As expected, Microsoft revealed its much-anticipated Origami Project at CeBIT in Germany, showing off a new platform of devices it calls Ultra-Mobile PCs. The UMPC largely resembles a small Tablet PC with 7-inch touch screen, and runs the full version of Windows XP.

Microsoft calls the UMPC "a new category of device" -- larger than an iPod or PSP, but smaller than traditional laptops and tablets. While the UMPC won't fit into a pocket, the company feels that consumers are ready for a smaller, lighter form factor that retains the full functionality of a PC.

The Touch Pack adjusts 10 Windows settings to optimize the operating system's interface for the UMPC's small screen. Microsoft has also included a special Windows Media Player skin to make the controls easier to use with pen input.

Because current versions of the UMPC don't have a keyboard, Microsoft is including a software package called DialKeys, which overlays a QWERTY keyboard on the screen and enables users to type with their thumbs. The devices will also support external USB or Bluetooth keyboards.

On the inside, the UMPC includes a 30-60GB hard drive and Intel Celeron M, Pentium M or VIA C7-M processors. Depending on the configuration a UMPC could feature GPS, a webcam, fingerprint reader, TV tuner and build in memory card reader. Bluetooth, Wi-Fi and Ethernet are all supported as well.

"Although hardware designs will vary by manufacturer, UMPCs will all feature small, lightweight designs that are optimized for mobility and ease of input. According to current baseline physical specifications, Windows-based UMPC devices will weigh less than 2 pounds," says Bill Mitchell, Corporate Vice President of the Windows Mobile Platforms Division.

Three UMPCs were on display at CeBIT built by manufacturers Samsung, ASUS and Founder. The Samsung and Founder models are expected to launch in the second quarter with the ASUS UMPC following shortly thereafter. Although pricing will be determined by each OEM, Microsoft expects UMPCs to run between $599 and $999 USD.

Jupiter Research vice president Michael Gartenberg says the price point is a key difference in getting adoption of UMPCs to take off. "Is it the most powerful PC you own? No, but the PC you have at hand is better than the best machine you leave behind."

"As a business user, I'd much rather have a small XP device that can use all my Office documents and let me manage mail on the road and a nice large and powerful desktop with a nice big screen in the office," Gartenberg notes. "Of course, in order for this to work, we're going to need to see some real powerful sync tools from Microsoft."

However, Gartenberg also notes the batter life of the new devices -- currently around two and a half hours -- needs to improve. "They could also use cheap 3G solutions for connectivity and a smaller form and higher storage capacities," he says.

Microsoft says it will listen to feedback it receives on the first generation devices, and promises it has big plans for the UMPC.

"The "Origami" project is really our first step toward achieving a big vision. We believe that UMPCs will eventually become as indispensable and ubiquitous as mobile phones are today," says Mitchell. "Our next step along the roadmap will take place in the Windows Vista release timeframe."

While UMPC will be the official name for the class of devices, Microsoft is continuing to use Origami Project for a new community site it has setup. UMPC owners can post their opinions on the site, as well as download Program Launcher backgrounds.