News Item: Microsoft and its manufacturer partners--Hewlett-Packard, Acer, Toshiba, and Motion, a startup company - recently introduced the first generation of Windows Tablet PCs using a new version of Windows XP Professional with extensions to support handwriting recognition, electronic "ink" (the ability to capture the handwriting as images inside documents), voice annotation, and voice recognition.
Situation Analysis: The new Tablet PCs (available 4Q02) are essentially modified notebook computers running the specialized Windows XP Tablet PC Edition. They include features that enable them to operate as electronic clipboards, with device interactions via a pen-based interface.
Although pen-based computing platforms have been tried before, with limited success, this announcement opens new opportunities for this form factor. Microsoft has enabled two new interfaces--the ability to write directly on the screen with a special stylus, and voice annotation and recognition. Microsoft has built support for these new interfaces and alternative data types directly into the operating system and has promised to add support for them into Outlook, Office, and other core productivity software. It is also actively encouraging third-party software providers to add support to their products.
Presuming that Microsoft does a good job at developing and integrating the handwriting recognition and voice technologies, we believe these new interfaces will help drive the emergence of a viable tablet form-factor market. Although we do not expect a mass migration to Tablet PCs for most users, some market segments are ready to accept this technology. Examples include eastern Asia, where keyboards are inadequate to handle the written languages (Microsoft has already committed itself to a kanji version of its handwriting recognition), the education market (as soon as prices go low enough), and some business markets.
Many common activities--such as simple document editing, filling out forms, and entering information into spreadsheets--are done more easily using a stylus than a keyboard and mouse. This does not mean the keyboard and mouse will disappear as a human interface technology, because these technologies remain superior for certain types of tasks. The new interface technologies will supplement rather than replace them. Furthermore, this signals the emergence of more "natural" data types (e.g., handwriting recognition, ink notes, speech recognition) as rich data supported by both the OS and personal productivity applications.
"A significant number of users are not adept on keyboards and prefer to write or dictate material," says META Group analyst Jack Gold. "And some activities are easier, quicker, and more natural to do with a stylus or microphone than a keyboard."
We do not expect any immediate widespread replacement of notebooks with Tablets. First-generation systems will need to be tested and improved ergonomically before they will be generally acceptable. On the software side, the focus will be on how well Microsoft is able to integrate the new interface technologies and data types with applications. It has yet to release the promised new Tablet PC versions of its application software.
Although we do not expect a mass move to Tablet PCs, it is important to realize that Microsoft is heavily committed to it. We expect Microsoft to support the Tablet PC with major marketing as well as continuing software development commitment at least into 2005, regardless of market response to the units.
"The Tablet PC is a pet project of Bill Gates" says META Group analyst Steve Kleynhans. "He was the driving force behind it at Microsoft and has ordered that all his senior-level direct reports use tablets. Microsoft sees the Tablet PC as a key to revitalizing the knowledge worker market, which has stagnated for Microsoft, and it hopes that eventually most workers will use tablets."
