Microsoft and Hewlett-Packard will announce on Wednesday a tablet computer, sources said, becoming the biggest names to venture into a nascent but potentially competitive market. The world's largest software company and top personal computer maker join Apple and others that are expected to show off new tablets this year, aiming to bridge the gap between laptops and smartphones.

Microsoft and HP may be seeking to steal a march on Apple's hotly anticipated tablet, widely reported to be unveiled on Jan 27, though the company has not confirmed that. The Microsoft tablet device will come with multimedia capabilities and multi-touch functions, sources familiar with the product told Reuters without elaborating, confirming a New York Times report. It will go on sale possibly by mid-2010, the newspaper reported on its website. Microsoft and HP declined to comment.

Although next-generation tablet PCs are scarcely evident on the market, the technology world is abuzz about their potential. Endpoint Technologies analyst Roger Kay said both Microsoft and HP have experience in designing a touch-screen, tablet-style device but that consumer interest in the category has never lived up to the hype. That could all change, he said, if Apple joins the fray. Microsoft and HP faced a difficult challenge in topping whatever device Apple launches, Kay added. "The elephant in the room of course is Apple. Other manufacturers are scrambling to get things together before it defines the market," Kay said. "HP may be looking to put a stake in the ground before Apple makes its move."

HP has been heavily promoting touch technology across its line of PCs, and just announced new products such as an updated version of its TouchSmart swivel-screen convertible laptop, and a touch-enabled netbook. Unni Narayanan from Primary Global Research said he does not expect the new tablet to showcase any game-changing innovation, and instead may be more advanced versions of existing HP devices already on the market. "Our expectation is that it will be a testing-the-waters sort of thing," he said.

From Microsoft's perspective, Kay said the company wants to "highlight and showcase everything that Windows 7 can do." The new generation of devices will seek to break Intel's stranglehold on PCs – the chipmaker makes eight out of 10 microprocessors in the global market. Intel's Atom processor now dominates the fast-growing netbook market. (Reuters)