Origami PC maker has to scribble 'wait'

Instead, the tiny Southern California company discovered a manufacturing issue in the first prototypes; the internal fan was striking the devices' outer shell, causing a myriad problems. As a result, the company had to make some tweaks, and most of the devices won't ship until June.

"It's extremely frustrating," said Gail Levy, TabletKiosk's director of marketing. Doubly so since the company has already sold out its first production run (though it won't say how many have sold or shipped) and its phone continues to ring with people interested in buying the tiny tablets.

And it's not just gadget geeks who are calling. While much of the Origami buzz has been around the device's appeal to consumers, TabletKiosk is aiming its product, called "Eo," at niche vertical markets like health care and manufacturing--the same kinds of people who have bought larger, more expensive tablet computers, which is TabletKiosk's primary business.

But while the company has lost some of the pride that comes with being first to market, it has managed to win points from customers pleased that it is taking the time to get it right, as well as the forthright nature by which the company let the public know of its woes. Last month, it posted an open letter on its Web site and Levy also posted an update in the forums section of the Origami Project Web site.

"It's good to see that TabletKiosk has done a good job testing the machines and did not ship them to us with problems," one user on the forums responded. "TabletKiosk, you have my support."

Microsoft used a buzz-marketing campaign to generate hype for the new generation of devices, which use a custom version of the Windows XP Tablet PC edition operating system (code-named Origami) and have also been heavily pushed by chipmaker Intel.

Even with the delays, and with better-known Samsung getting in on the act, TabletKiosk hopes to find its place.

"We're more of a boutique company," Levy said. The company hopes customer service will help it gain a slice of the market, as well as the fact that its devices can be customized to order. Thanks in part to its lower-priced processor from Via Technologies, TabletKiosk was also able to get its device to start at $899, a threshold some rivals were unable to reach.

The market for these early ultramobile PCs is expected to be small, with the cost coming in higher and the battery life lower than originally hoped.

Over time, though, the niche could grow. Market researcher In-Stat issued a report last week projecting that sales of the devices could reach 7.8 million units by 2011.

One challenge, the research firm said, is that the device's battery life isn't what it should be, in part because the chips that power most PCs just aren't suited to offering all-day life.

"Even though Intel is one of the ones pushing (ultramobile PCs), I think it is a great opportunity for companies like Via," said In-Stat analyst Jim McGregor, noting that price and battery life are more important qualities for these minitablets than performance.

The industry will also have to break out of a model in which companies charge a premium for all things tiny.

"It was always, 'It was smaller, we can charge more,'" McGregor said of industry wisdom. But with full-fledged laptops now selling for as little as $400, McGregor said even the industry's $500 price target for ultramobile PCs may be too high.

In general, McGregor says that the first crop of devices is better- suited to consumers than businesses. The initial Origami devices aren't particularly ruggedized and many of them lack a cellular modem for true anywhere-connectivity.

But he sees a possible niche in the areas TabletKiosk is targeting--contained environments like hospitals or manufacturing facilities. "Those just aren't real high-volume applications."