Can Microsoft Succeed With Tablet PC?

In fact, the pen-computing market is filled with examples of much-hyped pen products and companies from the early 1990s that ended up in the "dust-bin of history," including Momenta, Go Computing (later called EO) and Apple Computer's Newton. For their part, Microsoft executives dismiss any notion that the Windows XP Tablet PC Edition will endure the same fate as Microsoft's long-forgotten PenWindows, or Windows for Pen Computing.

So far, though, it appears that the newest pen products suffers from many of the same problems that plagued earlier versions.

"They're too heavy, too hot, too fragile and too expensive," said John Parkinson, chief technologist for Cap Gemini Ernst & Young's Americas region. Parkinson said customer adoption will remain limited until tablets feature improved battery life and faster handwriting recognition - the same complaints about pen computers heard more than 10 years earlier.

At least some of those criticisms could fade next year, when Microsoft is expected to release its Tablet PC OS upgrade, code named 'Lonestar." Sources familiar with Lonestar say it will include enhanced handwriting recognition -- allowing users to insert text in URLs, e-mails and file names - as well as deliver instant messaging and collaboration capabilities. Further out, Microsoft plans to provide more advanced ink and personalization features for a Longhorn edition in 2005.

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In the near term, however, partners expect potential customers will respond to 10 new next-generation Tablet PCs, from a variety of vendors, that will be launched at Comdex. Many will feature larger displays and better battery life, a byproduct of Intel's Centrino mobile processor. Acer's TravelMate c300 convertible Tablet PC and Hewlett-Packard's new Tablet PC, are viewed as significant advances. Partners also expect new ink- and handwriting-enabled applications - notably Microsoft's Office 2003 and OneNote - to spur purchases.

But while Tablet improvements march on, PDA and cell phone technologies advance at a run. Ken Winell, president of Econium, of Totowa, N.J, which has sold a few hundred Tablet PCs in the past year, said those advances hurt Microsoft. "It has a coup of strikes against it," Winell noted. "The Tablet PC is getting squeezed by the Blackberry and smarter cell phones that have portability and typing. They're eating at the heels of the Tablet PCs."

Market research firm IDC estimates that roughly 260,000 units sold during the Tablet PC's first year. Microsoft, in contrast, claims it has sold 400,000 copies of the Windows XP Tablet PC Edition in the past 12 months, surpassing expectations in a spending slowdown, company marketing executives insist.

"IT budgets have been tighter than expected and that's across all of technology purchases," Andrew Dixon, director of marketing for the Tablet PC, added, acknowledging that the economy has stalled adoption. "The Tablet PC is the evolution of the notebook PC."

The question for channel partners is, will that evolution resonate with customers.

"Executives are really starting to take notice of tablets, and integrate them into their business," said Michael Cocanower, president of ITSynergy, of Phoenix, Ariz. "Once the economy is in full swing, and once the hardware vendors start to introduce improved models, you will see a lot of growth."