November 16, 2001 4:00 PM PST

Tablet PCs, handhelds ready to rumble?

As the capabilities of handheld computers expand and as Tablet PCs emerge, some in the technology industry believe the two categories are headed toward a collision course.

Over the last two years at the annual Comdex trade show, Microsoft and a handful of PC makers have pushed Tablet PCs as the future of the PC industry. Tablet PCs are essentially full-fledged PCs with touch screens, wireless Internet connections and speech and handwriting input. While larger than handhelds today, Tablet PCs will likely shrink over time.

At the same time, handheld computers, which are further along in terms of available products, have been the center of attention at other trade shows, such as PC Expo, and are viewed as an emerging product category. Handheld features are expected to improve. Next-generation processors from Intel, called the XScale, enabling wireless communications and multimedia capabilities, are expected to be available in February.

While neither type of device is close to challenging the dominance of the PC in the technology landscape, the two may be battling for the title of second banana.

"PDAs (personal digital assistants) are built around an interim technology," said Dave Ditzel, chief technology officer at Transmeta. "Obviously, if you can put a PC here (in this size category), you will."

Handspring Chairman and Chief Product Officer Jeff Hawkins disagreed and expressed hope that the Tablet PC would just disappear.

"Some ideas never die. I can't understand it," Hawkins said. "I'm surprised it's come back. It's like bell-bottom pants."

Manufacturers face numerous challenges--such as battery life and price--when trying to shrink the technology of a PC into the size of a tablet. Because of those significant hurdles, Tablet PCs aren't expected to hit the market until the second half of 2002, according to some.

Tablet PCs are expected to be more powerful than current handheld devices, but with the upcoming advances to processors and improved multimedia capabilities, handhelds are expected to close the gap.

Tablet PCs are expected to use components--such as Celeron or Pentium III processors--hard disk drives and screens that are closer in size and performance than handhelds.

Tablet PCs are expected to cost about $2,000 and may come down in price as manufacturers increase volumes.

Some of the prototype Tablet PCs demonstrated at Comdex this month were about the width and length of a legal-size pad of paper, measured between 1.5 inches and 2 inches thick, and came with color touch screens with resolutions sharp enough to allow people to read electronic books.

Handhelds are more portable and are in a different price range--from $100 to $600--than Tablet PCs. Handhelds are meant to come closer to fitting inside consumers' shirt pockets and to provide contact and scheduling information. Manufacturers have been touting higher-end features, such as wireless communications in next-generation devices.

Despite the increasing popularity of handhelds, some major manufacturers will remain on the fringes of the market because of the price competition and the lack, for now, of a standard platform.

"There is a giant vortex out there in handhelds," said Leo Suarez, vice president of personal computing devices at IBM. "A better play for IBM is to sell services that integrate with PDAs. IBM is less interested in bringing a PDA out--at least in the short term."

Dell also is unlikely to release its own a branded handheld in the foreseeable future, said John Hamlin, general manager of Dell's consumer business in North America.

The reluctance of IBM and Dell has not stopped PC rivals Compaq Computer, Hewlett-Packard, Toshiba, NEC and Acer from releasing handhelds based on Microsoft's Pocket PC 2002 software or from creating new capabilities for handhelds.

Compaq is expected to come out with a new $649 iPaq device in December with an integrated Bluetooth chip for short-range wireless networking.

In January, a number of add-on expansion packs will emerge for the iPaq. A zoom-lens digital camera from Nexian, a voice and data GSM/GPRS (Global System for Mobile Communications/General Packet Radio Service) cell phone unit and a global positioning unit will all hit the market, Compaq product manager John Brandewie said, followed later by an optical character recognition scanner. The camera and the positioning unit will cost around $199 each.

In other handheld-related news, Handspring cut the price of its Visor Deluxe device on Friday from $169 to $129. The Mountain View, Calif.-based handheld maker also kicked off a holiday promotion: Consumers who buy a handheld from Handspring's Web site can pick out one of three gift options. The options vary depending on the model, but include travel chargers, leather cases and game modules.

CNET News.com's Ian Fried contributed to this story.

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