Fujitsu will unveil a prototype of a tablet PC next week, sources close to the company said, one of a new breed of computers that have touch screens and can read handwriting.

The new tablet computer, which sources say is to be dubbed the Stylistic ST4000 when it ships later in the year, will be part of a mobile computing festival at next week's TechXNY trade show in New York.

Microsoft will command most of the attention next week, however. As previously reported, the company will unveil details of its new Windows XP Tablet PC Edition operating system at the show, sources familiar with its plans said.

The announcement will likely come during a Tuesday morning keynote by Jeff Raikes, Microsoft's group vice president for productivity and business services. Microsoft is working with a cadre of manufacturers to have tablet PCs on store shelves by October. A representative of the software giant said the company would discuss Windows XP Tablet PC at the show, but declined to comment on the details of its plans.

Tablet PCs, in their most generic form, are modified notebooks: They will weigh about three to four pounds, can connect to the Internet wirelessly, and may or may not include keyboards.

Unlike notebooks, though, tablet PCs will come loaded with new applications, such as Microsoft Journal, that let users input words or drawings into the computer by writing on the screen.

Microsoft "has really tried to make it like writing on a piece of paper," said one source, who requested anonymity. Microsoft, which will not build the machines, could not be reached for comment.

Other applications include Inking, which lets users add handwritten annotations to computerized documents, and voice recognition. Some of these applications have been demonstrated before in software prototypes.

Since the earlier days of the PC, researchers have tried to create a more natural way to input data into machines, with mixed results. The push to popularize handwriting and voice recognition has begun to accelerate in recent years because of improved software and increased processing power. The proliferation of computers into developing countries, where keyboards aren't a part of daily life, has also added impetus to the effort.

Skeptics abound
Many analysts have been skeptical of the tablet PC's prospects since it was first unveiled as a concept in November 2000. "Nontraditional" portables, such as Fujitsu's current line of Stylistic pen tablets, have captured a fraction of the market and are typically used for very specific jobs, such as tracking inventories at a factory.

IBM dropped the TransNote, a ThinkPad that had let users input notes by writing on a paper pad with a special pen. Similarly, Sony released a Vaio desktop that allowed consumers to use a PC screen as a painting canvas. The machine received rave reviews, but was pulled because of slow sales.

The software included in tablet PCs, although still in need of improvement, is more sophisticated and intuitive than some earlier versions, a source who has used it said. Microsoft has largely achieved its goals, set forth at the technology's introduction nearly two years ago, the source added.

In Journal, handwritten notes are automatically stored as image files. But the handwriting can be converted to a text file simply by circling it. Microsoft Journal looks like a legal pad with a view resembling lined paper.

One source who viewed the software said he liked Journal because it allows a tablet PC owner to use the entire device to take notes on or draw on. Meanwhile, the handwriting recognition worked well, but showed some lag time when translating handwriting to text, something that should improve before Tablet PC software ships, he said.

The editing process can become tedious, another source said, because it requires the user to edit text using a series of drop-down menus that display words or that ultimately allow the user to enter the correct word with a keyboard, the source said.

Similar to Journal, Inking is one of the features that Microsoft believes could become one of its strong selling features.

Through Inking, tablet PC users will be able to make hand-written notes or draw diagrams in Microsoft office documents, such as a Word file, or a PDF file. A Word document, for example, could be written by one person then mailed to another who edits it with handwritten annotations and then sends it back to the originator.

Non-tablet PC users who have Microsoft Office, sources report, can view the annotations.

As another method of input, some tablet PCs will also have built-in voice recognition capabilities. Motion Computing, for example, said its tablet PC will include speech recognition.

Show time
While Microsoft shows off its software next week, hardware makers also will show off their prototypes of the device.

The list includes Hewlett-Packard, which announced its Compaq Evo tablet PC on June 2, Acer, Toshiba and Sony.

Fujitsu's new Stylistic ST4000 will weigh about three pounds and will include an ultra-low-voltage Pentium III-M processor from Intel, sources said.

Others, including Dell Computer and IBM, have been skeptical of tablet PCs. Part of that skepticism comes from the expected price. Because of the need to incorporate a touch screen and other add-ons, tablet PCs are expected to cost roughly $150 more than a similarly configured ultra-portable notebook, putting them at a starting price of about $2,000.

While a number of tablet PC prototypes have been floating around for the last two years, companies such as HP are expected to begin wider field trials with their tablet PCs this summer.

One possible disappointment on the hardware side may be battery life, sources said. The first crop of tablet PCs will have about the same battery life as the average ultra-portable notebook, or about three hours, sources said. An ultra-portable notebook typically weighs three to four pounds.

Analysts have expressed reservations about the tablet PC, especially because of the difficult conditions in the PC market right now.

"We're still in a situation where price matters," said Toni Duboise, an analyst with ARS. "That's the biggest problem. It's going to be prohibitive of (tablet PCs) going on to penetrate the market."

That's because, if you're after mobility, "You can still get that through a notebook and pay a lot less," she said. As a result, "I think it's going to be hard to get consumers to step up to bat."

Most tablet PCs are expected to come with, at a minimum, an 800MHz low-power processor, 128MB of RAM and a 20GB hard drive. HP's Compaq Evo tablet PC, for example, will sport a 1GHz Crusoe processor from Transmeta.

Most, if not all, also will include wireless networking capabilities, such as 802.11b, a short-range wireless protocol.

Manufacturers are expected to deliver tablet PCs in two different styles: a traditional tablet or slate design, with no keyboard or mouse, and a "convertible" design.

Convertibles, like those shown off by Acer, will resemble a traditional notebook PC. The device would open as notebooks do, but its screen would be able to rotate and fold back down to create a tablet-like shape.

Fujitsu will offer a variation on the convertible theme by including a detachable keyboard, sources said. It would allow a person to shed the keyboard for a trip into the field. Back at the office, a docking system then turns the Stylistic Tablet PC into a desktop, allowing it to be attached to a keyboard and monitor as well as able to use a CD-Rewritable or DVD drive.

The tablet PC software is one of a growing number of offshoots of the standard Windows XP software. Later this year, Microsoft will also introduce software called Freestyle that will make it easier to edit videos and record TV shows. Freestyle will appear on only a select few consumer PC models.

News.com's Joe Wilcox and Michael Kanellos contributed to this report.