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Typhoon Touch is working its way down the tablet PC food chain.

After suing Dell and Motion Computing for allegedly infringing on two of its patents for portable computers with touch-screen technology, Typhoon, and licensing partner and co-plaintiff Nova Mobility Systems, said Tuesday they are targeting three more potential infringers: Xplore Technologies, Electrovaya, and Sand Dune Ventures, which makes tablet PCs under the brand TabletKiosk.

Typhoon Touch says the Sahara TufTab i310XT tablet PC is one of several PCs that violates two of its portable touch-screen patents.

(Credit: TabletKiosk)

Typhoon specifically cites Xplore's iX104C series of tablet PCs, Electrovaya's Scribbler SC4000 tablet, and four of TabletKiosk's ruggedized tablets. Typhoon, a Seattle-based firm that creates and acquires patents, has only licensed its patents on portable touch-screen computers to Nova Mobility. The two companies have asked the U.S. District Court in the Eastern District of Texas for unspecified damages and an injunction on the sales of the computers Typhoon says are in violation of its patents.

A TabletKiosk representative said the company couldn't talk about the lawsuit, and neither Electrovaya nor Xplore could be reached for immediate comment.

The suit against Dell and its Latitude XT tablet PC is still ongoing, but Typhoon settled out of court with Motion Computing last month.

Much has been made of Dell's retail makeover, but it's actually part of a larger trend toward experimentalism.

The company that has largely avoided unproven product categories is jumping all over them suddenly. Case in point: several years ago, when Microsoft was pushing tablet computing, Dell was fairly adamant that, no thanks, tablet PCs weren't something the company was interested in making.

"I think it is really unknown at this point how big the market is," CEO Michael Dell said in a 2002 interview about tablet PCs. "Dell, of course, likes to participate in high-volume markets, and until we can determine the size of the market we are not ready to decide at what level we will participate."

The Latitude XT is Dell's first foray into tablet computing.

(Credit: Erica Ogg/CNET News.com)

Fast-forward to late 2007, when Dell introduced its first tablet PC, the Latitude XT. Tick forward some more to this week when the second version, the Latitude XT2, was leaked onto the Web. Tablet computing, to Microsoft's chagrin, still has never really taken off--tablets comprised 3.25 percent of the worldwide notebook market in 2007, according to market research firm IDC. Yet, Dell's staking out its claim in that category.

So what's changed? Well, almost everything.

"The old Dell was about how everything had to improve with scale. In other words, any fixed cost investment had to get more profitable with volume," said Roger Kay, analyst and president of Endpoint Technologies. But after the leadership change a year ago, "Michael (Dell) said there were no sacred cows when he took back over."

Now Dell can't seem to stay out of niche markets. Besides the Latitude XT, in the last year Dell has launched a ruggedized laptop, a consumer-friendly all-in-one desktop, and began offering Linux pre-installed on some PCs. Plus, there's constant chatter about the company re-entering the handheld market.

The PC industry is moving toward increased mobility, so tablets and rugged notebooks are part of a larger trend. But they also represent opportunities that Dell can't afford to miss anymore.

In Dell's heyday, its mammoth commercial computing clients would choose a variety of machines they wanted Dell to supply; if one of them was too much of a niche product, Dell would simply partner with a manufacturer that did make it.

"But now they're saying, we don't want to keep giving away those opportunities because that's decent margin (being left) on the table," said Richard Shim, PC analyst for IDC. Now, "they go out and create their own versions of these products."

Within the overall trend toward mobility, commercial clients, and even consumers, are demanding more and more specific usage models, and Dell, it seems, is trying to adapt.

"The market is evolving beyond generic solutions. There are new opportunities in more specialized products," said Shim.

Evolution seems to be the name of the game down in Round Rock, Texas, these days. The company has undergone a major transformation of its business plan since Michael Dell stepped back into the executive suite as CEO.

Along with that has come this marked shift toward experimentalism at the 20-year-old company. Though Dell's hallmark for its first two decades in business was its sharp, efficient supply chain and direct-to-customers sales model, now you can find a Dell almost anywhere you look: Best Buy, Staples, Wal-Mart Stores, and more.

Its product choices are different, too. "In the past, Dell would adopt new technologies faster than most, but new products more slowly," noted Kay. While it was happy to move from one processor generation to the next fairly rapidly, Dell was far more circumspect about getting into a niche market like PDAs or music players. Of course, Dell's expertise has always been in the enterprise market, which isn't particularly fast-moving. But targeting consumers is a different animal--they expect more product innovation and faster product cycle times.

Dell's ruggedized laptop, a first for the PC maker.

