PC sales grew just 1.9 percent during the first quarter of 2012, according to a new report from Gartner.

The research giant had predicted sales would decline 1.2 percent during the quarter. It said sales in Europe and the Middle East were better than expected, offsetting slowdowns in India and China.

"While the PC industry has high expectations for strong growth in the emerging markets, the slowdown of these countries in this quarter provides a cautionary notice to vendors that the future growth for the PC industry cannot heavily depend on the emerging markets even though PC penetration in these regions is low," Mikako Kitagawa, principal analyst at Gartner, said in the release.

Fellow research giant IDC followed with its quarterly report, pegging PC sales at 2.3 percent, up from its forecast of a 0.9 percent decline.

IDC said hard-drive shortages from last year's flooding in Thailand continue but the large PC makers had better access, managed inventories and absorbed price increases. As a result the big vendors kept PC shipments moving while smaller PC makers saw the expected declines.

PC makers should see bigger gains later this year. PC sales historically rebound after slow periods, driven by new technologies and need to replace aging systems, IDC's Loren Loverde said in the release.

"As a result, we expect PC shipments to pick up significantly by the fourth quarter and beyond as HDD supply and pricing are normalized, Windows 8 is launched, and replacements pick up," he said.

The news foreshadows upcoming earnings reports from Microsoft -- next Thursday -- and Intel on Tuesday.

There were a few bright spots in Gartner's report.

Hewlett-Packard emerged from its internal funk and grew nearly twice as fast as the overall market and held its global lead on the PC business. Its sales grew 3.5 percent, Gartner said.

Lenovo posted a 28 percent gain, driven by sales in Europe and the Middle East and sales of business systems, according to Gartner.

Dell's sales fell along with overall sales of lower-end consumer systems as consumers were lured by Web tablets and other gadgets in the same price range.

IDC estimated HP's global growth was 3.2 percent and Lenovo's were 43.7 percent during the quarter.

In the U.S., HP sales were up 6.6 percent, Dell's were down 3.6 percent and Apple's were up 3.8 percent, according to Gartner. IDC's numbers for HP and Dell were the same, but it said Apple's PC sales were up 5.1 percent.

IDC said sales in the U.S. were slow for several reasons. Businesses are "still cautious" and consumers are evaluating different prodocts and may be waiting for Windows 8 to arrive, perhaps in the fourth quarter.

That fourth quarter - the holiday season - "will likely determine if there is any growth at all in the U.S. market in 2012," Loverde said.

In other words, it's up to Microsoft and its PC partners to deliver with the Windows 8 wave.

A few charts from Gartner's report:

Microsoft is resurrecting one of its oldest franchises, "Flight Simulator," with an entirely new game called "Microsoft Flight" that's debuting on Feb. 29.

But instead of a new installment of the hyper-realistic, encyclopedic simulator that mostly appealed to flight enthusiasts, Microsoft built a smaller, more accessible game that's going to be offered online for free.

Planes can be flown simply by moving a mouse around, though enthusiasts can also use more realistic and complex controls.

It's also a new business direction for Microsoft's PC game business, which is using "Flight" to experiment with free online games monetized through microtransactions. About 80 percent of U.S. gamers now play such titles, mostly through Facebook, where players spend an average of $29 per month, according to Parks Associates research.

To start, the game will let people fly around Hawaii - the Big Island - in planes including a Boeing Stearman similar to one displayed at the Museum of Flight. For $20 players can get seven additional islands, new missions and an additional plane.

Microsoft will periodically offer new territories, planes and activities. The company may also extend the franchise to other devices beyond the PC. Executive Producer Joshua Howard hopes the game will draw more than 20 million players eventually.

Howard (left) leads a studio with about 50 employees, a third of whom are veterans of the ACES Studio behind "Flight Simulator" that Microsoft wound down in 2009.

Here are edited excerpts of an interview this week with Howard:

Q: Gaming on Windows has seemed to languish, maybe because so much energy was around Xbox. How much is this release a sign that the Windows game group is back, especially with Windows 8 coming up soon?

A: Some folks on my team will say Games on Windows isn't what it used to be. You're forgetting it is certainly the biggest platform for gaming anywhere, ever. I feel like the PC has been the most successful platform when it comes to gaming because gaming as a whole has become mainstream - 75 million people playing Facebook games of one form or another, that's all on a PC. It didn't happen on a console, it didn't happen on a closed mobile platform.

As Microsoft - to have built that system and allowed that to happen - we don't get to take credit for everything people do on a PC but that didn't happen because we ignored PC gaming. So I think PC gaming is alive and well in fantastic ways in fantastic ways. It's still where the heart of innovation is happening.

Q: I didn't mean PC gaming as much as PC game development within Microsoft. Perhaps the company felt it no longer needed to seed the market so much?

A: It's doing very well so that's right, maybe that's part of what it came down to.

Q: Is Flight intended to seed online services and bring people into Microsoft's online realm?

A: I like to think this is both about reimagining a franchise that we know has always been successful. I also think it's part of Microsoft the studio saying 'I want to develop this new muscle.' Maybe because we have so much of the organization focused on the console-side of the business which is more rigid when it comes to business models, you get to ask the PC side to be a little more experimental, a little more exploratory. I relish that opportunity and the team has really jumped on that. We couldn't be doing half the things we do here on a console - this is not a console game that just happens to sit on a PC. This is really a PC game and we're proud of that.

Q: Is your studio just building this title?

A: I imagine this is a group of people who will continue to bring flying experiences out over time. This is where we are right now.

Q: One you've developed new muscles, you want to keep using them ...?

A: There are a lot of really cool, exciting platforms on the horizon. I'd love to think that someday you'll be hearing from me about how we're going to bring Flight to those exciting opportunities.

Q: On tablets and other devices with Windows?

A: It could be broader than that even. As a division we no longer organize around your PC games and your console games. We're a team that's about the thrill and experience of flight.

Q: But it makes sense that your games could be on the new PC form factors running Windows ... like tablets, maybe TVs - the "three screens and a cloud"?

A: Yeah. I believe in crawl, walk, run. We're rebooting a franchise, and that was really hard. We wanted to this well. We took the time and energy to do that. Now this becomes a platform to keep going.

Q: Is it running on Azure and will it be used to showcase the platform's ability to run a massively multiplayer online game?

A: The services could be on Azure but they're not today. It turns out they didn't need what Azure provides as far as scale goes. It's less MMO in that sense. While do have what we think of as interesting and enjoyable multiplayer, it's still not that massive. (Up to 16 players can play together in an online session.)

Q: So the focus is on the PC experience mostly?

A: Yes. The way we talk about it is between the client, and the web site and the community that combines them, that's what Flight means. It's this combination of those three elements working together.

Q: It sounds like a hybrid PC game.

A: Exactly. In many respects we are like an MMO business would be run, we just don't happen to be an MMO. We're taking what is traditionally a game studio and transitioning it into an online business.

Q: Why did Microsoft take so long to resume development of MMO PC games?

A: I think the reality internally is we've continued to incubate and play and continue to try things. You just don't always bring those to market or out until you believe you've got something you can be successful with. I was excited to see that instead of trying innovate in these genres that are already well-understood, Microsoft went off and tried Kinect. I think Microsoft just put their energies elsewhere and it paid off.

Q: Will you sell the game on discs at retail?

A: Sometime maybe in the future but right now we're all in online. Retail is not something we're talking about right now.

Q: Will you get it preloaded with PC hardware?

A: Possibly.

Q: Will it be part of the game suite included with Windows 8?

A: Probably not. We deal with those separately - that's an operating-system business, we're a game publisher.

Q: Will you be able to control the game with gestures, if you attach a Kinect sensor?

A: We're not talking about Kinect support at this time but who knows.

Q: It seems like the tradeoff you made - building richer, smaller locales to explore in the game - is the loss of the full, open world that could be explored in "Flight Simulator"?

A: The bet we've made is that to the non-hardcore simmer, flying the whole world isn't as interesting when there's nothing really interesting to see or do. I do get that for some segment of the audience that was one of the values - I can fly anywhere, into any airport, 25,000-odd airports was crazy.

But I think as you try to broaden and you want to bring in not the next million or two but the next 20 million or 30 million people, you say I will err on the side of more interesting area that's dense than the same amount of content spread all over the globe. There's a lot to do in Hawaii, and Hawaii is gorgeous.

Q: It seems inevitable that you'll have a mobile version someday?

A: We may do other stuff in the future but today we're just talking about the PC version of flight. I think Flight has legs. This is a franchise that's going to keep living for a lot of years. We're going to do that by exploiting all the opportunities that are coming at us, whether that's mobile, new operating systems, new hardware. There's a lot of stuff out there and I think Flight is going to be part of that at some point.

Q: I thought the ACES studio was fully shuttered back in 2009?

A: The reality was inside the company there were already efforts underway to bring that core expertise back together with a new mandate of how they could move forward.

Q: Will Flight make more money than Microsoft's "Gears of War"?

A: I think in the long-run, this franchise will definitely make more money than "Gears." I think Gears is a great. Flight is one of those evergreen franchises in entertainment - this will live another 30 years.

Everybody loved the sleek design of Ferraris in the late 1960s, back when cars were the coolest gadgets around.

So it was monumental when Datsun introduced the 240Z in 1969 -- a Japanese sports car with Italian looks for less than half the price. It wasn't as exquisitely handcrafted, but the 240Z looked great, ran well and a lot of people could afford one.

That helped convince Americans that Datsun -- now Nissan -- and Japanese carmakers really could build sexy machines and not just boxy, cheap sedans.

There's a new generation of laptops appearing this holiday season that may have a similar effect on the Windows PC industry, which in recent years has fallen under the shadow of Apple's glamorous new hardware.

These laptops blatantly lift design cues from Apple's MacBook Air, an elegant, impossibly thin wedge of aluminum that first appeared in 2008, and they're approaching half the Air's price.

Intel calls them Ultrabooks, a brand PC makers can use if they meet Intel's criteria. Ultrabooks basically have to be thinner than a finger; run five to eight hours on a battery charge; use Intel's latest mobile processors; and have a solid-state hard drive, or SSD.

The SSD, which is like a big version of the memory card in a digital camera, is crucial because it improves performance and startup times.

I've been testing one of the first Ultrabooks, the Acer Aspire S3 (left), which takes only a few seconds to wake from sleep and less than a minute to reboot.

It's a beautiful laptop with a brushed aluminum cover, a 13.3-inch screen and a total thickness of about a half an inch. Closed, it looks like it could be a Web tablet, and it makes mini-netbooks look chunky. At 3 pounds it weighs about the same as a MacBook Air. (Below are pictures of the S3 with a Kindle Fire and a pencil)

Inside the S3 runs Windows 7 Home Premium on a second-generation Intel Core i5 processor.

There's also a dual drive system -- a 20 gigabyte SSD plus a 320 gig standard hard drive.

Blended drive setups will appear on several new Ultrabooks. It's a way for PC makers to provide the performance boost of an SSD without the crazy expense of a full-sized Flash hard drive. A spokesman for drive-maker Seagate said its new hybrid drives add only $30 to $60 to the cost of a standard laptop drive at retail.

There are other ways that PC makers are trying to keep Ultrabook costs down.

The S3 has "chiclet" style keys similar to the MacBook Air. There's a bit of wiggle in the keys and I was concerned about the small space bar and Enter key, but I could type reasonably fast without misfires. The keyboard felt just right to my wife and daughter, who have smaller hands.

With more plastic parts, it doesn't have the exquisite, machined feel of the Air. It also lacks the fast, new USB 3.0 ports (it has two USB 2.0 ports and an HDMI port) and full SSD drives used on some other Ultrabooks.

But these things depend on your perspective. If you're upgrading from a thick, standard laptop, the S3 or other Ultrabooks may be thrilling.

Keep in mind, though, that the S3 and other ultrathin laptops don't have DVD drives. If it will be your only computer, you may need to connect an external DVD drive at some point.

The S3 lists for $900, but I've noticed some discounters are already selling it for just under $850. That's expensive, especially when you can get really powerful laptops for $400 to $700, and Thanksgiving sales are just around the corner.

Still, the S3 looks like a deal if you've been pining for an ultrathin laptop and unwilling or unable to pay for one. Windows PC makers have made gorgeous, thin laptops for years, but they're usually aimed at executives and cost $1,500 or more.

