LOS ANGELES (AFX) -- Microsoft Corp. is reportedly planning a new portable consumer gadget that will combine the features of a personal computer and a digital-music player, as the software giant looks to make inroads into the handheld market.
Redmond, Wash.-based Microsoft is developing an 'ultraportable PC,' the Wall Street Journal reported Monday, citing a person familiar with work going on at the world's largest software firm.
In recent weeks, postings on Web sites and blogs have fueled speculation that Microsoft is developing its own portable music device to compete with Apple Computer Inc.'s popular iPod line, under a project dubbed 'Origami.'
However, according to the Journal report, the device under development would be for a broad range of uses, not solely a music player, and be modeled after Microsoft's tablet PCs that use a pen-like stylus to input information.
Analyst Shaw Wu at American Technology Research said that he doubts the Microsoft product would pose a direct threat to Apple's market-leading iPod. The analyst predicted Microsoft is more likely to offer a scaled-down PC or a new operating system that it would license to PC makers like Dell Inc.
'It sounds like a more general-purpose PC than something designed for a specific purpose, like the iPod,' Wu added. 'The cost point isn't likely to be competitive anyway.'
Microsoft could be gearing up to launch a device along the lines of an ultraportable computer showcased last year by Chairman and Chief Software Architect Bill Gates, according to analyst Matt Rosoff at Directions on Microsoft, an independent firm dedicated to tracking the company.
Rosoff, who pointed out that he had not been briefed on a product that could be released under the project, said such a move would be 'smart' for Microsoft.
'Sales of regular laptop computers are growing very quickly among consumers, but full-size tablet PCs haven't sold as well as they [Microsoft] expected, so they're taking another approach,' he wrote in an email.
Rosoff agreed that pricing would be an important detail.
Separately, a cryptic Web site said to be run by Microsoft heralds a product that 'can change your life,' but offers no concrete product details. The Web site (www.origamiproject.com) promises that consumers can 'learn more' this Thursday.
The Directions on Microsoft analyst said that the company could time the launch of an ultraportable product with the release of its newest operating system, Windows Vista, with an announcement this week as part of its efforts to promote the OS.
Also Monday, Microsoft announced details of its upcoming Windows Vista operating system, saying that it was on track to launch six versions of the software in the second half of the year.
Success at hand?
Microsoft dominates the global market for PC operating systems and certain software applications, but its efforts in the handheld market have had mixed success.
In late 2004, three hardware manufacturers -- including electronics giant Samsung and Creative Technology Ltd. -- began selling 'Portable Media Centers' running Microsoft's Windows Mobile software. Against Apple's dominant iPod, however, the handheld devices failed to capture a sizable share of the digital music-player market.
Microsoft has found somewhat better traction in the wireless market, where cell phones from some major handset makers run on Windows Mobile OS.
Now Microsoft, whose only branded hardware product is the Xbox line of video-game consoles, may be expanding into handhelds.
Rosoff, the analyst, said that Microsoft would be unlikely to launch the product under its own brand name. 'I'm fairly sure this will be a reference design for third parties,' he observed.
'The product would exist in a kind of in-between market that hasn't yet been shown to exist,' Rosoff added. 'But sometimes those are the biggest hits.'
When asked about the company's plans, a Microsoft representative said: 'Origami is a concept we've been working on with partners. We are excited to share more details about the evolution of the Origami concept with you in the coming weeks, so stay tuned.'
Purported photos of Microsoft's portable device were posted on at least one Web log, revealing a small device with a stylus-type pen similar to those used by PDAs and tablet PCs.
Microsoft's stock rose in Monday trading, closing higher by 42 cents, or 1.6%, at $27.05. Shares have ranged in price from $23.82 to $28.68 over the past 52 weeks. This story was supplied by MarketWatch. For further information see www.marketwatch.com.