Dell isn't buying the Tablet PC revolution - not yet, anyway. Yesterday Michael Dell himself told the Austin American Statesman (which he surely didn't have to go to Las Vegas to talk to) that his customers weren't interested, and that there were "some other reasons" Dell wasn't going to build Tablets right now. We don't know for sure what these other reasons are, but we think we see where Dell might be coming from.

Not going with Tablets and making a point of it is also clearly Dell policy right now. Talking to Infoworld, a Dell PC exec echoed Mikey, and suggested the company wouldn't build them for another 18 months. If two Dell people say the same thing at the same time, they're making a point - Dell's that kind of company. Superficially Dell's apparent antipathy to the new-style box is striking because it's so close to Microsoft, and should therefore be pulling in the same direction. But we propose an alternative analysis: Dell and Microsoft understand one another because they both think similarly about product packaging, marketing and timing. Dell can see what Microsoft is up to with Tablet PCs, and it sees it as a big bet which - if it succeeds - will channel the bulk of the rewards to Microsoft and leave the PC companies in even worse straits than they are today.

The Tablet, effectively, is a packaging job. It is essentially a device of similar specification to a current mid-range notebook which has been cosmetically fiddled with. As we pointed out here earlier this week Microsoft has been pretty vague about precisely what a Tablet consists of, but back in July Geoff Walker of Walker Mobile did a very detailed job on it in Pen Computing, based on information gleaned at WinHec 2001. We hadn't seen it before, but if you're interested in what Tablet PCs are really about it's well-worth reading now. Here's his take on what Tablets really are:

"Fundamentally, the Tablet PC is a notebook (laptop) without a keyboard. It's not a WebPad, as some of the members of the press still seem to think, it's a full-scale PC with a rotating hard disk. If you take any of today's very thin and light, high-end notebooks, rip off the keyboard, flip over the screen and add a digitizer, you've got what is basically a Tablet PC (except for some minor details, such as not being legacy-free). If you take the Fujitsu Stylistic 3500 and substitute an active digitizer for the passive (resistive) digitizer, again you've got what is basically a Tablet PC."

Not difficult, there are machines you could class as Tablets on the market already, and it's significant that one of the founder Tablet builders, Acer, has chosen to just go ahead with the machine early next year without waiting for Windows XP Tablet Edition. Fujitsu is another one of the early movers, except it's already an early mover when it comes to Tablets, so when the big Microsoft rollout comes it also will be doing pretty much what it was doing before, but with whatever the TE extensions turn out to be added, and with the aid of the hundreds of millions of dollars Microsoft will no doubt pretend to be putting behind Tablet marketing.

You can probably see where we're going here. Geoff Walker thought this several months before we even started to consider it, so we'll let him take it again:

"Actually, what's happening is that Microsoft is simply applying good marketing skills to the pen tablet. Relatively few vertical pen tablet companies articulate the message about laptop versus tablet usage very clearly. This is because either (a) it's such common knowledge in markets such as Sales Force Automation that it's just taken for granted, or (b) the company is selling pen tablets into vertical markets that don't involve a lot of face-to-face meetings, such as Utilities."

In this sense the Tablet is a classic Microsoft "product" - it's all been done already by other companies, but they've all been making money quietly in niche and vertical markets. Microsoft can therefore take something that's not revolutionary at all, add a pile of eye-candy and ludicrous marketing spin, call it a standard platform ISVs can build to and voila - it's driving the standards for both hardware and software, on its own.

If it can get enough marketing momentum and OEM support behind it, then it can get buyers (it's aiming for the corporate market initially) to go for it as the standard computer. As it said at WinHec, eventually "all laptop and PC owners" will use Tablets. This will be a pretty good trick to pull off, because it's really not about technology, it's about changing customer perceptions - make them stop thinking the tablets they could buy already are low volume, vertical market boxes they don't want, and start thinking they're amazing machines they must have.

It could just work, and the script is actually pretty similar to the Xbox one. With Xbox, Microsoft approached the OEMs and - so Microsoft tells us - they weren't interested. Given that the Tablet is going to have to go into the corporate market, the OEMs are maybe a bit more important, because Microsoft needs the OEMs' corporate sales operations to evangelise it. Whether they'll bite or not kind of depends, though.

If you're aiming for the corporate market Compaq, Acer, Fujitsu and Toshiba will carry some weight, but ranged against that we have Dell, IBM and HP - you'd need at least two of the latter as well to be sure of making a standard stick. Corporate buyers, meanwhile, are going to be hostile to the Tablet unless there's a lot of momentum behind it, because they're hostile to anything new until it's poised to engulf them. That leaves Dell in a position that is in one sense advantageous (because it might be able to cut a better deal if Microsoft really thinks it needs the company's support) and in another, difficult, because the model Microsoft proposes doesn't really fit in with the way Dell likes to sell computers.

Dell likes build-to-order, just in time manufacturing, adding perceived value and steering clear of undifferentiated commodities. It's had blips, but broadly speaking it's done a lot better via this strategy than much of the rest of the PC market. Microsoft, on the other hand, will want to drive the Tablet as a high volume, highly-standardised platform. You could maybe differentiate it with compelling software (which is not Dell's style or business), but otherwise you'd probably be reduced to the colour scheme, shape and what the docking stations looked like. So good buddies or not, maybe Dell can see a future where Microsoft carries on raking in profit per box from a whole new hardware sector, while the manufacturers descend further into no-margin suicide. It's not somewhere Dell would want to go, and consequently it's not a plan Dell would want to see work. ®

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