A 13-inch MacBook Air costs $1,299 to $1,599, for models with 128 or 256 gigabytes of SSD storage.

You could say that the S3 and other Ultrabooks are just copying the Air.

That's partly true.

Also at play is the cost curve. Premium components that Apple used to build such a thin machine are coming down in price. That's enabling other PC makers to build similar systems and sell them for $1,000 or less. If component prices keep falling, most laptops eventually may look like this.

Intel expects 40 percent of consumer notebooks sold by the end of 2012 will be Ultrabooks. But research firm IDC says that's optimistic; it's predicting they'll take 16 to 19 percent of the consumer laptop market next year.

With consumers paying an average of $686 for laptops nowadays, according to IDC, Ultrabook prices need to fall before they take off, said IDC Vice President Bob O'Donnell. "The issue is this first batch is really expensive, unfortunately -- too expensive," he said. "In my view it needs to be $799 or less before it really gets attention from people."

O'Donnell said the combination of Ultrabooks and Windows 8 will be appealing, in part because the new operating system will further improve startup times.

Another research firm, HIS iSuppli, projected Ultrabook sales will grow from 1 million this year to 136.5 million in 2015.

For now, Intel's requirements for Ultrabooks -- especially the SSDs -- are a challenge for PC makers trying to lower prices, O'Donnell said. He met last week with Taiwanese manufacturers who are working on "Ultrabook class" systems with less expensive components that don't quite meet Intel branding standards.

Perhaps Intel will be more flexible with processor prices. It's about to introduce the next generation of the "Core" processors that are the basis of its Ultrabook strategy. These processors, code-named "Ivy Bridge," are supposed to have better performance, power savings and improved graphics.

Ivy Bridge PCs will go on sale in the first half of 2012. It's a safe bet that laptops and tablets built on the platform will be shown in January at the Consumer Electronics Show. Apple's also likely to upgrade its computers to the new processors.

Having "old" and "new" processors on the market could lead to a broader range of prices for Ultrabooks and they'll all be upgradeable to Windows 8.

Meanwhile, the S3 is worth a look if you're in the market for a laptop, especially if you need a fast, light, full-powered Windows PC. It's not the Ferrari of laptops, but it's still a pretty nice ride.

The world's largest PC maker has decided to keep making PCs after all.

Hewlett-Packard just announced that it has decided not to jettison its Personal Systems group, ending a bizarre public parade of self-doubt that began in August and led to the ouster of its chief executive, Leo Apotheker.

Competitor Michael Dell recently made the best argument for HP staying in the business. He said HP's servers would get more expensive because the PC business gives companies like HP and Dell the scale to get deals on components.

HP's new chief executive, Meg Whitman, issued a statement today saying that the company has "completed its evaluation of strategic alternatives for is Personal Systems Group and has decided the unit will remain part of the company."

"HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It's clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees," Whitman said in the release. "HP is committed to PSG, and together we are stronger."

The company's PC business is profitable and had sales of $40.7 billion last year. It also has recently been growing faster than the rest of the PC industry, which is in a period of relatively slow growth.

HP is also one of Microsoft's largest customers and one of the largest tech companies in the Northwest, with offices in Seattle and large facilities in Boise and Corvallis.

HP's statement said "the outcome of this exercise reaffirms HP's model and the value for its customers and shareholders."

With all the excitement over Windows 8 last week, one major new feature was almost overlooked.

That would be the arrival of an online sign-in system.

When you first start using a Windows 8 PC -- which much of the world likely will do within a few years -- you'll be prompted to sign in with a Microsoft online account, linking your PC to the company's data centers. By doing so, you'll be among hundreds of millions of people feeding data to Microsoft's online business group, which may finally give the scale to seriously compete with Google's search and advertising business.

You won't have to sign in this way, and you'll still be able to operate the PC as you do today.

But if you decline the digital handshake, Windows 8 won't do some of its cooler tricks, such as the ability to sign in to any Windows 8 computer and have it display and run your settings and applications.

You'll also miss out on new "Metro" style applications designed for its new tiled interface and file-sharing capabilities.

Microsoft really is boldly re-imagining Windows, and not just for mobile devices that will challenge the iPad.

The company also is pushing Windows -- the software that powers most of the world's personal computers -- to become a connected service and portal to applications running through its global network.

I'm not revealing a secret. Microsoft Server and Tools President, Satya Nadella, spelled it out Wednesday in a quote that topped that day's news release.

"In today's world of connected devices and continuous services, we are focused on helping developers build the next generation of client applications that are tethered to a back-end cloud," he said.

This may be a little disconcerting, if you like to think your PC is still personal and your computing is somewhat private.

But a Microsoft manager I talked with said logging in to online services makes Windows 8 more personal because that personalizes the system.

Pulling in your online connections also populates applications and communications features with your friends, family and other contacts.

Microsoft really is just catching up in this regard. It's also offering more privacy choices than you get with today's leading devices.

You can't use Apple's iPad or Google's Chrome computers without signing in to an account and linking the devices to those companies' networks.

Nor do you have much choice about signing in with smartphones. If you want them to be smart, you must create an account with one of the online giants. And they all use information about you to deliver advertising at some point.

Then, there's the Kindle and upcoming Android tablets from Amazon.com, the grand master of targeted marketing. You can't use its hardware at all without agreeing to let the company analyze usage, so it can continually tune its merchandising.

People sometimes get upset when they discover they're being profiled this way.

But almost everyone automatically clicks "agree" when their gadgets and apps ask if they mind sharing digital footprints. Sometimes that's the only choice to get what you expect from your expensive device.

Few really seem to care anymore that they're trading personal information for free services such as Web search, email and photo sharing.

It's more convenient to stay logged in all the time. Consumer websites just seem to work better that way, and you get to do tricks like click to share things through Facebook or see which friends are online and ready to chat.

Windows 8 lights up in all sorts of ways when you sign into Microsoft services.

Thankfully for Luddites and the anti-social, it also works fine if you don't.

I tried the untethered approach on a Samsung Windows 8 demo tablet, setting it up without signing in to an online account.

I also changed the privacy settings, declining to "allow apps to use my location" and "allow apps to use my name and account picture."

The desktop still had the new Metro style and most of the app tiles on the home screen worked fine, including the browser and widgets for displaying the weather, stocks and news feeds.

This test proved the system will work for anti-social networkers and others who prefer to use a computer that's not tethered to Microsoft's online network. But your homescreen won't flash images of your Facebook friends and other linked services.

Going this route also hobbles the breezy, simple tool for sharing files, a marquee feature of a system designed for the era of social networking. "Share" is one of the five primary control buttons on its new vertical control panel.

But I'm not sure everyone's ready for this much sharing.

Given the trend toward devices that are bound to commerce systems, it's refreshing Microsoft's giving you a choice. This makes a great-looking operating system even more appealing.

So let's hope by the time Windows 8 computers go on sale next year, and the wave of Metro applications appear, people still feel like it's a reasonable option to stay untethered.

Here's the desktop running untethered, after declining to sign-in and turning the "share" features off:

Here's the desktop running tethered - signed into Windows Live and sharing enabled. It has minimal personalization at this point, mostly just Twitter and Facebook feeds:

Hewlett-Packard unveiled a line of new "all in one" desktop PCs, including touchscreen models that look like good candidates for running Microsoft's upcoming Windows 8 operating system.

They range in price from $399 to $899 for the base models, with screen sizes ranging from 20 to 23 inches diagonally and touches like HDMI output and slot-loading disc drives on some models.

HP already offers some of the nicest all-in-one Windows machines, which stuff the computing hardware behind the monitor. They're not as gorgeous as Apple's iMac but they cost around half as much, which puts the convenient "computing console" design into reach for mainstream buyers.

There's growing interest in this style of PC, according to market data HP provided in its release. During July, 34 percent of consumer desktop sales were all-in-one systems, according to NPD.

Business users also plan to buy more all-in-ones, which take up less space and don't need a bunch of wires connected. Among "commercial PC users," plans to buy an all-in-one will grow to 15.7 percent from 9.9 percent over the next 12 months, according to IDC research.

"The popularity of the all-in-one form factor continues to grow, and HP's contribution to this market is significant," Todd Bradley, executive vice president of HP's personal systems group, said in the release.

Yet HP is still thinking about jettisoning its PC business under a reorganization announced last month that walloped the company's stock.

The systems announced today include redesigned TouchSmart desktops - the more powerful models with touchscreen displays. They have a silver external frame design and base, upgraded "Beats" audio systems and screens that tilt back up to 30 degrees.. They also come with new version of HP's desktop software that emulates the Mac desktop, with application icons spread across the bottom of the screen.

The new PCs - especially the ones with the powerful, latest-generation Intel Core processors - will presumably work well with Windows 8, which has Microsoft's "Metro style" interface displaying a group of large tiles on the desktop. They are tapped or clicked to launch programs, and can be rearranged and customized, similar to the way you can change the display on phones running Microsoft's Windows Phone 7 software.

HP didn't mention Windows 7 at all in its release - perhaps because of its cool relationship with Microsoft - and declined to comment specifically on whether the new systems are being designed with Windows 8 in mind. It didn't mention anything about offering these PCs with its WebOS software, although that was the direction it was headed earlier this year.

The emailed response to my question about whether the new touch computers were designed with Windows 8 in mind:

"HP knows people expect a lot from their technology - from the overall design to the user experience. Our new all-in-ones were designed with this in mind, combining a full featured PC and a high definition display into an elegant, modern design that complements the user's environment instead of trying to define it."

HP also updated are the designs of its lower-end all-in-one desktops without touch input. The $399 models is rounded and funkier looking, like the budget all-in-one "net tops" offered by companies such as Asus, MSI and Lenovo.

Only partial details of the hardware were available, but here's what I was able to find out about the lineup and processors:

Omni 120, 20" screen, available Sept. 21, starting price of $399.

- Base configuration includes: AMD dual core processor, 2GB memory, 320GB hard drive, ATI Radeon graphics, wired keyboard and mouse

-Base configuration includes: Intel core i3 processor, 4GB memory, 750GB hard drive, Intel HD graphics, wired keyboard and mouse

-Base configuration includes: AMD dual core processor, 2GB memory, 320GB hard drive, ATI Radeon graphics, wireless keyboard and mouse

-Base configuration includes: Intel core i3 processor, 3GB memory, 500GB hard drive, Intel HD graphics, wireless keyboard and mouse

-Base configuration includes: Intel core i3 processor, 4GB memory, 750GB hard drive, Intel HD graphics, wireless keyboard and mouse

Also announced were two new TouchSmart models for business customers.

Here's the $399 Omni 120:

Here's the $699 TouchSmart 420:

The $799 Omni 220:

A side view of the $899 TouchSmart 520:

Microsoft is showing off new Windows hardware at a Tech-Ed developer conference in New Zealand, including a quad-core slate device and laptops with flexible metal screens.

Blogger Alan Burchill posted photos of the hardware at his blog, which I learned about via Mary Jo Foley.

The hardware will probably be fully unveiled in September at the Build Windows event showcasing Windows 8, which is coming out in 2012.

But the quad-core tablet device will come out sooner, by the end of the year, running Windows 7, according to a Microsoft-produced video (below) from Tech-Ed that Mary Jo called out. She also speculated that the quad-core devices could be hardware that developers are given at the Build conference to test Windows 8 and start developing applications for the new operating system.

Qualcomm, Intel, Nvidia and AMD all announced quad-core mobile hardware earlier this year. Nvidia was to begin producing its quad mobile processors in August and Qualcomm was going to begin shipping quad-core Snapdragon systems by the end of the year, according to Silicon.com.

Pricing of the Windows tablets wasn't disclosed but the video provides clues to selling points that Microsoft will emphasize to compete with the iPad and other tablet devices.

One of the devices shown has a replaceable battery that is described as being more sustainable than the fixed iPad battery, and all the Window devices have enterprise management tools. Another has 1080p video and all-day battery life, and the laptops highlighted have solid-state hard drives for ultrafast startup.

Reuters added to the growing pile of rumors about upcoming Apple hardware with a report today on a cheaper version of the iPhone 4 that could launch "within weeks."

