Microsoft is working with the two chipmakers and five PC makers, including Toshiba, Sony and Compaq Computer, to produce a number of Tablet PC prototypes.
"You can think of it as evolutionary or revolutionary," Gates told developers Monday at the Windows Hardware Engineering Conference here.
To date, Web-surfing tablets--which look like laptop screens and connect to the Internet--have not succeeded commercially. Gateway is "re-evaluating" the release of its own version of a Web tablet, which was due this year.
But the Tablet PC will be more than just a Web-surfing pad. It will have a hard drive and a wireless Internet connection, which remains connected to the Net or the office network, even if a person heads to a meeting room or the cafe.
Gates said the Tablet PC is evolutionary because it is based on the next generation of Windows--Windows XP--and runs standard software programs. However, it is revolutionary in the way one interacts with it--using a pen as a primary input method instead of a mouse or keyboard.
A demonstration showed the crowd that the Tablet PC can change the size of handwritten notes, make them bold or italic, and move them around. When not being carried, the device rests in a cradle and connects to a full-size keyboard and mouse.
Overall, the device will be about the width and length of a legal-size pad of paper, measure between 1.5 inches and 2 inches thick, and provide a color touch screen with a resolution sharp enough to allow people to read electronic books.
Transmeta chips away at Intel's strength
Humberto Andrade, analyst, Technology Business Research
Transmeta is providing its 600MHz Crusoe TM5600 processor and LongRun power-management software for the prototypes. The company will also assist Microsoft with tweaks to the Tablet PC's Windows XP operating system.
"We've got a great relationship with Microsoft. This is just more evidence of it," Transmeta CEO David Ditzel said.
Scribbling a success story?
Handheld computers, many of which are similar in form to the Tablet PC, have made simpler interfaces more popular and more acceptable to consumers.
"I think that is what Microsoft is heading toward, but whether this is going to be that big jump is another story," said IDC analyst Alan Promisel.
It remains to be seen if the Tablet PC will be more successful than Microsoft's previous efforts, such as its failed Windows for Pen software.
The Tablet PC "has that big 'ooh, ahh' factor, but people want something they're familiar with, which is the keyboard," Promisel said.
MicroDesign Resources analyst Peter Glaskowsky said that tablet computing has a place in the market. But he is concerned that with five companies working on separate designs for such machines, the market may become too fragmented.
"Not one of them is going to have a large enough business to be sustainable," Glaskowksy said. "Most PC software is designed for a keyboard and mouse."
As for the Tablet PC itself, Glaskowsky said it appears to borrow much from Apple Computer's ill-fated Newton.
"Eighty percent of the features they have demonstrated were in the Newton," said Glaskowsky, himself an avid Newton user.
While Microsoft is choosing to build its own prototypes, the Redmond, Wash.-based software giant will leave it up to PC makers to build final versions of the Tablet PC.
Microsoft will provide the operating system, the user interface, and such applications as its electronic ink software. The application allows people to create, edit and annotate Word documents using a pen.
Microsoft likely will provide a hardware reference specification for the Tablet PC if the company follows the path it has set with other devices such as Pocket PC-based handheld computers. The specification, however, probably will call only for an X86 chip. Pocket PCs can use MIPS, StrongARM and Hitachi SH-series processors, among others.
Individual device manufacturers will be able to choose from several processors offered by chipmakers Intel, Transmeta, Advanced Micro Devices, Via Technologies or even National Semiconductor.
Intel is working on a Tablet PC reference specification based on its own ultra-low power mobile Pentium III chips. A company spokesman said Intel is working with PC makers to build the specification. The chipmaker will also likely provide reference devices to those PC makers.
Separately, Microsoft announced that a number of PC makers have signed onto the Tablet PC program. In addition to Compaq, Sony and Toshiba, Acer and Fujitsu announced they plan to build Tablet PCs. The first ones are expected to ship in 2002. Sources familiar with Compaq's plans said it is working with Intel's reference specification.
Gates first publicly demonstrated Tablet PC during his opening keynote address at the Comdex trade show in November. At the time, he called it "one of the most amazing projects we've ever done."
The prototypes of the Tablet PC likely will follow a hardware outline given at Comdex. Aside from the Transmeta chips, they will include 128MB of RAM, a 10GB hard drive, a docking cradle, a USB (universal serial bus) keyboard and mouse, and built-in local-area networking based on the 802.11 wireless connectivity standard.