilities of the devices you are referring to. Not in the near-term," he added, referring to the Apple iPhone.
A Dell spokesperson said the firm does not comment on speculation.