The report said Asian suppliers have begun manufacturing a model with reduced memory - 8 gigabytes instead of the current entry-level 16 gigs.

It's unclear how much the cheaper iPhone would cost and where it will be distributed, though it may be headed for emerging markets.

The report, citing "two people with knowledge of the matter," said Apple will also launch an upgraded version of the iPhone 4 around the end of September. It's been dubbed the iPhone 5, though it's basically the same chassis as the iPhone 4 but with a larger display, better antenna and 8 megapixel camera, the report said. That would bring its specs closer to carriers' flagship Android and Windows Phone 7 devices.

Other sources have been reporting that Apple's testing an LTE version of the iPhone but it apparently won't go on sale until sometime in 2012. That's to be expected since the two largest wireless companies are now operating LTE networks and Apple's a major phone manufacturer. What would be surprising is if Apple weren't yet testing LTE technology.

There's also a very thinly sourced report out of Japan about Apple releasing new Macs by the end of the year. There's speculation that it's a refresh of the MacBook line.

It also seems likely that Apple will eventually offer touchscreen PCs that can take better advantage of touch apps developed for the iPhone and iPad.

My guess is that Apple will time the phone launches to take the wind out of Microsoft's Windows Phone 7.5 "Mango" launch and the debut of the first Nokia Windows phones, which may surface by October.

Similarly, it could time the unveiling of new Macs to steal thunder from Windows 8 and the new generation of Windows PCs running Microsoft's new operating system. The full unveiling of Windows 8 is expected at a developer conference beginning Sept. 13.

Both Windows 8 and "Mango" phones will be highlighted at the Microsoft conference, which is a major event for the company's new mobile platforms. So you can expect the flow of disclosures about exciting new things from Apple and Android will increase in the coming weeks.

The global PC market is still recovering from a four-year binge of consumer sales, according to the latest reports from reseach firms Gartner and IDC.

Gartner said PC sales grew 2.3 percent in the second quarter -- gaining, but well below Gartner's earlier forecast of 6.7 percent growth. IDC said sales grew 2.6 percent, just under its 2.9 percent projection.

Apparently consumers are just fine with the computers they've bought over the past few years and weren't yet looking for replacements in the first half of the year, but companies were busy upgrading their systems.

IDC analyst Jay Chou predicted that sales will pick up in the second half of the year, boosted by refreshed products and easier comparisons with slower sales in late 2010.

Gartner's Mikako Kitagawa said the market is "shifting to modest, but steady growth" after four strong years of consumer sales driven by netbooks and inexpensive laptops.

"The slow overall growth indicates that the PC market is still in a period of adjustment, which began in the second half of 2010," Kitagawa said in a release.

HP remained the biggest PC company, with 17.4 percent of the market during the second quarter. Globally its sales were up 3 percent, but they fell 1.2 percent in the U.S.

Dell was the second largest firm, with 12.5 percent of the market, but Lenovo's a close third. Lenovo's sales grew 22.5 percent during the quarter, giving it 12 percent of the global market.

In the U.S., retailers chased the tablet business and consumer PC sales suffered. But business sales were strong, with midsize and largest companies going through an upgrade cycle.

"Given the hype around media tablets such as the iPad, retailers were very conservative in placing orders for PCs," Kitagawa said in the release. "Instead, they wanted to secure space for media tablets. Some PC vendors had to lower their inventory through promotions, while others slimmed their product lines at retailers."

IDC's take is that U.S. PC sales are down because the netbook craze has faded, sales look thin compared with a surge in early 2010, and demand has softened "as corporate buyers continue to focus on increasing share of their IT budget in new IT solutions such as cloud and virtualization, and consumer interest shifts to media tablets," analyst Rajani Singh said in a release.

Apple PC sales in the U.S. grew 8.5 percent in the quarter, moving into third place, past Acer and Toshiba. HP and Dell remain the largest in the U.S., according to Gartner. IDC pegged Apple's U.S. sales growth at 14.7 percent and also ranked it third, behind HP and Dell.

Expect to hear more about the next version of Windows next week.

It was just announced that Steven Sinofsky, president of Microsoft's Windows and Windows Live group, will speak at the All Things D conference next week in the Los Angeles area.

Sinofsky [below] has a longtime relationship with conference co-host Walt Mossberg, the Wall Street Journal's personal technology columnist.

The timing is right for another peek at Windows 8 or whatever Microsoft decides to call the next version of its flagship operating system. It's expected to go on sale, along with a wave of new PCs, in early 2012.

At the Consumer Electronics Show In January, Sinofsky gave a technical preview of the software, showing that it runs on small mobile device hardware.

A fuller preview is expected at a Windows developer conference that Microsoft's holding in Anaheim in September.

Perhaps Sinofsky will stoke anticipation -- and further ties with Mossberg -- by using the D9 conference to reveal more details of Windows 8 such as its interface design.

Sinofsky is likely to be asked to clarify some of the details about Windows 8 that were released by Intel. A manager revealed there will be different versions of the software and different application compatibility for systems based on traditional x86 computers and those running mobile ARM processors.

Steve Ballmer gave him an opening, dropping a few tidbits at a developer conference in Tokyo today, Mary Jo Foley noted this afternoon. Ballmer said the new OS will be released in 2012 and he called it Windows 8, although that may not be the final name. From his speech:

We're obviously hard at work on the next version of Windows. Windows 7 PCs will sell over 350 million units this year. We've done a lot in Windows 7 to improve customer satisfaction. We have a brand new user interface. We've added touch, and ink, and speech. And yet, as we look forward to the next generation of Windows systems, which will come out next year, there's a whole lot more coming. As we progress through the year, you ought to expect to hear a lot about Windows 8. Windows 8 slates, tablets, PCs, a variety of different form factors.

D9 co-host Kara Swisher announced Sinofsky's appearance today, but held back on previewing whatever news he'll make next week. Swisher said Sinofsky "will talk about the future of Windows in the era of all kinds of new devices and the cloud."

Microsoft spokesman Lou Gellos had no details to provide, beyond confirming Sinofsky's appearance at the event.

The conference runs Tuesday through Thursday.

Other speakers include a raft of CEOs: Hewlett-Packard's Leo Apotheker, Twitter's Dick Costolo, AT&T Mobility's Ralph de la Vega, Disney's Robert Iger, Zynga's Mark Pincus and Reed Hastings of Netflix. Others include Google Chairman Eric Schmidt and Sinofsky's old co-worker, Nokia Chief Executive Stephen Elop.

Nielsen today released a report on how U.S. consumers are using their iPads and other tablet computing devices.

The research suggests that the risk to the PC industry from the iPad is there, but awfully overstated. It also makes me wonder how pleased buyers are with their expensive new tablets.

The majority of people told Nielsen that buying a tablet hasn't led to a reduction in how often they use PCs, netbooks, portable media players, game consoles, smartphones or connected TVs.

A tiny number of tablet buyers said they've stopped using their computers since their purchase - 2 percent said they're no longer using their laptop, 3 percent stopped using their desktop and 5 percent stopped using their netbook.

But a greater number of people said they've been using their computers more since they bought an iPad or other tablet. Nielsen found 22 percent are using their netbook more often, 13 percent are using their laptops more and 9 percent are using their desktops more since buying a tablet.

Can you imagine the conversation between spouses in those households? "Why did you have to spend $800 on that thing, honey? You're just spending more time on the plain old computer ..."

We'll have to see what the next few installments of the survey say about computing trends. So far it sounds like tablets are being used as computer accessories more than computer replacements.

It would be helpful if Nielsen provided information on whether tablets are meeting buyers' expectations. How many buyers thought they were getting a computer replacement?

The survey says 68 percent of people who bought tablets are using their laptop the same or more since the purchase, and 72 percent are using their netbooks the same or more.

Were they expecting the tablet to take the place of other gadgets in the home?

Of those that had another e-reader, like Amazon.com's Kindle, 72 percent said they're using their e-readers the same or more since buying a tablet, and 89 percent said they're using their Internet-connected TVs more since buying the device.

Then again, these are people who bought a tablet when they already had computers and perhaps a Kindle, Web-connected TV and game consoles. Maybe they just don't have much time for their latest toy.

About a third of tablet buyers said they're using their computers less or not at all. Nielsen provided a few reasons why, after asking tablet buyers why they're using the new device for things they used to do on a laptop or desktop.

Here are the reasons, which should be a roadmap for PC makers designing their Windows 8 machines:

The big two PC research firms both said first quarter PC sales were awful. Gartner and IDC had predicted it would be a slow quarter and it turned out to be worse.

Events in Japan and the Middle East were factors, as were the economic situation and Apple's iPad. But mostly people are doing fine with the PCs they have and aren't in a rush to upgrade, apparently.

"While it's tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles,'' Bob O'Donnell, IDC vice president, said in the release.

IDC said global PC sales fell 3.2 percent compared with the first quarter of 2011, much worse than the 1.5 percent growth the firm had predicted. In the U.S., shipments fell 10 percent from the high demand seen in recent years.

Gartner said global sales fell 1.1 percent, below the 3 percent growth it had predicted. It blamed the decline on weak demand for consumer PCs.

"Low prices for consumer PCs, which had long stimulated growth, no longer attracted buyers. Instead, consumers turned their attention to media tablets and other consumer electronics," Mikako Kitagawa, Gartner principal analyst, said in its release. "With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs."

Corporate spending on replacement PCs kept the market from "one of the worst declines in recent history," Gartner said. It expects the corporate replacement sales to continue into late 2011 or the start of 2012.

IDC said spiking fuel and commodity prices were also a factor -- you may hold off on that new PC when a tank of gas costs $75 -- and sales in China cooled after big growth in 2010.

Both firms said HP held its position as the world's biggest PC company. IDC puts Dell in second place, followed by Acer, Lenovo and Toshiba. Gartner puts Acer in second place, followed by Dell, Lenovo and Toshiba.

In the U.S. market, Lenovo is bumped from the top five by Apple, which is fourth or fifth place with 8.5 percent to 9.3 percent market share depending on which research firm you ask.

Here's Gartners rank of the top global PC makers:

PC makers are finally releasing some cool new systems based on Intel's delayed Sandy Bridge hardware.

Sony today is announcing a Vaio laptop that boasts up to 15 hours of battery life, when coupled with an optional "Sheet Battery" that forms another layer below the case.

Without the $100 sheet battery, their stated battery life is 7.5 hours.

Without the battery, the laptop is an inch thick and weighs 3.8 pounds. It has a 13.3-inch diagonal screen and a case made from aluminum and magnesium. It starts at $970 and is available in the spring.

The Vaio S can also be had with dual solid-state drives -- 128 gigabytes apiece -- but that adds a crazy $550 to the cost. If you really want to burn up the expense account, Sony also is offering a Blu-ray read-write drive as a $500 extra.

Dell's also rolling out new Sandy Bridge laptops, including an "ultraslim" model coming next week, and Apple's Sandy Bridge MacBooks surfaced on Feb. 24.

Research giant Gartner slashed its influential PC sales forecast today, saying that sales will be much slower than expected in 2011 because of growing interest in smartphones and tablet devices such as the iPad.

Gartner cut its 2011 forecast of PC sales growth to 10.5 percent, down from 15.9 percent. It's expecting 387.8 million units to be sold.

Weakness in China's mobile PC market is a factor, but there's "a general loss in consumer enthusiasm for mobile PCs," Ranjit Atwal, Gartner research director, said in a release.

Mobile PCs were key to the industry's growth over the last five years, with average growth rates approaching 40 percent, but all sorts of devices can now be used to connect wirelessly to the Internet, it noted.

Gartner had thought mobile PC sales would continue to grow as consumers bought their second or third systems but it's now thinking that enthusiasm for alternative devices will "dramatically slow home mobile PC sales," George Shiffler, Gartner research director, said in the release.

Shiffler said, "we now believe that consumers are not only likely to forgo additional mobile PC buys but are also likely to extend the lifetimes of the mobile PCs they retain as they adopt media tablets and other mobile PC alternatives as their primary mobile device."

Gartner's now expecting home mobile PC sales to grow less than 10 percent a year in mature markets from 2011 through 2015.

Some consumers are buying tablets instead of PCs. But the bigger issue is that consumers are holding off PC purchases because they're curious about tablets and waiting to see what's available during the rest of 2011.

