Microsoft makes plans for Vistagami

With the first Origami devices out the door, Microsoft is setting its sights on the next generation of tiny tablet PCs - products known within the company as "Vistagami" devices.

The new mini-tablets are likely to resemble the first of the ultra-mobile PCs, though they will run Windows Vista, rather than XP. Hopefully, they will come with a lower price tag than the first devices, such as Samsung's Q1, which starts at $1,100.

While Microsoft was under no illusions that it could hit its long-term $500 price goal, the company said on Tuesday it was not happy with how expensive the first devices turned out to be.

Mika Krammer, a director in Microsoft's Windows product marketing unit, said: "We were [disappointed]. We would have liked to have seen a lower price point."

Krammer said Microsoft doesn't have much say in what the final price of the device is but conceded "the ding accrues to us, regardless".

The software maker generated huge publicity with a "teaser" campaign that touted the Origami idea without revealing many details of the proposal for Windows-based mini-tablet PCs. However, as the plans became clear, analysts said the hype had moved ahead of reality.

Microsoft is still a strong believer in the concept. Krammer said: "There's a huge benefit to using a smaller form factor, because it is more convenient and it is more portable."

But Krammer, a former Gartner analyst, agreed that a lack of all-day battery life and the high price tag are keeping the devices from being mass-market items.

The company is hoping to spur more competition among both computer makers and component suppliers, thereby generating lower prices. The arrival of systems with Via processors, such as the one made by TabletKiosk, could help lower prices even before Vistagami products arrive, Krammer said.

Lower prices are seen as key to moving such gadgets beyond a geek status symbol. Market researcher In-Stat has forecast that shipments of the tiny PCs could rise to 7.8 million units by 2011. Intel vice president Gadi Singer said the market could reach 100 million units per year but did not pin a date on that prediction.

As for Vistagami, Microsoft is still aiming to have devices ready by the time Vista ships early next year.

As with the first generation of Windows XP-based mini-devices, the Vistagami products will be built on top of the operating system, Krammer said. They will come with a software pack that adds features to make it easier to navigate around or open programs on a device that has a seven-inch or smaller display. Other features are still being determined, she said.

The devices will require Windows Vista Home Premium, Ultimate, or one of the business versions of the upcoming operating system, because they rely on the touch and tablet capabilities included in those editions.

Even with the new operating system factored in, Microsoft hopes the price of the devices will be somewhat lower than that of their predecessors, though the improvement isn't expected to be dramatic.

Krammer said: "We're not saying in the Vista time-frame we'll see it slashed by 50 per cent. We're not going to reach the ultimate $500 price range at the time of the Vista launch."

Ina Fried writes for CNET News.com