Sony phasing out pen-tablet PCs

Slow sales are leading Sony Electronics, the PC division of the Japanese electronics giant, to rapidly phase out one of its more glamorous product lines--the Vaio Slimtop Pen Tablet--the company has confirmed. The computer came with a touch screen that allowed people to draw images directly onto the monitor and run Windows applications with a stylus.

Although the technology and software behind the Pen Tablet could re-emerge in future products, production on the current PC lines has stopped, and plans for follow-up models have been canceled.

"It emerged as sort of a niche market," said Mark Viken, senior vice president in the Information Technology Products Division at Sony Electronics. "We saw some good results, but we have put it on hiatus."

The demise of the Pen Tablet line underscores the difficulty that manufacturers face in trying to bring new technologies to market. It also in some ways highlights some of the challenges awaiting the Tablet PC, a portable PC with a touch screen coming in the second half of 2002 from Compaq Computer and others.

Sony's Pen Tablet, which came out in early 2001, consistently drew oohs and aahs from trade show attendees, consumers and analysts, for both its sleek industrial design and the software that let people paint color pictures directly on a flat-panel monitor. Sony even featured the computer in a national TV ad campaign.

Unfortunately for Sony, the Pentium III-based computer was also expensive, ranging from $2,499 to $2,969. That's several hundred dollars more than other high-end Pentium III computers.

"You are paying a premium for the touch screen, and that is always an inhibitor," IDC analyst Roger Kay said, adding, "I really liked it. I really wanted one for my daughter."

Customer acclimation also inhibited sales, Viken said. People had to be taught how to use it.

Still, the experience isn't stopping Sony when it comes to improvising on the PC formula. The company re-entered the U.S. desktop market about two-and-a-half years ago and has steadily been gaining market share. Currently, Sony is one of the top selling brands in retail and has a higher market share in retail than Apple Computer, according to Steven Baker, an analyst at NPD Intelect.

Unlike competitors, Sony doesn't emphasize components and price as much as how its PCs can be used for digital photography or music. The company creates and bundles into its PCs its own software for digital music management and for recording TV shows. Sony also develops services in conjunction with other divisions. Sony's Screenblast, for instance, is an online video-editing service that allows consumers to insert special effects or scenes from Sony films into their home movies.

"As logical as we try to be--and we look at the feeds and speeds--we still are influenced by the design of a product," Viken said. "Consumers accept that we are a great audio company and a great video company."

Sony's average selling prices are "significantly higher than the rest of the industry," he added.

The company is selling off existing stocks of the LX910 and LX920 Pen Tablet computers and will not come out with the LX930, a previously planned follow-on product. Sony showed off a concept version of the tablet at the Comdex trade show in fall 2000 and started selling it in early 2001.

In addition, Viken said that Sony will place "less emphasis" on its Slimline PC--the computing box that comes with LX910 and LX920. Slimline boxes are much smaller than conventional PC towers. To date, Sony has sold them only as part of the Slimtop Pen Tablet package.

As for the Tablet PC, Kay said that the next test for this category of devices will come at PC Expo in June. By then, Compaq, Toshiba and others should have product plans firmly in place for the Tablet PC. If not, it could be a sign that these types of portable PCs with handwriting input could be pushed further back.

The Tablet PC, powered by a special version of Microsoft's Windows XP operating system, will differ from Sony's Pen Tablet computer. Tablet PC comes with handwriting recognition, which allows it to be used as an electronic notepad. Sony's Pen Tablet was largely designed for drawing images. Both, however, let people manipulate applications through a stylus.

Although Sony is dropping Slimtop PCs for now, Baker said the idea will likely emerge successfully someday.

"Just because one or two products weren't successful doesn't mean that one won't be successful in the future," he said. "What was the name of the AT&T handheld? And there was the Newton. It took awhile for Palm to take off too."