Corporate sales of PCs will continue to see double-digit growth in 2011 and 2012 as older PCs are replaced around the world but even in this market, some purchases are being delayed as buyers consider whether to buy tablets instead.

Gartner said mobile PCs have lost their cachet as a fashion accessory and aren't living up to their mobility promise.

"The current 'cool' device is the smartphone, and now PCs will soon have to do battle with media tablets when they are launched in large numbers in the second quarter of 2011," the release said.

"Up to now, the appeal of mobile PCs has been their portability. But mainstream mobile PCs have not shed sufficient weight, and do not offer the all-day battery life, to substantiate their promise of real mobility. These limitations have become all the more apparent with the rapid spread of social networking, which thrives on constant and immediate connections. In short, all-day untethered computing has yet to materialize, and that has exposed the "mobile" PC as merely a transportable PC at best."

So when is Microsoft launching that new, more mobile version of Windows?

If you haven't upgraded to a smartphone running Qualcomm's 1 gigahertz Snapdragon processors yet, there's no rush.

Dual-core models are just arriving, and Qualcomm just announced a quad-core, 2.5 gigahertz beast to arrive in early 2012.

The capabilities of the new APQ8064 processor blur whatever's left of the line between mobile phones, tablets and PCs.

They also preview what's coming to smartphones and tablets shown at next January's Consumer Electronics Show:

-- 12 times more power and 75 percent lower power usage than the first Snapdragon.

-- Quad-core graphics processor "for a console-quality gaming experience." (Qualcomm's chief executive hinted at this during HP's WebOS launch last week).

-- Support for cameras with up 20 megapixel resolution.

-- 3-D stereoscopic photo and video capture and playback.

-- Full 1080p HD and 3-D video output to large screens, via HDMI.

-- Integration with LTE/3G radio modules.

-- Support for PC-type DDR3 memory, plus PCIe interfaces and multiple USB ports.

-- Support for near-field communication.

Snapdragon processors are used in many of the latest smartphones, but the quad-core model seems aimed at tablets and other mobile computers as much as phones.

Qualcomm's announcement said it will provide computer makers with a platform "that can meet all of their design configuration needs for tablets and next generation computing and consumer electronic devices."

This hardware hints at the sort of mobile computers that will use Windows 8, or whatever Microsoft calls its next major operating system. Microsoft announced in January that it's designing the software to run on this kind of system-on-chip hardware.

With a 2.5 Ghz chipset the size of a matchbook, your next PC may be the size of your phone, and your phone may be more powerful than your current desktop.

SAN FRANCISCO -- Hewlett-Packard on Wednesday outlined a billion-dollar bet to reshape its huge personal-computer and mobile-device business to be more like Apple, using an in-house operating system rather than Microsoft Windows.

It's a blow for Microsoft to have its largest customer -- and the world's largest PC maker -- reject Windows for its new push into the fast-growing mobile-device business.

But shoppers may benefit from the increased competition and new options coming later this year.

HP plans to release two phones this spring and a tablet computer in the summer, all based on the latest version of the WebOS software the company acquired when it bought Palm last April for $1.2 billion.

HP's tablet -- the TouchPad -- joins a flood of tablet computers to be released this year, including new versions of Apple's iPad, devices running Google's Android software and Windows-based tablets from Dell and other major PC makers.

Research firms forecast more than 50 million tablet computing devices will be sold this year. Gartner expects 64.8 million will be sold globally, rising to 154 million in 2013.

"These things are proof that the future is really wide open when it comes to growth and opportunities in the mobile space," Qualcomm Chief Executive Paul Jacobs said during the HP event.

The TouchPad was the highlight of a splashy media event in a waterfront pavilion Wednesday morning.

Yet HP made clear it was launching more than a few devices. It was presenting a new platform it expects to rival Windows, Android and Apple's iOS software used in the iPhone and iPad.

The company aims to build the largest community of connected devices in the world, creating a big draw for software developers, according to Steven McArthur, senior vice president for applications and services.

"Virtually no other company could credibly put forward such a goal," said McArthur, a former president of Expedia.

HP emphasized that the WebOS platform can be pushed through its vast network of customers, partner companies and retail outlets. The Palo Alto, Calif., company has more than a billion customers and distributes its products through 88,000 stores around the world.

It's going to count on wireless phone companies to help move the TouchPad, though. Verizon and others will start selling the device in summer for a price somewhere below $800.

The 1.6-pound TouchPad has a 9.6-inch diagonal display with 1,024 by 728 resolution and a front-facing camera for videoconferencing. It's powered by Qualcomm's newest dual-core, 1.2 gigahertz Snapdragon processor and will come with 16 or 32 gigabytes of storage.

It will be available first with Wi-Fi and later with 3G wireless service through multiple carriers.

The new phones include the tiny Veer, about the size of a credit card with a 2.6-inch screen. It has 8 gigabytes of storage, a slide-out keyboard, HSPA+ wireless and an 800 megahertz Snapdragon processor. It will go on sale in "early spring."

"Never before has a smartphone done so much and felt so little," said Jon Rubinstein, the former CEO of Palm and now an HP senior vice president.

Rubinstein also showed the Pre3, a larger phone with a 3.6-inch diagonal screen, slide-out keyboard and HSPA+ and EVDO rev. It runs on a 1.4 gigahertz Snapdragon processor and will be available this summer.

Rubinstein said that with WebOS, the company aims to transform how people think, feel and connect to different devices and services. Devices running the software stay synchronized with online services and can integrate multiple providers of e-mail and online calendars, for instance.

To use all the features, though, users will need both a TouchPad and a WebOS phone.

For instance, the demonstrations Wednesday showed how messages coming into a Pre phone can be answered on a tablet. Web pages being browsed on the tablet -- such as a restaurant's website -- can be shifted to a Pre phone by tapping the phone against the tablet.

Todd Bradley, HP's executive vice president for personal systems, said the company is bringing memorable new experiences comparable to the first time he heard the whisper of an electric car.

"We should all witness these firsts as often as we can in our lives. If you think about it, creating those experiences for a living is what the technology industry is all about."

The phones and tablet had been expected, but Bradley added something extra when he announced the company also plans to extend WebOS to desktop and laptop PCs.

Executives provided no details of when WebOS PCs will arrive and said the company will continue to produce Windows-based PCs also.

Microsoft declined to make executives available to discuss HP's move but a spokesman provided a statement: "HP is a valued Microsoft partner, and we continue to work closely with them on many new products that bring great experiences to our mutual customers."

In January, Microsoft disclosed the next version of Windows will run on the tiny, integrated hardware platforms used in smartphones and the latest tablet computers, including the Qualcomm hardware HP is using for its WebOS devices.

But the new version of Windows may not arrive until late this year or in 2012.

HP looked into different operating systems when it began developing slate-type tablet computers five years ago, according to Chief Technology Officer Phil McKinney.

It decided the best approach was an operating system designed from the ground up for mobile devices and one that could be tailored for tablets.

"There are operating systems appropriate for the job," McKinney said.

That approach is similar to that of Apple, which develops its own hardware and software, and has led the emergence of mobile computing devices since its iPhone was first released in 2007.

HP also may have decided it was simply cheaper to develop its own operating system and developer platform, instead of paying to license the multipurpose Windows.

It's a challenge to lure developers to a new platform, especially when they're already stretched developing applications for multiple platforms and devices, but HP has already landed a few big ones.

Time Inc. showed TouchPad versions of "Sports Illustrated" and "People" magazines that are expected to be ready -- along with Fortune magazine -- when the device launches.

HP also worked with Amazon.com on a TouchPad version of Kindle that supports the Kindle's new "collections" feature for managing libraries of Kindle books.

(This is an expanded version of my blogging live from HP's event)

SAN FRANCISCO -- Hewlett-Packard on Wednesday outlined a billion-dollar bet to reshape its huge personal-computer and mobile-device business to be more like Apple, using an in-house operating system rather than Microsoft Windows.

It's a blow for Microsoft to have its largest customer -- and the world's largest PC maker -- reject Windows for its new push into the fast-growing mobile-device business.

But shoppers may benefit from the increased competition and new options coming later this year.

HP plans to release two phones this spring and a tablet computer in the summer, all based on the latest version of the WebOS software the company acquired when it bought Palm last April for $1.2 billion.

HP's tablet -- the TouchPad -- joins a flood of tablet computers to be released this year, including new versions of Apple's iPad, devices running Google's Android software and Windows-based tablets from Dell and other major PC makers.

Research firms forecast more than 50 million tablet computing devices will be sold this year. Gartner expects 64.8 million will be sold globally, rising to 154 million in 2013.

"These things are proof that the future is really wide open when it comes to growth and opportunities in the mobile space," Qualcomm Chief Executive Paul Jacobs said during the HP event.

The TouchPad was the highlight of a splashy media event in a waterfront pavilion Wednesday morning.

Yet HP made clear it was launching more than a few devices. It was presenting a new platform it expects to rival Windows, Android and Apple's iOS software used in the iPhone and iPad.

The company aims to build the largest community of connected devices in the world, creating a big draw for software developers, according to Steven McArthur, senior vice president for applications and services.

"Virtually no other company could credibly put forward such a goal," said McArthur, a former president of Expedia.

HP emphasized that the WebOS platform can be pushed through its vast network of customers, partner companies and retail outlets. The Palo Alto, Calif., company has more than a billion customers and distributes its products through 88,000 stores around the world.

It's going to count on wireless phone companies to help move the TouchPad, though. Verizon and others will start selling the device in summer for a price somewhere below $800.

The 1.6-pound TouchPad has a 9.6-inch diagonal display with 1,024 by 728 resolution and a front-facing camera for videoconferencing. It's powered by Qualcomm's newest dual-core, 1.2 gigahertz Snapdragon processor and will come with 16 or 32 gigabytes of storage.

It will be available first with Wi-Fi and later with 3G wireless service through multiple carriers.

The new phones include the tiny Veer, about the size of a credit card with a 2.6-inch screen. It has 8 gigabytes of storage, a slide-out keyboard, HSPA+ wireless and an 800 megahertz Snapdragon processor. It will go on sale in "early spring."

"Never before has a smartphone done so much and felt so little," said Jon Rubinstein, the former CEO of Palm and now an HP senior vice president.

Rubinstein also showed the Pre3, a larger phone with a 3.6-inch diagonal screen, slide-out keyboard and HSPA+ and EVDO rev. It runs on a 1.4 gigahertz Snapdragon processor and will be available this summer.

Rubinstein said that with WebOS, the company aims to transform how people think, feel and connect to different devices and services. Devices running the software stay synchronized with online services and can integrate multiple providers of e-mail and online calendars, for instance.

To use all the features, though, users will need both a TouchPad and a WebOS phone.

For instance, the demonstrations Wednesday showed how messages coming into a Pre phone can be answered on a tablet. Web pages being browsed on the tablet -- such as a restaurant's website -- can be shifted to a Pre phone by tapping the phone against the tablet.

Todd Bradley, HP's executive vice president for personal systems, said the company is bringing memorable new experiences comparable to the first time he heard the whisper of an electric car.

"We should all witness these firsts as often as we can in our lives. If you think about it, creating those experiences for a living is what the technology industry is all about."

The phones and tablet had been expected, but Bradley added something extra when he announced the company also plans to extend WebOS to desktop and laptop PCs.

Executives provided no details of when WebOS PCs will arrive and said the company will continue to produce Windows-based PCs also.

Microsoft declined to make executives available to discuss HP's move but a spokesman provided a statement: "HP is a valued Microsoft partner, and we continue to work closely with them on many new products that bring great experiences to our mutual customers."

In January, Microsoft disclosed the next version of Windows will run on the tiny, integrated hardware platforms used in smartphones and the latest tablet computers, including the Qualcomm hardware HP is using for its WebOS devices.

But the new version of Windows may not arrive until late this year or in 2012.

HP looked into different operating systems when it began developing slate-type tablet computers five years ago, according to Chief Technology Officer Phil McKinney.

It decided the best approach was an operating system designed from the ground up for mobile devices and one that could be tailored for tablets.

"There are operating systems appropriate for the job," McKinney said.

That approach is similar to that of Apple, which develops its own hardware and software, and has led the emergence of mobile computing devices since its iPhone was first released in 2007.