(Credit: Dell)

In trying to garner more consumer attention, Dell also has been more adventurous, with firsts for it like colored laptops last summer, the stylish design of the XPS laptop line, and the XPS One, an iMac-esque all-in-one PC. Dell even went as far as co-branding the XPS gaming line with World of Warcraft.

"It's more like they're dropping a lot of bait in the water to see what works," Kay noted.

Sure, Dell is trying a lot of new things, but it's got to do something different. No longer the largest seller of PCs overall, it's also recently fallen behind the Acer-Gateway-Packard Bell behemoth in notebook sales.

"They have to be risky to reverse their misfortunes here," Shim said. "That takes time when you're trying to change your personality. I'm sure they'll make missteps along the way because everyone does. But the positive is that they are making these changes. The writing is not just on the wall, it's in neon."

Tablet computing is a very small pond, and it's now home to a very big fish: Dell.

The Round Rock, Texas-based PC maker on Tuesday is introducing the Latitude XT Tablet PC, its first product in the category.

Though it's just one notebook, Dell's entry is sure to cause a stir. It's a modest niche of computing that hasn't really gotten off the ground yet. And the interest of the second-largest PC maker in the world can't help but have an impact on the market.

"It puts the product in limelight," said Richard Shim, PC industry analyst with IDC. "It has potential to bring down pricing on key components that are being priced at a premium."

The Latitude XT at work.

(Credit: Erica Ogg/CNET News.com)

Currently tablet PCs comprise just 2.4 percent of the worldwide notebook market, according to IDC. That's about 2.5 million units shipped total. But as Dell joins other high-profile tablet makers like Hewlett-Packard, Toshiba, Gateway, and others, the category is expected to grow to 12.3 million units and 6.3 percent of the notebook market by 2011, IDC said. And as volumes go up, prices are sure to go down.

That Dell would delve into tablets was one of the worst-kept secrets in the PC industry over the last year. The company confirmed the rumors in May and then briefly showed the product during Michael Dell's keynote speech at Oracle Open World in November.

The Latitude XT is aimed chiefly at commercial markets, and Dell says it initially tried to address several of the key complaints expressed by typical tablet users: that they're too bulky, the screen isn't viewable in direct sun, poor handwriting recognition, and inadequate battery life.

Although tablets in general are not marketed toward consumers right now, Dell's entrance could bring component prices down enough to make building and buying tablets affordable for, say, students one day, noted Shim. "Lately we've been seeing manufacturers start to look at the consumer market as an audience for this type of tablet," he said. Particularly because the profit margins are much higher for consumer devices.

For now, the price is not what you would call friendly to the mainstream notebook buyer. At the starting price of $2,499, the Latitude XT has a 12.1-inch LED-backlit screen, a 1.06-gigahertz Intel Core 2 Solo processor, 1GB of memory, and a 40GB hard drive. It comes with Windows Vista Business edition or XP Tablet Edition. The whole device weighs 3.57 pounds, and has about 5 hours of battery life. It uses capacitive touch input, which recognizes both fingers and an included pen for inputting data. The pen also comes with a right-click button.

The Latitude XT at rest.

(Credit: Dell)

To target outdoor, all-day commercial users, the Latitude XT comes with upgrade options of an extra bright outdoor-viewable LCD display (which adds to the thickness of the notebook), an extended battery, which clips on the bottom of the device, as well as the option of an Intel Core 2 Duo processor and a 32 or 64 GB solid-state drive.

Dell calls its capacitive touch technology, which picks up on the electrical current in a person's hand, the "breakthrough" in the device. It also recognizes the difference between the touch of an errant palm or a purposeful press of a fingertip on the screen.

Touchscreen interfaces are a technology area with huge potential, and mainstream interest in multitouch technology skyrocketed this year with Apple's iPhone and Microsoft's demonstrations of its Surface PC technology. Dell has its cooking up its own multitouch technology, which it showed at Oracle Open World, in which all five fingers can be picked up by screen sensors. That won't be available until at least next year, said Glenn Keels, director of Dell's commercial product group.

The biggest delay is the availability of software applications that take advantage of touchscreen technologies. And it's not just Dell, but all makers of tablets. "The (manufacturers) making progress are the ones getting closer to customers, like Motion Computing," Shim said. Dell, HP, Toshiba, and Gateway "have to come up with applications that are a little more mainstream or mass market. The hard part is they're not used to thinking that way, in terms of applications, as (tablet computing) is less and less about speeds and feeds, and more about the experience."

Dell says it will begin to take orders and ship the Latitude XT by the end of the year.