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    Analysts: Tablet PC Could Quietly Vanish

    Written by

    Mark Hachman
    Published May 12, 2004
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      The “slate” version of the Tablet PC platform that Microsoft Corp. and its partners pioneered is being increasingly marginalized, a victim of a desire to bring “electronic ink” technologies into notebook PCs, analysts and vendors said.

      Furthermore, the fate of the Windows XP Tablet Edition OS itself seems to be in question.

      Last week at the Windows Hardware Engineering Conference (WinHEC) in Seattle, Microsoft executives said they had yet to decide just how this part of the next-generation Longhorn technology would be implemented. However, the number of companies offering slate Tablet PCs has declined, industry watchers said, indicative of the fact that tablets are still too highly priced and lack the functionality of modern notebooks.

      The question is whether the Tablet PC and Microsofts Windows XP Tablet Edition OS are being subsumed back into the notebook PC, a product the Tablet once broke away from. If they are, observers wonder, is there a need for a dedicated Tablet operating system?

      So far, the only answers have been forthcoming from hardware makers, many of which have moved to “convertible notebooks,” which combine a keyboard and a touchscreen. These devices run the Tablet PC OS.

      However, for the slate hardware platforms, the outlook with customers is somewhat muddy. Slate PCs still play an important role in vertical enterprises, such as health care, vendors say, but “knowledge workers” have asked for a keyboard to complement the pen input.

      Meanwhile, Microsoft recently began to reposition the Tablet PC as a secondary display for the home, capable of remote viewing of TV and movies. Averatec Inc., a European and Asian OEM, plans to shortly announce a new, smaller 12-inch Tablet PC for $1,100 aimed at the consumer market, industry sources said.

      /zimages/4/28571.gifMicrosoft Watchs Mary Jo Foley also wonders about Microsofts commitment to the Tablet PC platform and Lonestar, the next update of the OS. Click here to read more.

      For its part, Microsoft has remained mum on its plans for the Tablet PC in the Longhorn timeframe.

      So far, Microsoft executives admit only that the company wants to bring electronic ink technology into notebooks: “Thats what enables the mobile PC over time,” said Andrew Dixon, director of marketing for Microsofts Tablet PC.

      Microsoft could develop a mobile version of Longhorn, Dixon said, pointing out that Microsoft hasnt made any product announcements regarding Longhorn or the Tablet PC OS. Dixon, however, hinted that the two operating systems could be combined. “We are looking at what it means to bring tablet functionality into notebook versions of Windows, specifically mobile Longhorn,” Dixon added.

      Next Page: Tablet PC Misunderstood by Industry?

      Tablet PC Misunderstood by

      Industry?”>

      Meanwhile, the market has largely misunderstood the purpose of the Tablet PC, industry watchers said.

      Microsoft originally envisioned the Tablet PC as a device that “knowledge workers” could carry on their rounds, jotting down notes in electronic ink that could later be transferred into text. Early slate-style Tablet PCs used a software-based keyboard for entering text; some manufacturers included a docking station or wireless card for additional connectivity.

      When Microsoft circulated designs for the original prototype in 2000, the Tablet PC was envisioned as a slate-style PC not because that was going to be the final form of the device, but because Microsofts engineers wanted to see if they could design a device without a keyboard, according to pen industry consultant Geoff Walker of San Jose, Calif.-based Walker Mobile LLC. He participated in the design of Fujitsu Computer Systems Corp.s pen-based tablet products from 1993 to 1999.

      Only Acer Inc. understood what the Tablet PC was supposed to be, Walker said, and designed a convertible tablet providing both keyboard and pen input.

      At the 2002 launch of the Tablet PC platform, Bill Gates said that in four or five years most mobile PCs would contain tablet functionality, Microsofts Dixon added.

      Pen input does play a critical role. Without a pen, theres no easy way to quickly diagram a flow chart or add a quick digital scribble, such as an arrow or star, to a document, Walker said.

      “Theres really been a misunderstanding about this,” Walker said. “Microsoft never wanted to replace the keyboard, but put the pen on an equal footing. Theyve gone from two input devices—a keyboard and a mouse/touchpad—to three devices. To translate that for the layman, the tablet PC being folded into notebooks isnt a very clear statement. I think a better statement would be to say that [the] pen will be added to notebooks as a standard hardware device.”