HP also may have decided it was simply cheaper to develop its own operating system and developer platform, instead of paying to license the multipurpose Windows.

It's a challenge to lure developers to a new platform, especially when they're already stretched developing applications for multiple platforms and devices, but HP has already landed a few big ones.

Time Inc. showed TouchPad versions of "Sports Illustrated" and "People" magazines that are expected to be ready -- along with Fortune magazine -- when the device launches.

HP also worked with Amazon.com on a TouchPad version of Kindle that supports the Kindle's new "collections" feature for managing libraries of Kindle books.

(This is an expanded version of my blogging live from HP's event)

SAN FRANCISCO -- Hewlett-Packard on Wednesday outlined a billion-dollar bet to reshape its huge personal-computer and mobile-device business to be more like Apple, using an in-house operating system rather than Microsoft Windows.

It's a blow for Microsoft to have its largest customer -- and the world's largest PC maker -- reject Windows for its new push into the fast-growing mobile-device business.

But shoppers may benefit from the increased competition and new options coming later this year.

HP plans to release two phones this spring and a tablet computer in the summer, all based on the latest version of the WebOS software the company acquired when it bought Palm last April for $1.2 billion.

HP's tablet -- the TouchPad -- joins a flood of tablet computers to be released this year, including new versions of Apple's iPad, devices running Google's Android software and Windows-based tablets from Dell and other major PC makers.

Research firms forecast more than 50 million tablet computing devices will be sold this year. Gartner expects 64.8 million will be sold globally, rising to 154 million in 2013.

"These things are proof that the future is really wide open when it comes to growth and opportunities in the mobile space," Qualcomm Chief Executive Paul Jacobs said during the HP event.

The TouchPad was the highlight of a splashy media event in a waterfront pavilion Wednesday morning.

Yet HP made clear it was launching more than a few devices. It was presenting a new platform it expects to rival Windows, Android and Apple's iOS software used in the iPhone and iPad.

The company aims to build the largest community of connected devices in the world, creating a big draw for software developers, according to Steven McArthur, senior vice president for applications and services.

"Virtually no other company could credibly put forward such a goal," said McArthur, a former president of Expedia.

HP emphasized that the WebOS platform can be pushed through its vast network of customers, partner companies and retail outlets. The Palo Alto, Calif., company has more than a billion customers and distributes its products through 88,000 stores around the world.

It's going to count on wireless phone companies to help move the TouchPad, though. Verizon and others will start selling the device in summer for a price somewhere below $800.

The 1.6-pound TouchPad has a 9.6-inch diagonal display with 1,024 by 728 resolution and a front-facing camera for videoconferencing. It's powered by Qualcomm's newest dual-core, 1.2 gigahertz Snapdragon processor and will come with 16 or 32 gigabytes of storage.

It will be available first with Wi-Fi and later with 3G wireless service through multiple carriers.

The new phones include the tiny Veer, about the size of a credit card with a 2.6-inch screen. It has 8 gigabytes of storage, a slide-out keyboard, HSPA+ wireless and an 800 megahertz Snapdragon processor. It will go on sale in "early spring."

"Never before has a smartphone done so much and felt so little," said Jon Rubinstein, the former CEO of Palm and now an HP senior vice president.

Rubinstein also showed the Pre3, a larger phone with a 3.6-inch diagonal screen, slide-out keyboard and HSPA+ and EVDO rev. It runs on a 1.4 gigahertz Snapdragon processor and will be available this summer.

Rubinstein said that with WebOS, the company aims to transform how people think, feel and connect to different devices and services. Devices running the software stay synchronized with online services and can integrate multiple providers of e-mail and online calendars, for instance.

To use all the features, though, users will need both a TouchPad and a WebOS phone.

For instance, the demonstrations Wednesday showed how messages coming into a Pre phone can be answered on a tablet. Web pages being browsed on the tablet -- such as a restaurant's website -- can be shifted to a Pre phone by tapping the phone against the tablet.

Todd Bradley, HP's executive vice president for personal systems, said the company is bringing memorable new experiences comparable to the first time he heard the whisper of an electric car.

"We should all witness these firsts as often as we can in our lives. If you think about it, creating those experiences for a living is what the technology industry is all about."

The phones and tablet had been expected, but Bradley added something extra when he announced the company also plans to extend WebOS to desktop and laptop PCs.

Executives provided no details of when WebOS PCs will arrive and said the company will continue to produce Windows-based PCs also.

Microsoft declined to make executives available to discuss HP's move but a spokesman provided a statement: "HP is a valued Microsoft partner, and we continue to work closely with them on many new products that bring great experiences to our mutual customers."

In January, Microsoft disclosed the next version of Windows will run on the tiny, integrated hardware platforms used in smartphones and the latest tablet computers, including the Qualcomm hardware HP is using for its WebOS devices.

But the new version of Windows may not arrive until late this year or in 2012.

HP looked into different operating systems when it began developing slate-type tablet computers five years ago, according to Chief Technology Officer Phil McKinney.

It decided the best approach was an operating system designed from the ground up for mobile devices and one that could be tailored for tablets.

"There are operating systems appropriate for the job," McKinney said.

That approach is similar to that of Apple, which develops its own hardware and software, and has led the emergence of mobile computing devices since its iPhone was first released in 2007.

HP also may have decided it was simply cheaper to develop its own operating system and developer platform, instead of paying to license the multipurpose Windows.

It's a challenge to lure developers to a new platform, especially when they're already stretched developing applications for multiple platforms and devices, but HP has already landed a few big ones.

Time Inc. showed TouchPad versions of "Sports Illustrated" and "People" magazines that are expected to be ready -- along with Fortune magazine -- when the device launches.

HP also worked with Amazon.com on a TouchPad version of Kindle that supports the Kindle's new "collections" feature for managing libraries of Kindle books.

(This is an expanded version of my blogging live from HP's event)

After launching a series of tablets based on Google's Android software, Dell today gave a sneak peek at a Windows 7 model coming out in a few months.

The device is aimed at business customers - but will be sold to consumers as well - and has a 10-inch diagonal screen, Intel's latest processors and an iPad-like design.

That's based on various reports from an event in San Francisco today where Dell announced 39 new PCs for 2011. Most are updated laptops and desktops.

This must be new PC week. Hewlett-Packard on Monday announced its new touchscreen desktops and today announced its new laptops. On Wednesday HP's also showing off its WebOS operating system, presumably with new consumer tablets.

There are also several rumors floating around about Apple unveiling the next iPad this week.

Dell's going to start selling its Windows tablet in May, according to PC Pro's report, but I wonder if the mockup was rushed out to get ahead of the HP news.

The device shown today was a non-functioning demo unit, with a decal instead of a working display, according to Cnet's blog from the event, which has a good picture of the tablet here.

Dell's also going to develop a 10-inch Android tablet, joining the 5-inch and 7-inch "Streak" models now carried by AT&T and T-Mobile.

During Dell's presentation, an executive said big companies want a Windows tablet that fits into their IT plans. Android can also fit, he said, but more want a Windows version, according to Cnet's report.

Get ready for a bunch of tablet announcements as PC makers start building devices based on Intel's "Oak Trail" system and launch them in time for the graduation and Father's Day sales season.

If you're in the market for an all-in-one Windows PC, there's a new option from Hewlett-Packard coming out this week.

The company today announced the TouchSmart 610, a $900 consumer model going on sale Wednesday, and the 9300 business version, which goes on sale in May.

Both have 23-inch diagonal touchscreens, slot-load disc players and a sleeker design than the slablike TouchSmarts that first debuted with Windows Vista. They're still not as gorgeous as an iMac, but they're getting closer and have more hardware bang for the buck.

Their money feature is a tilting stand that reclines the display nearly horizontal into a position that's easier for prolonged touch activity and more natural for doodling, arranging photos, playing games. When reclined, the touchscreen is in a position more akin to using an iPad or other tablet computer while seated.

HP also added a new laptop link application that lets users access and control the desktop of their laptop from the TouchSmart. The laptop's desktop appears as a window on the TouchSmart, and gestures and taps on the screen are converted to mouse clicks to remotely control the laptop.

The TouchSmart 9300 is going to be based on Intel's "Sandy Bridge" hardware platform, which was recalled with a glitch. The press release mentions the "second generation Intel Core processors." Pricing hasn't been announced.

The consumer 610 model is shipping with the first-generation Core i5 650 processor, at least to start.

It would have been nicer if the base 610 came with the quad-core i5, but the specs nevertheless aren't too shabby. The base model comes with 6 gigabytes of DDR3 RAM, a 1 terabyte hard-drive, a built-in TV tuner, HP's upgraded "Beats" audio system and a Bluetooth/80211.n radio.

UPDATE: The initial price and specs provided by HP were a little misleading. The base, $900 model has much lower specs. It doesn't have any flavor of Core i5 processor - it has an AMD Athlon X4 with 4 gigs of RAM and a 750 gig hard drive.

There's a higher-end model that starts at $1,149 that has the i5 650, 6 gigabytes of RAM and a terabyte drive. That changes the value equation.

Here are a batch of screenshots that Google posted of "Honeycomb," the new version of its Android operating system designed for tablet computing devices.

It looks like Android 3.0 is a big step toward a PC operating system, if your next PC will be a tablet.

The first Honeycomb tablet to go on sale will be the Motorola Xoom, which was unveiled at CES and will be available in late February. It has a 10.1-inch diagonal touchscreen, dual-core Nvidia Tegra processor and a camera that takes 5 megapixel stills and 720p video.

By summer there should be all sorts of Honeycomb tablets fighting for shelf space at wireless stores with the new iPad, Windows 7 tablets and Hewlett Packard's Topaz WebOS device.

Google's Honeycomb screenshots show new features of the system, but device makers may customize things so the final product may look different. The screenshots were released with a developer preview and tools released Wednesday.

Here is the new user interface designed especially for tablets:

The new tabbed browser, with improved zooming and a log-in feature to automatically sign into Google sites and sync bookmarks with Google's Chrome browser:

New camera controls; there's also a "gallery" application for viewing albums:

Developers can build better home screen widgets, with tools for flipping through 3D stacks of content, and touch gestures to scroll and flip through content:

Google redesigned the Android keyboard for the larger screens of tablets (versus phones, which Android initially targeted). The system also lets users select words by pressing the screen, then dragging little handles ("bounding arrows") to highlight a text block:

Here's the Xoom image Motorola released a few weeks ago. Word on the street is that this will cost $800, without a phone plan attached:

Lastly, here's the Google Honeycomb preview video released earlier:

The big two PC sales reports came out today from IDC and Gartner, with both research firms saying that sales were up about 3 percent during the holidays.

Both firms had predicted around 5 percent growth in the fourth quarter, but consumers were being more thrifty and weighed the iPad and game consoles against PC sales. Sales also slowed in Asia, outside of Japan.

The reports hint at what investors will hear from the big PC companies when they report earnings later this month. Intel reports on Jan. 13 and Microsoft on Jan. 27.

For the full year, PC sales were up 13.8 percent according to Gartner and 13.6 percent according to IDC.

Hewlett Packard remains the world's biggest PC vendor despite a 1 percent drop in sales. Both firms estimated HP has a roughly 19 percent share of the market globally and 29 percent share in the U.S.

Dell and Acer are second largest globally. Gartner gives Acer the edge, with 12.7 percent market share in Q4, while IDC gives it to Dell, with 12.1 percent.

Lenovo is third, followed by Toshiba globally.

In the U.S., Apple is the fifth largest with 9 percent of Q4 PC sales, according to IDC, or 9.7 percent according to Gartner.

Here are the global stats -- choose your vendor:

Steve Ballmer's getting scooped.

Asian computer makers are letting news of their Windows 7 tablets trickle out ahead of the Consumer Electronics Show, when Ballmer's expected to show more Windows-based rivals to the iPad during his Jan. 6 keynote.

MSI gave Taiwanese journalists a sneak peek at the Windpad 100W that it's going to present in Las Vegas next week.

Here's a video taken by Netbooknews.com, which had a reporter at the preview event in Taipei. They said the 10-inch tablet running an Intel Atom Z530 chip is about the same as the one MSI unveiled in June. It has an HDMI port, memory card reader, two USB ports and a 32 gig solid-state drive.

New tablets based on Intel's Oak Trail platform will appear in March, according to the report.

