February 27, 2003 12:47 PM PST

A tablet PC in every hand?

Manufacturers are having a field day with their new tablet PCs.

Top vendors Hewlett-Packard and Toshiba say sales of their tablet PCs--tiny portable computers fitted with pens, touch screens and handwriting-recognition technology--are exceeding predictions made before the devices' November launch. The machines are based on Microsoft's Windows XP Tablet PC Edition software.

Toshiba several times has increased production of its Portege 3500 tablet, after having trouble meeting initial demand, said Mark Simons, vice president of Toshiba's transactional business group.

Meanwhile, HP's "tablet sales have been exceeding expectations from the day we launched," said Ted Clark, a vice president for HP's personal systems group.

Tablet PCs are still a fairly small segment of the overall notebook market. But the devices have so far been a bright spot for manufacturers which are still feeling the effects of the PC market crash of 2001. The smaller machines have generated interest among the legal, real estate and health care industries, as well as from some consumers, executives from Toshiba and HP said.

HP's 3-pound Compaq Computer tablet PC TC 1000 is drawing customers who normally would consider a mini-notebook weighing 3 pounds or 4 pounds, the company said.

"What appears to be happening is (the tablet PC) is helping to expand that portion of the market to others who've wanted to buy a small notebook or folks who may be buying a second machine to use with a desktop," Clark said.

HP also has inked a few large corporate deals involving its tablet PCs. The company recently signed an agreement to provide 1,000 tablets to a large company, Clark said, but he would not disclose the company's name.

Indeed, tablet PCs have "done better than the industry expected for the short period of time they've been shipping," said Alan Promisel, an analyst with IDC.

The research firm forecast U.S. tablet PC shipments to reach 150,000 units in 2002. That figure is expected to jump significantly in 2003 to about 675,000 units, or roughly 5 percent of the overall notebook market, Promisel said.

But while those predictions are generally considered a good thing, the stronger-than-expected demand has left Toshiba trying to keep up.

The company has boosted production by 100 percent or slightly more, Simons said. However, its tablet PCs--though obtainable through its own sales arm--aren't always available from its sales partners. And while manufacturers prefer to have orders to fill versus having excess inventory on hand, at least some customers have grown unhappy waiting for their orders to arrive from Toshiba.

"It is my, and many others' opinions, that Toshiba is not doing a good job informing its customers about problems they are having," one Toshiba customer wrote in an e-mail to CNET News.com. "You have to be reasonable about setting ship dates, especially if there is any sense that you won't be able to make...delivery dates."

Toshiba said it is responding to the growing demand. "Each month we've improved each one of our (sales) channels from the previous month," Simons said. "Once we move into the March time frame we will see an improvement."

Meanwhile, sales of tablet PCs also have gotten off to a good start in Europe, according to a recent report by London-based Context. Context said Microsoft tablet PCs garnered about 1 percent of notebook sales in Europe during the fourth quarter, a relatively large figure for that category.

 

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