      To date, pen input has had the greatest success in tablets aimed at specific vertical industries, including transportation and especially health care, which will spend an estimated $47.9 billion for infrastructure by 2006, according to Gartner Inc. of San Jose.

      Customers find slates especially useful for predictable tasks, including operation and inventory, according to Paul Moore, director of product marketing for Fujitsu Computer Systems of San Jose, which pioneered the slate-style tablet computer.

      Fujitsu sells between 60 percent to 70 percent of its Tablet PC volume in the slate form factor, Moore estimated. Customers like the weight of the tablet—about 3.5 pounds—and show no desire to move to a bigger screen, he said.

      “I think it would be nice if some other companies all of a sudden turned their notebooks into a tablet,” Moore said. “But right now, one just doesnt serve the customer yet.”

      One customer issue for Fujitsu is the swiveling hinge that transforms a tablet into a convertible PC—people think its going to break. “Most of what intimidates them is the hinge,” Moore said. “Its not like theres been any blurbs out there in the media about a huge hinge disaster; theres no reason to be concerned. But they are concerned.”

      Yet, convertible tablet providers are making inroads in the health care market too. Acer, which competes with Hewlett-Packard Co. as a leading vendor of Tablet PCs, says it has inked contracts with the Visiting Nurses Associations of America, based in Boston, for its TMC110 convertible tablet. In North America, the average age of a visiting nurse is between 42 and 46 years old.

      Next Page: The Costs Can Add Up for Tablet PC

      The Costs Can Add


      Up for Tablet PC”>

      “Nurses do like a larger display,” said Sumit Agnihotry, product manager for all of Acer America Inc.s notebook products in San Jose. The company has several deployments of its 3.2-pound TMC110 model in hospitals. “They can get back to their desk, turn it around, do e-mails,” he said.

      Right in the middle of the two notebook vendors sits HP with its Tc1100 notebook, which allows the keyboard to be undocked entirely, creating an even-more mobile PC. Ken Cotter, a product manager for the Palo Alto, Calif.-based company, said HPs tablet works best in varied physical environments, such as a doctors office or airplane. “One of the reasons this design was chosen was for flexibility,” he said.

      Microsofts Dixon expected both the slate and convertible tablet form factor to be successful. However, cost alone could inhibit widespread acceptance of pen-centric functionality.

      Integrating tablet functionality to a notebook design will add cost to the platform, Walker warned. For example, adding a tablet digitizer will add about $40 to the manufacturing cost. Meanwhile, Microsoft charges about $30 more for the Windows XP Tablet Edition than the base version of Windows XP, he said. After a protective glass is added to the display and the backlight upgraded, the street cost of the convertible notebook can go up by $300.

      “The average user can buy a notebook from Gateway or whomever for about $1,300, while a tablet could run up to $2,000—those figures arent exact, but you get my drift,” Walker said. “Is it worth the extra $700? The answer is no.”

      Corporate buyers have had a difficult time justifying the extra expense of a tablet, added Sam Bhavnani, a senior analyst with Current Analysis in La Jolla, Calif. So have consumers: “The OneNote [annotation] concept is awesome, but the consumer price delta is way too high,” he said.

      Walker said he estimates that slate PCs will still remain viable, but represent only between 10 percent to 15 percent of all tablets sold. Meanwhile, notebooks will take on more tabletlike attributes, helped out by tablet-optimized LCDs.

      “Within five years most notebooks will incorporate pen [input] in some fashion,” Walker said. “That does not mean they will be convertible. The screen may fold down 180 degrees, to lie flat with the table. … You use it on your lap to draw on all the time; why cant you lay the tablet flat on the desk?”

      But if the Tablet PC is going to survive in any incarnation, Microsoft needs to provide a compelling usage scenario to justify its existence, Bhavnani argued.

      Microsoft began to do that at WinHEC, when it began to position the Tablet as a remote display, he said. “Wi-Fis great. I can check my e-mail at the kitchen table, work in bed, do whatever I want wherever I want, or so the argument goes. With a [rewritable] optical drive I can make my own videos. But what do I do with a Tablet [PC]?”

      /zimages/4/28571.gifCheck out eWEEK.coms Windows Center at http://windows.eweek.com for Microsoft and Windows news, views and analysis. Be sure to add our eWEEK.com Windows news feed to your RSS newsreader or My Yahoo page: /zimages/4/19420.gif http://us.i1.yimg.com/us.yimg.com/i/us/my/addtomyyahoo2.gif

      Mark Hachman
      Mark Hachman

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