Asus is also jumping the gun with preview glimpses of its Eee Pad, a handsome convertible laptop/tablet based on Windows.

Here's the Asus teaser video:

Curious timing: Goldman Sachs issues another report saying the iPad and tablets are hammering Microsoft, then anonymous sources tell the New York Times that Windows 7 tablets are part of Steve Ballmer's CES keynote.

The Times piece says Ballmer will show Dell and Samsung tablets running Windows 7 and may even give a peek at a device running Windows 8.

A Microsoft spokesman declined to comment, saying "we are not talking at all about CES."

Ballmer already said these devices are coming. He told analysts in July that Microsoft's big push into tablets will come in early 2011 with the release of new Intel hardware for mobile devices.

One of the analysts he was talking to was Goldman's Sarah Friar, who is unlikely to be convinced by a whispery blog entry saying "wait until January!"

Still unanswered are key questions about the next generation of Windows tablets: When exactly will they go on sale, and how much will they cost?

If they're $1,000, they'll die the same quick death as Microsoft's ultra-mobile PC concept, which debuted on Samsung hardware in 2006. The device Ballmer will show in January is "similar in size and shape to the Apple iPad, although it is not as thin," according to "people familiar with the device" who spoke to the NYT.

An appearance at CES doesn't mean the devices will go on sale in January. The show is really for retailers to see products that they'll carry later in 2011.

Hewlett-Packard, for instance, waited until late October to finally, and quietly, take orders for the Win7 Slate PC that Ballmer showed last January. HP was a special case, though, as it's trying to build consumer tablets on its own operating system now.

I'm curious to see whether the "Windows 7" operating system on the tablets will be the full-blown version or stripped-down versions designed for consumer-electronics and portable devices.

Today's column is an extended take on Google's CR-48 preview of its Chrome operating system:

It was thrilling to fire up Google's ultra groovy CR-48 laptop running the company's new Chrome operating system.

The Applesque machine was like an early Christmas present from Silicon Valley Santa. Inside the eco-friendly cardboard package was technology that promised to finally topple Microsoft's 30-year dominance of the PC business.

Who could wait to see what kind of new computer the hottest software company in the world can create with its $3 billion-a-year research budget?

But after spending a few days with the CR-48, I don't think Microsoft has much to worry about yet. If anything, Chrome is more likely to challenge Apple's iOS software used in the iPad.

Chrome OS is elegantly designed with clever features that make it simple to run. But the software is crippled by Google's ambitious business objectives and quixotic pursuit of "online only" computing.
It's not really a personal-computer operating system, like Windows or Apple's OS X. It's more of an embedded system - like the software inside a cable box or phone - that's locked into place, mostly out of reach to users and managed remotely by Google.

What the user sees is just a browser - a version of Google's Chrome browser - with enough software under the hood to make the computer work. As a result the software is fast to start but limited. The user hardly has any control or choice over how to use and manage the computer on which it's running.

Chrome is designed to be always connected to the Web, through Wi-Fi or Verizon 3G Wireless service.

The CR-48 that Google's distributing to developers, testers and the media is a gorgeous laptop but, unfortunately, it's not for sale. It's only a test bed for demonstrating, testing and marketing the Chrome OS, which is to start appearing on computers sold by Acer, Samsung and others next year.

I'm expecting to see a bunch of different Chrome systems shown in January at the Consumer Electronics Show aimed for stores later in 2011. There will probably be a mix of laptops, tablets similar to the iPad and maybe even "all-in-one" systems with a monitor and processor in the same unit.

They'll probably cost about the same or less than low-end Windows PCs.

They should be cheaper, since the systems require you to use Google's ad-supported services. Buyers probably will also end up buying Verizon Wireless service.

Google and Verizon are offering 100 megabytes of free data transmission per month for two years to Chrome users. After that you'll have to pay either $10 per day for unlimited service or sign up for monthly plans that start at $20 for 1 gigabyte of data. (Verizon provides information on how much data various tasks will use; an excerpt below)

The 100 megabytes lasted less than a day. It wasn't enough to watch a single episode of "The Office" on Hulu.com, stuttering and buffering on the 3G service at my house. Partway through, the system showed an error message, blaming the website. It said the site "may be temporarily down or it may have moved permanently to a new Web address." Hulu was still up; the problem was that I needed to start paying Verizon or get on a Wi-Fi network.

Google is taking another stab at the "network computer" that Oracle, Sun Microsystems and others proposed in the 1990s.

The concept is to offer cheap and simple computers that connect to a network where the heavy-duty computing is handled and centrally managed. The PC becomes a simple terminal.

This approach minimizes the importance of the PC and puts the emphasis on the data center.

You've probably used a similar system at libraries, which provide terminals to search and browse the catalog.

Having a browser-only computer is fine for a lot of things we do with computers. You can write and save documents at sites like Google Docs or Office Web Apps, if they're designed to work with Chrome. I was able to edit an Office document with the CR-48 but couldn't stream anything from Netflix, which uses software that's not supported by Chrome.

Last week's "launch" of Chrome was really aimed at Web developers. Google wants them to write special versions of their Web pages for Chrome. Those pages are characterized as applications and distributed through a polished Chrome app store offering free and paid apps. When you "install" one of these pages, they are bookmarked on your Chrome start page, with phonelike icons that you click to open the pages.

But this approach really works only if you're constantly connected to the Web. It also shifts control of the system from the user to the system manager and site operators.

Some people will be uncomfortable using computers that basically require you to log in to Google and store files on its servers.

For all of Google's talk about open software and net neutrality, Chrome OS is pushing computing back toward a model where you've got to sign in and use a big, nosy company's mainframe.

It's also unclear whether Google is willing to invest the massive effort it takes to build and support a true PC operating system. For instance, one of the hardest things about building an OS is making sure it works with different devices people use with their computers.

I connected the CR-48 to a three-year-old printer in my house and was presented with a "white screen of death" - a blank box that froze the browser. I should have read the online help pages first; Chrome OS doesn't have any printer drivers whatsoever.

To print something, you've got to send the file to a Google server, which in turn will send the file to a Windows PC (not a Mac) that's connected to a printer. But first you've got to sync your Windows PC with Google's online print service and be sure that it's logged in to your Google account.

Google may think this is a clever way to piggyback on the work Microsoft's done to support all the different printers people use, at least until all printers connect to the Web. Chrome OS users are going to think it's a royal pain and the software just doesn't work right.

More competition in the operating-system business is good and Chrome is an intriguing entry. But it has a long way to go before it's a contender for your next PC.

Note: For a different perspective, here is a post by Google Chief Executive Eric Schmidt about the CR-48 launch and Chrome OS, relating his work on an early Sun network computer and "going back to old ideas."

A batch of court documents The New York Times pressed to unseal has more details about a flood of faulty computers the company sold in 2003 to 2005.

The documents include a 2004 Dell study that projected customer problems with 45 percent to 97 percent of the SX270 Optiplex systems, up from its earlier forecast of problems with a minimum of 12 percent of the systems. It ended up replacing 22 percent of the motherboards on 21 million of the Optiplex systems sold during that period, according to the story.

Problems arose because Dell received poor capacitors that bulged and failed when they got hot. But the bigger question surrounds the way Dell responded, and its decision to not issue a recall when it became aware of how widespread the problem had become.

Dell took proactive steps to help customers who bought 50 or more of the machines and had high failure rates, but individual buyers were left to report problems to the company. (I think I heard from a few of them who were having customer service challenges.) At the same time, technicians were advised not to bring the problem to customers' attention and to "emphasize uncertainty," according to the story.

A Dell spokesman told the paper the projected failure rates were theoretical, and the company replaced motherboards on broken systems and extended warranties. He noted that other companies that sold the bad capacitors also declined to issue recalls.

I wonder how much this problem contributed to Dell's loss of its perch on top of the PC manufacturing business. Less than a year after the Optiplex problems, Dell lost 6 percent of its dominant share of the market, and HP is now world's biggest PC seller.

Customers that had extensive problems include the city of New York, which had incidents with 20.2 percent of the 5,000 PCs it bought during the period, and Microsoft, which had problems with 11 percent of 2,800 PCs it bought.

Kudos to the Times for sticking with this story, even after Dell settled a lawsuit over the situation in September.

Hopefully exposure of Dell's cheap response will help PC and electronics companies do a better job when they start seeing double-digit failure rates.

As promised in January, Hewlett-Packard has released its Windows 7 Slate computer before the end of the year.

The Slate 500 is the highly anticipated slatelike computer that Steve Ballmer presented during the opening keynote at the Consumer Electronics Show just before Apple launched the iPad.

HP kept the buzz going for a while last spring with teaser videos poking fun at the iPad's inability to do things like run Adobe Flash, but then it suddenly went quiet about the Slate, around the time it bought Palm and said it would use Palm's operating system in consumer devices.

HP today began taking orders for the $799 Win7 device, which it's aiming at business users.

HP now seems to be trying really hard to downplay its potential as a consumer device for browsing media like the iPad. It's no longer teasing the iPad about Flash or talking up the full computing capabilities of the Slate 500.

The Slate 500 is listed among business computers at HP's website, and the description makes it sound relatively dull. It's being pitched not as an exciting alternative to the iPad, but as a productivity device capable of running enterprise applications.

Does HP think the biggest competition is really the business tablets from RIM and Cisco, or is it keeping things low-key until it releases consumer tablets based on the operating system it acquired with Palm?

Here's how it's describing the long-awaited Windows 7 tablet:

"The HP Slate 500 is the ideal PC for professionals who don't usually work at a traditional desk, yet need to stay productive in a secure, familiar Windows environment. The HP Slate 500 is also intended for those who use custom applications built for Windows."

What happened to the "perfect storm of innovation" stuff HP was talking about in January?

More interesting are the specs HP provided.

The Slate 500 is based on Intel's Z540 Atom processor, which runs at 1.86 gigahertz, and has up to 2 gigabytes of DDR2 RAM. For storage it uses flash memory units with up to 64 gigabytes of storage.

It's built around an 8.9-inch diagonal multitouch screen and has 802.11 b, g and n Wi-Fi and Bluetooth 3.0. The device weighs 1.5 pounds and is 0.58 inches thick. It's overall case is 9.2 by 5.9 inches.

Unlike the iPad, the Slate 500 has a USB 2.0 port and an SD memory card slot for directly loading and transferring files. It also has a built-in 3 megapixel camera, a front-facing VGA webcam and built-in microphone and speakers.

HP says the device's battery lists "up to 5+ hours." Applications preloaded on the device include Adobe Reader and a "Slate Camera" application from HP.

The device comes with a stylus and a dock, but not much of a drumroll.

The big PC tracking firms are releasing their third-quarter reports today, showing how computer sales fared during the back-to-school season and hinting at the iPad's effect on computer sales.

IDC was first with a report, showing an 11 percent increase in PC sales during the quarter, about 3 percent lower than it had predicted.

Gartner followed shortly, saying it saw a 7.6 percent gain in PC sales, below its 12.7 percent forecast.

Both said consumers were being more careful with their spending during what's usually a big season for PC sales. But IDC said businesses are upgrading their PCs "largely on schedule."

PC sales in Japan were especially strong, while U.S. sales were dramatically lower than the forecast -- up 3.8 percent vs. IDC's expectations of an 11 percent gain.

The quarter started off slow but ended strong, perhaps boding well for a big holiday, IDC analyst Jay Chou said in the release. He said lower PC component prices and "budding excitement around new media-centric form factors and continued business buying should still make for a competitive holiday season."

Apple's iPad isn't counted as a PC but was mentioned as having "some negative impact" on netbook sales. A "halo effect" from the device also helped Mac sales, according to IDC vice president, Bob O'Donnell.

Gartner's Mikako Kitagawa said consumer demand for mobile PCs slowed after very strong growth the past two years. She said in the release that "media hype" around devices such as the iPad has affected consumer laptop sales not by replacing primary PCs, but by creating uncertainty and delay.

"At this stage, hype around media tablets has led consumers and the channels to take a 'wait and see' approach to buying a new device," she said.

The reports come a day after Intel Chief Executive Paul Otellini commented on the iPad challenge during his company's strong earnings report Tuesday.

