RPT-CES-UPDATE 3-Microsoft CEO unveils new HP tablet

Thu Jan 7, 2010 12:46pm EST

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(Repeats for wider distribution)

* Comes ahead of expected Apple unveiling Jan. 27

* Microsoft, HP slate to go on sale this year

* Demo runs Amazon Kindle software (Recasts with Ballmer demonstration)

By Bill Rigby and Gabriel Madway

LAS VEGAS, Jan 6 (Reuters) - Microsoft Corp (MSFT.O) Chief Executive Steve Ballmer unveiled a new Hewlett-Packard Co (HPQ.N) tablet computer on Wednesday, beating Apple Inc's (AAPL.O) hotly anticipated move into the market.

But analysts were skeptical that Microsoft and HP could generate as much consumer excitement as Apple's new device, widely expected to be unveiled on Jan. 27, though the company has not said anything about it publicly.

Ballmer showed off the new device at the end of his keynote speech at the CES technology show in Las Vegas.

"This great little PC -- which will be available later this year -- I think many customers are going to be very excited about," said Ballmer, using finger touches to flip through a book on the screen using Amazon.com's (AMZN.O) Kindle software.

"Everyone's fired up about this type of device," said Kim Caughey, senior analyst at fund manager Fort Pitt Capital Group. Microsoft has "a lot of the pieces in place" to make such a device work, she said, but it's not clear that it can claim significant market share.

"How do you make them usable and at a price point people will pay, which I suggest is sub-$500?" asked Caughey.

Ballmer did not detail pricing or when the device will hit stores. An earlier New York Times report said it could go on sale by mid-2010.

Microsoft's presentation, which kicked off the world's biggest consumer technology show, started late after a power outage and suffered a few tech hiccups.

After Ballmer, Microsoft's entertainment and game chief Robbie Bach announced that a new instalment of the hugely successful Halo game will be out this year, and its controller-less game system Project Natal will be in stores by the holiday season. [ID:N06170410]

BIG HYPE

Microsoft, the world's largest software maker, and HP, the top personal computer maker, are the latest companies to eye tablets that bridge the gap between laptops and smartphones.

Endpoint Technologies analyst Roger Kay said both companies have experience in designing a touch-screen, tablet-style device but that consumer interest in the category has never lived up to the hype.

That could all change, Kay said, if Apple joins the fray. Microsoft and HP faced a difficult challenge in topping whatever device Apple launches, he added.

"The elephant in the room of course is Apple. Other manufacturers are scrambling to get things together before it defines the market," Kay said. "HP may be looking to put a stake in the ground before Apple makes its move."

Talk of Apple's tablet -- potentially the company's biggest product launch since the iPhone -- has swirled in trading rooms, tech websites and industry forums for months. The speculation helped propel Apple's stock to record highs in January, though some say the device may be overhyped. [ID:nN0588388]

ABUZZ?

HP has been heavily promoting touch technology across its line of PCs, and just announced new products such as an updated version of its TouchSmart swivel-screen convertible laptop, and a touch-enabled netbook. [ID:nN04220829]

Although next-generation tablet PCs are scarcely evident on the market, the technology world is abuzz about their potential.

At this week's CES show, Qualcomm Inc (QCOM.O) and Nvidia Corp (NVDA.O) are also expected to unveil so-called smartbooks based on their chips. Freescale Semiconductor [FSLSM.UL] already has announced its own version.

Unni Narayanan from Primary Global Research said he does not expect the new tablet to showcase any game-changing innovation, and instead may be more advanced versions of existing HP devices already on the market.

"Our expectation is that it will be a testing-the-waters sort of thing," he said.

From Microsoft's perspective, Kay said the company wants to "highlight and showcase everything that Windows 7 can do."

The new generation of devices will seek to break Intel Corp's (INTC.O) stranglehold on PCs -- the chipmaker makes eight out of 10 microprocessors in the global market. Intel's Atom processor now dominates the fast-growing netbook market.

Microsoft's shares fell 0.6 percent to close at $30.77 on Nasdaq. HP was off 0.9 percent at $52.18 on the New York Stock Exchange. (Editing by Edwin Chan, Richard Chang and Muralikumar Anantharaman)

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