Originally created 11/07/02

Microsoft makes a big bet on Tablet PC



SAN JOSE, Calif. -- After years of promises, Microsoft Corp. co-founder Bill Gates is betting his company's money and his vision of computing on the launch of a new generation of portable computers.

Microsoft has reportedly spent $400 million developing the technology behind "Tablet PCs" that can handle text like a paper notepad but run all the programs of a notebook PC.

It's nothing but revolutionary, according to Gates, who has found the device indispensable around the office. He even predicted the gadgets will be the most popular PC style within five years.

But analysts who have toyed with the devices are not so impressed, particularly with the limited screen real estate and short battery life. And it's not clear customers see the need, they say.

"A lot of system architects are scratching their heads trying to figure out what the big advantage is here," said Richard Doherty, director of The Envisioneering Group, a research firm.

On Thursday, Gates was officially launching a version of the Windows XP operating system specifically for the devices. Thirteen hardware vendors from Hewlett-Packard Co. to Fujitsu will unveil models based on Microsoft's software.

Beyond the $400 million spent on developing the technology, Microsoft is spending $70 million on marketing, including a lavish launch event in New York including a concert featuring Chubby Checker and The Shirelles.

All the tablets weigh about 3 pounds and are about the size and shape of a standard ultralight notebook. They have swiveling screens that can be written on with a pen-like stylus.

The tablets are based on one of two designs, with a few mixing elements of both. Some are only tablets, with no input device other than the digital pen.

Others are notebook computers in which the keyboard can be folded away and the screen used for entering data. Others still can be docked into a unit that provides network connections or additional drives.

The Microsoft operating system loaded on these tablets includes software that recognizes handwriting scribbled on the screen and converts it into plain text. Jotted notes also can be used in programs as graphics.

Prices vary. Hewlett-Packard's entry model costs $1,699 without wireless capability and $1,799 with wireless. Acer's starts at $2,199 without wireless and $2,395 with the feature.

Analysts say the devices are especially handy for those who have to enter data into forms while on the go, such as insurance or health care workers. Similar devices, which essentially bolted Windows onto proprietary hardware and software, have been available for 10 years and have sold well in industries where mobile form entry is important.

Microsoft and its partners hope the full version of Windows XP will attract a wider audience. Standardization also will lower prices.

"It's going to allow companies to deliver the platform in a much more cost effective fashion than has been delivered by companies who have tablets currently on the market," said Ted Clark, who heads HP's Tablet PC unit.

But analysts doubt the new generation of tablets will gain much traction beyond the current market.

"The handwriting recognition is not all that good," said Rob Enderle of the Giga Information Group. "It's not clear that people really want it."

Enderle said the gadgets so far don't work well as replacements for desktop PCs. The screens - typically about 10 inches across - are too small, he said.

And anyone seeking the ability to scribble notes on a screen and to transmit them wirelessly need look no farther than their handheld computer such as those sold by Palm and others.

Smaller handhelds also offer greater batteries that last days, not a few hours.

Most of the tablets to be released Thursday can be used only about two to four hours before requiring a recharge. All but one of the new crop use low voltage processors from Intel. HP's Compaq Tablet PC uses a microprocessor from Transmeta Corp.

Not all PC vendors see a big hit - at least not immediately. Dell Computer Corp. will sell others' tablets but not make its own.

"It's initially going to be a niche and fairly nonmainstream product," said Anne Camden, a Dell spokeswoman.

Analysts say Microsoft's wealth could eventually drive tablets to success once more power-efficient chips are available and lighter, less energy-hogging screens developed.

But it's not clear whether hardware makers can afford to wait for the technology to take off.

"Historically, it's hard to bet against Bill (Gate's) hunches," Doherty said. "He does passionately believe in it, but he doesn't have to abide to the same calendar and quarterly reporting that most mere mortals do."