Otellini said "some small fraction" of iPad sales may be "taking money away from something else." But the sales "are relatively small in the grand scheme of the ship rate of the PC, notebook, netbook businesses. We are north of 70 million units a quarter now and growing a few percent a quarter even in this timeframe," according to a transcript of the earnings call.

Globally, HP held on to its position as the largest PC vendor with 15.8 million units sold in the quarter, down 0.1 percent, according to IDC. Lenovo and Asus had blowout quarters, increasing year-over-year sales by 32.9 percent and 30.5 percent.

Lenovo sold 9.2 million PCs, up from 6.9 million the year before, IDC said. Gartner's numbers were about the same for Lenovo and a bit lower for Asus.

In the U.S., HP and Dell held the lead, selling 4.6 million and 4.4 million units, respectively, according to IDC.

Apple's 24 percent increase in Mac sales put it just ahead of Acer in third place -- selling 1,999,000 units vs. Acer's 1,949,000 units, according to IDC.

Gartner reported a 13.7 percent gain for Apple, with 1.8 million units sold. Its report put Apple in fourth place in the U.S., behind HP, Dell and Acer.

Attention given the iPad helped Apple during the quarter, but so did updates to its iMac and Mac Pro line, Kitagawa said.

Her take on slower back-to-school sales of PCs:

"The weak back-to-school sales were not because students held off on PC purchases, but because nonstudent buyers, who normally are lured by massive back-to-school promotions, stayed away from PC purchases. These buyers were influenced by media tablet introductions, as well as the still-gloomy economy, since these buyers do not have an immediate need to purchase a PC."

Santa Ballmer's going to put a Windows tablet under your tree this year, according to a Reuters report on the Microsoft CEO's speech at the London School of Economics.

An excerpt:

"You'll see new slates with Windows on them. You'll see them this Christmas," he told an audience of students, staff and journalists at the London School of Economics.

"Certainly we have done work around the tablet as both a productivity device and a consumption device," he said.

The news follows the bombshell Goldman Sachs report lambasting Microsoft's response to the iPad.

But really the arrival of a Windows tablet this holiday seasons is right on schedule, following Steve Ballmer's unveiling of the Hewlett-Packard Slate at the Consumer Electronics Show last January. HP at the time said it would start selling the Windows 7 device in late 2010.

In recent weeks HP has been letting slip that it's going to be shipping a Windows tablet soon, before it releases one based on the Palm software it acquired.

Meanwhile, analysts are jostling to predict how many iPads Apple has sold so far, ahead of the company's Oct. 18 earnings report. Fortune mag has a roundup of the estimates, which range from 3.8 million to 6 million.

About 350 million PCs are expected to be sold this year globally.

If you still haven't bought your back-to-school PC, here's an awesome option -- if you have no intention of studying and just won the lottery.

It's the Origin Big O, a liquid-cooled behemoth that has one of the new Xbox 360 "Slim" consoles stuffed inside.

Maybe this is what Microsoft needs to really get PC gaming fired up again.

In this picture you can just see the Xbox drive try on the lower right.

The starting configuration has an Intel Core i7 930 processor overclocked to 4.0 GHz, dual Nvidia GTX 480 graphics cards, six gigabytes of DDR3 1600 Mhz RAM, dual solid-state drives and a 1,500-watt power supply. All for $7,669.

That's with Windows 7 Home Premium 64 bit and a one-year warranty.

The upgrade model -- with Windows 7 Ultimate and a three-year warranty -- has dual Intel Xeon X5680 processors overclocked to 4.3 GHz, plus four GTX 480 cards, 12 gigs of 2000 Mhz RAM and dual 1 kilowatt power supplies.

Miami-based Origin built the Xeon beast for CPU Magazine's annual "Dream Machine" feature, but it can be had for $16,999. Insert your own Bill Gates joke here.

To get the Xbox consoles into the cases, Origin takes them apart, re-arranges the components inside and connects them to the liquid-cooling systems. A spokesman said, "They strategically mod it and rearrange the components and ports for optimal usage within the PC."

Origin designed the systems so you can play games on the 360 "while your computer is busy dominating whatever other task it is assigned."

I wonder if Cray could squeeze a 360 inside its Windows 7 Xeon box, the $35,449.99 CX1-iWS. It runs the same 24-core Xeon 5600 processors as the upper-end Big O. Could they at least get a Wii in there, so the scientists have something to do while they're running simulations of the weather or nuclear explosions?

A few people have asked me about Dell's Streak, the minitablet/maxiphone that surfaced in Seattle in May.

You could say it's the latest version of the Origami ultramobile PC that Microsoft and Intel began developing about five years ago, but it runs Android software on Qualcomm hardware.

The company Tuesday finally announced that the Streak will be available to the general public on Friday for $549, or $300 with a two-year AT&T contract. It's a few weeks late and $50 more than Dell said in June.

Like most big phones today, it's based on a 1 GHz Snapdragon processor from Qualcomm with 3G, Wi-Fi (b, g and n) and Bluetooth radios. It works with HSDPA networks (such as T-Mobile's) that provide up to 7.2 Mbps downloads. It has a 5 megapixel still and video camera with a dual LED flash, plus a front facing VGA camera.

Here's a Dell video showing it in action:

Get ready for higher memory and PC prices.

Research firm iSuppli is predicting a supply crunch for the key memory used in PCs, DRAM, later this year.

Demand is surging when there's a bottleneck in supplies of new manufacturing equipment, and some firms are facing complicated new production processes.

The firm expects shipments of 1 gigabit equivalent units will increase 49 percent to 15.9 billion units this year, up from 10.7 billion last year.

Boise-based Micron is among the few companies well positioned with the latest equipment, iSuppli said in its release.

It's funny, this comes as I'm seeing the street price of DDR3 memory finally fall. A 4 gigabyte set is now under $100 -- about $90 in some places -- but maybe the deals are short-lived.

(Today's piece, keyed to the Society for Information Display conference in Seattle ...)

Talk about gazing into the future.

Imagine ultra high-definition TVs not much thicker than a millimeter.

How about electronic books made with plastic screens that flex like a magazine?

Or perhaps a display that lets you touch a virtual version of yourself on the other side of the glass?

Here's a quick primer on some of the new interfaces coming to PCs and consumer electronics. It's from today's column that drew on the Bluetooth SIG's "all hands" meeting in Seattle last week.

Bluetooth 4.0

What it does: Enables companies to add Bluetooth wireless technology to "low energy" devices such as watches and health, fitness and environmental sensors. The devices are intended to run for at least a year on a single watch-type battery.

Status: The specification was introduced in December and should be finalized by July. Devices with 4.0 should go on sale by the end of 2010 or in early 2011.

Caveats: Bluetooth 4.0 "low energy" devices will require new hardware. Phones and PCs will be available with dual-mode radios that work with both "classic" Bluetooth and version 4.0. (Here's a Bluetooth FAQ with more details).

HDMI 1.4

What it does: Sets standards for HDMI cables to support 3D and "4K" ultrahigh-definition video, with 4,096 by 2,160 pixels. Enables some HDMI cables to carry Ethernet network signals as well as audio and video content, for connecting TVs, video players and other A/V gear. Also specifies new mini HDMI plugs for camcorders and automotive use.

Status: HDMI 1.4 emerged last June, but its 3D specification was finalized just last month. TVs, receivers and other products with HDMI 1.4 are now on sale. It should be used by all major brands by the fall. Sony, for instance, is now using HDMI 1.4 in products that it's calling "3D enabled."

Caveats: I asked the HDMI licensing group if 1.4 is absolutely necessary for 3D. Sony's PlayStation 3, for instance, doesn't have 1.4 but is supposed to support 3D movies.

The response from Steve Venuti, president of HDMI Licensing: "Source devices, such as the PS3 and many set-top boxes, will be able to be firmware upgraded to accommodate the frame compatible 3D formats. So, in effect, these devices will be able to be updated from 1.3 compliant devices to 1.4 compliance with the 3D specification."

Venuti expects to see HDMI 1.4 appear on PCs and video cards this year.

USB 3.0

What it does: Computer and electronics connector technology that moves data at up to 5 gigabits per second, or 10 times faster than the widely used USB 2.0 technology.

Status: Since January it's been starting to appear in consumer devices, including external hard drives. By 2012, 45 percent of mobile computers will have USB 3.0, research firm IDC predicts. Meanwhile, more peripheral products are appearing.

Caveats: Getting USB 3.0 incorporated into the core architecture of PCs is taking longer than expected and won't happen until 2011, according to In-Stat analyst Brian O'Rourke.

There will be plenty of options for holiday shoppers looking for tablet computing devices from major computer companies.

In addition to the iPad and Hewlett-Packard's Slate, Toshiba will be selling similar devices based on Windows 7 and another line based on Google's Android software, according to a Reuters story quoting Jeff Barney, general manager of digital products for Toshiba America.

Toshiba is looking at a variety of form factors for its slate PCs, including a dual-screen model running Windows, and one with a roughly 10-inch screen, he said.

"We definitely see a place for the slate, we see there's a market there. It'll be expansive like netbooks, it won't be cannibalistic," he said.

Toshiba could really shake it up if they include the Intel WiDi technology that's on some of its laptops, enabling them to beam high-def video onto a nearby TV.

A convincing looking slide comparing the specs of Hewlett-Packard's upcoming "Slate" tablet with Apple's iPad appeared this afternoon on Engadget.

If accurate, HP is going to undercut Apple with a more powerful tablet device, but Apple already has the mindshare. I mentioned the Slate in Sunday's column on the iPad.

The slide says the Windows 7-based Slate will cost $549 for a 32-gig model and $599 for a 64-gig. Apple's iPads with the same capacity cost $599 or $699.

HP's device will have a 1.6 gigahertz Intel Atom processor, compared with the iPad's 1 GHz processor, and it will support 1080p and have a USB 2.0 port and SD card slot. It's a bit smaller than an iPad but weighs the same, at 9.2 by 5.7 inches, 0.57-inches thick and 1.5 pounds.

But the iPad has double the battery life -- 10 hours vs. the Slate's 5 hours -- and the Slate strangely only has 802.11b and g Wi-Fi and not the faster "n" flavor that the iPad includes. The Slate also supports a mobile broadband card, presumably 4G.

HP highlighted the ports -- which the iPad lacks -- in a teaser video it released this morning:

Redmond's Gas Powered Games today launched "Supreme Commander 2," a new version of its hit real-time strategy game for the PC.

Players command and customize massive land, sea and air battles with hundreds of individual units, plus 27 "experimental" battle machines.

Gas Powered's also releasing a version for the Xbox 360 on March 16, the first time the company has developed a console version of the game in-house.

Real-time strategy games are a niche market but they've been a profitable one for Gas Powered, especially as other game companies have shifted their focus to broader markets.

"A lot of people have walked away from this market and we see it being wide open now," said founder Chris Taylor (pictured).

The "Supreme Commander" franchise has sold 1.5 million copies, including around 800,000 when the last version was released in 2007. Taylor's hoping "Supreme Commander 2" will sell at least a million copies.

Gas Powered recently employed around 55 people but Taylor's expecting to let 10 to 12 go after the game's released, as work slows between releases.

"It's nothing like Hollywood but there are some similarities - you build a production team, you make a movie and then you disband," he said.

Fortunately Gas Powered already got another huge project in the works. Taylor revealed last month that the company's using its RTS technology to build a new franchise called "Kings and Castles" with kings vying for control of a medieval fantasy world.

Meanwhile Japanese publisher Square Enix is releasing "Supreme Commander 2," which retails for $49.99 and is rated E10 for players 10 or older.

A few screenshots:

Here's a Gas Powered video of Taylor introducing team members now working on "Kings and Castles":

LAS VEGAS -- Steve Ballmer reportedly is going to unveil Hewlett-Packard's new slatelike, wireless tablet PC during his keynote tonight at the Consumer Electronic Show.

But NEC beat him to the punch -- you can buy this 10'' diagonal Windows-based slate computer today for only $1,800:

Here's a whole batch of them introduced at CES, in 2004.

Responding to concerns about loading Windows 7 onto netbooks and other computers that don't have DVD drives, Microsoft introduced a tool to load the software onto a USB memory stick.

A netbook can then boot up from the USB stick, initiating the process of upgrading the PC to Windows 7.

