Jury still out on Tablet PC
Microsoft, HP, Acer and others hope new devices will be big sellers, but success is not certain.
July 2, 2002: 6:28 PM EDT
By Richard Richtmyer, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Microsoft Corp. and some big-name computer makers are hoping that the "Tablet PC" will reinvigorate sales in the flagging PC industry, but some remain skeptical.

Several PC makers, including Hewlett-Packard, Fujitsu and Acer, have been showing off their prototype Tablet PC products for the past two years. And they were on hand again Tuesday at the TechXNY trade show in New York this week.

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A sort of cross between a laptop computer and a personal digital assistant, Tablet PCs are fully functioning Windows-based computers with touch screens and features that enable users to input and manipulate data using a stylus.

The devices, which initially will be targeted at business users, are expected to carry a price tag starting at about $2,000.

Microsoft -- whose chairman and founder, Bill Gates, recently predicted that the Tablet PC would become "the most popular personal computer sold in America" -- on Tuesday said Tablet PCs with a specialized version of the Windows operating system would be available on Nov. 7.

Prototype Tablet PCs with an early version of Windows XP Professional Tablet PC Edition will enter the final testing phase within 30 days, the company said.

HP is expected to begin shipping the Compaq Evo Tablet PC, a prototype of which is seen here, late this fall. The devices will be powered by microprocessors from Transmeta.  
HP is expected to begin shipping the Compaq Evo Tablet PC, a prototype of which is seen here, late this fall. The devices will be powered by microprocessors from Transmeta.

Whether the new devices live up to the promise remains an open question.

While some big names in the computing industry have thrown their weight squarely behind the idea, others are taking a more cautious approach.

"We have no plans at this time, and none of our customers are asking for it," said Fran O'Sullivan, general manager of IBM's PC division.

IBM (IBM: up $0.98 to $68.58, Research, Estimates), which concentrates its PC sales to businesses as part of an overall package of hardware, software and information technology services, last February dropped its ThinkPad TransNote, which was a similar idea.

The TransNote system, which was introduced about two years earlier, enabled users to input data either through a keyboard or by jotting down notes on an adjacent pad of paper using a special pen attached to the computer.

Dell Computer (DELL: down $0.62 to $24.54, Research, Estimates) also has decided to take a wait-and-see approach to the Tablet PC idea.

"Our friends at Microsoft want that to become an overnight success, but we have not gone down the path of announcing a tablet because it's not sure to us whether it's going to be a success," said Joe Marengi, general manager of Dell's Americas business.

The company, which ranks second in global PC sales following the merger of HP (HPQ: down $0.48 to $14.62, Research, Estimates) and Compaq last month, has looked into the idea. But it decided that the "profit pool" -- a term Dell uses to describe the revenue and earnings potential of any given product area -- was not large enough to warrant an investment, Marengi said.

"We only have so many dollars to invest," he said. "We look at the biggest profit pools in the industry, and that's where we put our money."

He said while there are some specific applications where a Tablet PC may be useful -- for example, in the medical profession for entering bedside notes that can be wirelessly linked to a database -- it remains unclear if there would be broad appeal for such products.

But that doesn't necessarily mean you won't see a Dell-branded Tablet PC, should they prove to be as popular as Microsoft and others are hoping they will.

"Dell is notorious for taking a wait-and-see approach, and then, if something catches on, coming in and dominating it," said Tim Bajarin, president of Creative Strategies, a Silicon Valley consulting firm that focuses on studying emerging PC and consumer electronics technologies.

Bajarin, who has been using some of the early Tablet PC prototypes for several weeks, said that while they do have a lot of potential, users may be reluctant to switch to a device that relies exclusively on a touch screen for input and has no keyboard.

"As a stand-alone product, it would be a hard sell," he said.

Most of the prototypes include ports through which external keyboards can be attached. The Acer model has a keyboard built in that folds into the unit when it is not needed.  Top of page