Chipmakers courting Microsoft's Tablet PC

The Tablet PC, a next-generation notebook computer that resembles a laptop screen and uses a stylus as the primary input device, isn't due until 2002. But that isn't stopping Intel and Transmeta from jockeying for position with PC makers.

The chipmakers will try to woo the same PC makers, five of which have already publicly committed to bring out Tablet PC devices.

Transmeta CEO David Ditzel boasts that his company's Crusoe chip will have a leg up because it is present in a number of prototype Tablet PCs that Microsoft will distribute to developers.

However, Microsoft's basic Tablet PC hardware specifications call only for a power-saving X86 processor, which opens up the field to a number of players such as Intel, Transmeta, Advanced Micro Devices, Via Technologies and National Semiconductor. An Intel representative said the chipmaker is working with PC manufacturers to create Tablet PC prototypes, based on its ultralow power mobile Pentium III chips.

This gives Intel an advantage because it is already supplies the ultralow power mobile Pentium III to some of the same PC makers that will build Tablet PCs, such as Compaq Computer.

But if Tablet PC crashes and burns, as have several next-generation computing devices, all will be for naught. The Internet appliance market, for example, has taken its share of hits with the crumbling of Netpliance and the demise of 3Com's Audrey. Microsoft, however, wants the Tablet PC to become a successor to the PC, instead of a companion to it.

Analysts who follow the mobile market are skeptical so far.

The Tablet PC could expand the overall market for notebooks because "it has the potential to reach out to the user that would not have considered using a notebook computer," said Alan Promisel, an IDC analyst.

However, he added, it's unlikely Tablet PC will replace the traditional notebook anytime soon. Instead, people such as students or corporate sales forces would be most likely to adopt the device.

Nontraditional forms, such as so-called rugged notebooks used by the military or field engineers, have traditionally been a very small piece of the overall notebook market.

Promisel estimates they make up roughly 1 percent to 3 percent of the overall market. About 30 million notebooks were shipped worldwide last year, according to IDC. That means only a few hundred thousand notebooks with nontraditional forms were sold.

"I believe that number will go up if Tablet PC is done right," he said.

Ken Willett, vice president of product marketing at Compaq, sees potential in the Tablet PC. "It brings on a whole new level of usability" to a PC, he said. "It allows users to fall back to the way they've been doing (things) in the past, which was writing notes to themselves."

PC makers, such as Compaq, assert that the Tablet PC will succeed because the technology required to build it is finally here. The key elements are power-saving processors and high-resolution screens, Willett said.

This sets up the battle between Intel and Transmeta quite nicely. Each company has its own power-saving chip, with Crusoe soaking up 1 watt of power on average at speeds up to 600MHz and Intel's ultralow power Pentium III soaking up about half a watt while running at 300MHz.

"Between the two of them, both have very relevant offerings," Willet said. "We're open right now."

However, sources familiar with Compaq's plans say the company is leaning toward Intel.

Aside from Compaq, Microsoft announced Monday that Acer, Sony, Fujitsu and Toshiba will also produce Tablet PC devices.