The "Windows 7 USB/DVD Download Tool" is used when you buy a downloadable version of the software from Microsoft's online store. During the download process, buyers are given the option of creating a bootable USB stick or burning a DVD.

A number of hobbyist sites have been offering similar software tools for transferring Windows 7 to USB sticks, although it can take a leap of faith to download and use some of them.

In Monday's Windows 7 review I said the easiest option would be if Microsoft sold USB drives preloaded with the software. Reading between the lines of a Windows team blog entry today, it sounds like that may happen soon.

"We're working with partners now to deliver similar tools through their sites and hope to have more news to share in this regard soon," it said.

Acer is adding some depth to its line of Windows 7 computers appearing today: The company is introducing a laptop with a 3-D display.

The $780 Aspire 5738DG "delivers cinematic images that literally pop from the screen," the company said in its release.

Why? Acer said it's in anticipation of more 3-D games and movies, but the laptop can also "replicate a 3-D experience from standard 2-D content." It also works in standard mode.

The 6-pound system comes with 3-D glasses, plus a 15.6-inch-diagonal display, Intel Core 2 Duo T6600 processor, 4 gigabytes of RAM and an ATI 4570 graphics card.

Now they've got to figure out a way to combine 3-D and multitouch input.

In case you missed Intel's upbeat earnings report Tuesday, research firm IDC today is saying global PC sales rebounded in the third quarter, posting a 2 percent gain.

PC sales met or beat sales expectations in every region but Japan during the quarter. Maybe the Japanese are holding out for Windows 7.

Bob O'Donnell, IDC vice president, said in the release that the growth "underscores the value that both consumer and corporate buyers place on PCs. With the forthcoming launch of Windows 7 and expected commercial refresh beginning in 2010, the prospects for future PC market growth are very solid."

The firm also said HP now holds the largest share of the U.S. market - 25.5 percent - after a 3 percent sales gain in the quarter. Dell's share fell to 25 percent, after a 13 percent decline.

Acer's netbook sales helped the company grow sales 48.3 percent in the quarter, making it the third biggest PC seller in the U.S., ahead of Apple and Toshiba.

Apple sales grew 11.8 percent during the back-to-school quarter, giving it a 9.4 percent share in the U.S. Toshiba sales grew 37.4 percent, giving it an 8.1 percent share.

Globally, the top PC sellers in the quarter were HP, Acer, Dell, Lenovo and Toshiba.

Sony is announcing what looks like the flashiest new Windows 7 computer so far: A carbon-fiber laptop that's only a half-inch thick and weighs 1.6 pounds.

The company notes that the Vaio Series X is "roughly the width of a cellphone."

The Series X has a carbon-fiber chassis, 11.1-inch diagonal LCD display, solid-state hard-drive and a built-in 3G wireless radio.

It also has an aluminum keyboard frame, GPS and multi-touch touchpad, supporting gestures to zoom, flip, rotate and scroll what's on the screen.

Mike Abary, senior vice president of Sony's Vaio PC group, said in a release that the X Series is a "game changer -- altering the way people use and think about their PC."

Sony is taking pre-orders for the system, which will be in stores next month.

The Series X also lightens the wallet: Prices start at $1,300.

Here's some info for people adding Comcast DTA converter devices to a TV setup using a Windows Media Center PC.

It's based on an exchange with a Seattle guy having trouble getting his new DTA converter to work with his PC. As he describes it:

The DTA worked fine on my TV. It was really actually easy. I tried to put a DTA on my Vista computer and failed miserably. For some reason the IR [infrared] blaster would not transmit well and Media Center would not recognize the signals. It tried to learn my remote over and over with no success. I went online and found other people with similar problems. Their suggestions revolved around moving the IR blaster around but that didn't work for me. It should have worked, but didn't. I already rent one DVR from Comcast, but I am trying to avoid renting a 2nd.

I relayed the question to Microsoft's Entertainment and Devices division, which is responsible for Media Center. The response from a spokesman:

Some Comcast DTA converter boxes use the IR code C1982, which consumers can select using "Find from List" in the IR setup. However, this code may not be applicable to all Comcast DTA converters. Microsoft MVP Barb Bowman has also published a detailed description of the DTA setup, which goes through the steps required to use a Comcast DTA with Windows Media Center, which you can find online here: http://digitalmediaphile.com/index.php/2009/04/17/setup-a-comcast-dta-with-mce/

Here's some earlier info I received from Comcast on how Media Center PCs are affected by the cable company's digital switch. Let me know if there are other ways to make these things work.

If games and Vista Aero didn't pursuade you to buy a graphics card for your PC, perhaps DirectCompute will.

That's a new technology in Windows 7 that lets applications tap the power of graphics processors to accelerate performance, giving the system processor a boost. It sounds really promising, but so did ReadyBoost for Vista and it never seemed to take off.

Nvidia today announced that it's the first manufacturer of graphics processing units to get Microsoft's DirectCompute driver certification. People running Windows 7 with a GeForce GPU can download the driver (Version 190.62) from Nvidia later today.

I asked for a list of compatible Nvidia cards. Spokesman Hector Marinez said via e-mail that the DirectCompute driver will work with "all of our NVIDIA DirectX 10 graphics cards -- GeForce 8 series and later, including ION."

Mike Ybarra, Microsoft general manager for Windows Product Management, said in the release that "Windows 7 combined with applications that take advantage of the new DirectCompute technology have the potential to transform the personal computing experience for millions of customers using GPUs to turbo-charge scenarios in digital media applications."

Presumably ATI will announce its drivers soon.

Finally, you can get a home server with IBM pedigree.

Lenovo today confirmed that it's releasing an Atom-based home server, a $499 model with up to 8 terabytes of capacity:

The company also rolled out several new tiny PCs with home theater capabilities -- a sample of its Windows 7 wave lineup, out in time for back-to-school sales.

They include the "ultra slim and small" Q100 and Q110 desktops that are just 0.7 inches thick. Inside are Atom processors and Nvidia's Ion graphics system, which outputs 1080p video and supports Direct X 10 graphics. They'll go on sale next month for $249 to $349:

Slightly larger but still tiny for a PC is the Q700, a $499 entertainment-focused desktop with full desktop processors, HD video and 7.1 surround sound. Specs are a little iffy, though; Lenovo's site had suggested it was available with up to a quad core processor and a 1 terabyte drive but the press material says it will have Pentium chips:

Lenovo also announced a new IdeaPad laptop, the U350, with a 14-inch screen, DDR3 memory and HDMI output. It's 0.9 inches thick, weighs five pounds and starts at $799:

Specs for all models are on the next page:

IDC's latest PC market report said second quarter sales fell less than expected -- down 3.1 percent vs. the 6.3 percent it had predicted.

It's a great followup to Intel's blowout earnings that goosed Wall Street today, and a setup for Microsoft's earnings report next week.

IDC said "portables," including netbooks, helped, as did consumer demand for new computers in the U.S.

The U.S. PC market appears to be stabilizing or improving -- "a hint of recovery" that's tempered by the growth in lower-end systems that will drag down the market's overall value, Bob O'Donnell, IDC vice president, said in the release.

"The market continues to rely on consumer purchases, with a substantial weakness in the commercial space. We expect to see more of the same as we enter the busy shopping season of the second half of the year. In the longer term, an expected recovery in the commercial segment should boost growth in 2011."

Globally, Hewlett-Packard is still the largest PC maker with a 20 percent share. It's followed by Dell, Acer, Lenovo and Toshiba.

In the U.S., Dell's sales fell 19 percent but its 26.3 percent market share was just ahead of HP's 26 percent.

HP sales rose 2.3 percent, while third-place Acer's sales leapt 51 percent and fourth-place Toshiba saw a 34 percent jump.

Apple's sales fell 12 percent and its U.S. market share fell to 7.6 percent, from 8.5 percent.

PCs with USB 3.0 connections could start appearing by the end of the year, boosting throughput 10 times over USB 2.0 - fast enough to transfer 5 gigabits of data per second..

That's according to a Nikkei Electronics Asia report (which I found via Microsoft product planner Alan Cheslow's Twitter feed and blog).

The report said NEC - the leading USB 3.0 manufacturer so far - is going to begin large-scale production of USB 3.0 host controllers in September.

NEC expects USB 3.0 to quickly become mainstream. It's anticipating 140 million PCs with USB 3.0 will ship in 2011, and 340 million in 2012.

We'll have to see if Windows 7 supports the standard when the software's released in October, though. Early word was that it may not be in the initial version; I've asked a Windows spokesman for a status report.

UPDATE: The answer from Microsoft is no, not at launch. A spokesman said via email that the USB 3.0 specification "was approved too late in the Windows 7 development lifecycle so it won't be supported at launch. However they'll consider it down the road."

If you're shopping for a new PC, you may want to wait until Friday. That's when Microsoft and computer makers could start giving coupons for a free copy of Windows 7 to people who buy a new Windows Vista PC.

The coupons are intended to encourage people to keep buying PCs instead of holding off until a new operating system is released. It may be a crucial incentive this time around, since Vista has such a bad reputation and Windows 7 will be widely available on Oct. 22. (I've asked Microsoft for confirmation and will update when I hear back. UPDATE: I heard back but they're holding comment/info until Thursday morning)

It's also a good deal, because it gives buyers two operating systems for the price of one. (Assuming the older system will continue to have value after the newer one's released ...)

Microsoft hasn't said much yet about the coupons, but enthusiast blog Tech ARP has been posting what looks like authentic details of the program, dubbed the "Windows 7 Upgrade Option."

If the details are correct, computer makers may offer the coupons between June 26 and Jan. 31. Within that timeframe, they can decide how long to offer the deal. Customers would get Windows 7 on Oct. 22 at the earliest, and April 20 at the latest.

The coupons will offer the same tier of operating system -- buyers of Vista Premium could get Windows 7 Premium, Vista Ultimate buyers would get Windows 7 Ultimate, and Vista Business buyers would get Windows 7 Business. Vista Basic systems won't be eligible, the report said.

If you're buying a Mac and wondering about upgrading to the "Snow Leopard" operating system coming in September, Apple plans to provide single copies for $29 and five-packs for $49.

Finally, Intel is clarifying the jumble of brands used for its PC processors. Sort of.

During the Windows Vista era, Intel's brands became pretty confusing, forcing consumers to choose between "dual core" and "Core 2" processors, for instance.

Changes announced today will take effect in coming months and could make it easier by the time Windows 7 launches in October.

The biggest change is coming to the "Core" brand, which is going to come in three flavors: Core i3, Core i5 and Core i7. Core i3 will signify entry-level systems, i5 to mid-range and i7 to high-end. (The current vPro tag used on business-oriented systems will still be added to i5 and i7 systems).

Intel's Atom processor -- the one designed for mobile devices and now used in all sorts of budget netbooks and some desktops -- will keep the Atom name.

Also sticking around for a while is the last generation of Intel CPU names -- Celeron and Pentium. They'll be used on lowest-end systems, with Celeron designating the base models, Pentium a step up and Core (in its various flavors) "representing the best we have to offer," Intel's Bill Calder said in the blog.

Centrino -- an Intel term referring to a set of components, including a CPU and wireless module -- is being dropped from the PC lineup next year. But it will be used on WiMax products starting in 2010.

To simplfiy, here's Intel's new PC brand lineup, in order of good to best. (Insert Atom where you like -- it's relatively wimpy, but very power efficient ...):

Celeron
Pentium
Core i3
Core i5
Core i7

(Microsoft has said Windows 7 runs even on Atom processors, but my guess is that the message this fall will be that you'll want a Core system to get the best experience.)

PC sales weren't as bad as expected in the first quarter, research firm IDC said in its quarterly hardware report.

This tracks with Intel's earnings comments yesterday about the PC market bottoming out in the quarter, and suggests Microsoft may provide similar outlook in its April 23 earnings report.

Unit sales were down 7.1 percent vs. the 8.2 percent IDC predicted. Sales of netbook mini-laptops "mitigated the impact" of the credit and economic situations, Loren Loverde, director of IDC's PC Tracker report, said in the release.

"Following a drawdown in inventory throughout the supply chain, we expect more stable production over the next couple quarters, with growth returning around the end of the year."

Hewlett-Packard, Acer and Toshiba grew market share while Dell and Apple fell. Here are charts showing U.S. and global market share: