LAS VEGAS Microsoft Corp and Hewlett-Packard Co will unveil a new tablet computer on Wednesday, sources said, beating Apple Inc's 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 January 27, though the company has not said anything about it publicly.
"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, 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.
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.
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.
The Microsoft tablet device will also come with multimedia capabilities and multi-touch functions, sources familiar with the product told Reuters without elaborating, confirming a New York Times report.
It will go on sale possibly by mid-2010, the newspaper reported on its website. Microsoft and HP declined to comment.
Although next-generation tablet PCs are scarcely evident on the market, the technology world is abuzz about their potential.
At this week's Consumer Electronics Show in Las Vegas, Qualcomm Inc and Nvidia Corp are also expected to unveil so-called smartbooks based on their chips. Freescale Semiconductor 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 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 and Richard Chang)