Gates Previews Pen-Based Computer

Event Summary

November 13, 2000

Microsoft chairman Bill Gates used his keynote speech at Comdex to unveil a "proof of concept" system Microsoft calls its "Tablet PC". The Tablet is a little over two pounds, and expected to be around the size of a legal pad. Gates apparently believes pad/tablet PCs and pen-based computing are the "next big thing(s)" in the PC hardware arena.

The Tablet currently uses the "Crusoe" processor from upstart startup Transmeta Corp. Transmeta has been promoting its low-power-consumption CPU as being ideal for notebook computers and other mobile systems that require long battery life. In addition to the battery life issue, Crusoe utilizes "Mobile Linux", a scaled-down version of the increasingly popular Linux OS, and something Transmeta calls "Code Morphing" software, which allows the processor to be compatible with x86-based applications.

Microsoft does not expect the Tablet to ship until 2003

Market Impact

This is interesting on a number of levels.

If these products ever become a reality, they could conceivably take market share from notebooks. But three years is pretty far away, in computer terms - especially in an area where smart cell phones and the beefed-up PDAs are eating away at the bottom of the market, and are only expected to get more powerful and feature-packed. There is some sentiment akin to "been there, done that, didn't like it" - this is based on the past market failure of tablet products from Grid, EO, Go, and others. We do not subscribe to the idea that previous failure necessarily means future failure, especially since current technology allows more computing and application power.

Although Microsoft is currently using the Crusoe processor for the prototypes, we question whether that's the long-term plan. Acceptance of Crusoe is still limited at best, and Microsoft has been known to pull "the ol' switcheroo" at the last minute (e.g., switching from AMD to Intel on their Xbox gaming console). In addition, although Crusoe's code-morphing software will run x86-based applications, it's essentially a Linux-based unit, and that might be a little tough for MS to use (or bless) in production models.

A side issue here is the future of Transmeta. There was a bunch of hype surrounding the unveiling of their Crusoe processor, and a number of vendors (including Sony and Toshiba) have announced notebooks that will use Crusoe. However, in recent weeks IBM and Compaq - while not precluding the possibility for future products - have said they will not use Crusoe in various upcoming notebook products. (Note: Compaq has more recently stated they have not made any decision re: designing out Crusoe). Dell won't even switch to AMD, never mind an unproven CPU from a startup company. All this combines to dim Transmeta's prospects, but we do not believe they are in trouble - for now. The next 3-6 months will of course make their picture less fuzzy.

User Recommendations

Individual users should not be concerned with these products at present, except for intellectual exercise, as in: "What's the face of computing going to be like in five years?" Expending effort beyond that is pointless at this stage.

CIOs may want to spend some time thinking about the possible advantages of such a device, though, especially if they have a highly mobile workforce such as a large outside sales staff. Key issues for the success of these products will be things like battery life, ergonomics (including weight and ease of use/user interface), and functional capabilities (including speed, storage, and breadth of "full" applications supported).

Regarding Transmeta-based products: Currently, building a technology infrastructure strategy around Crusoe is high-risk for IT managers and CIOs. The risk level may get lower, but we still advise waiting 6-12 months (at least) before giving serious consideration to replacing Intel/AMD notebooks wholesale.

But, hey, whatever happens the tablets won't be shipped for another three years, so file this under the "extremely foggy crystal ball" section.