If the heap of new products that Microsoft showed at Comdex on Sunday is any indication of the future of computing, the desktop PC is old news.

In a keynote opening the Comdex Fall trade show, Microsoft chairman and chief software architect Bill Gates unveiled prototypes of the portable Tablet PC, which will run on a specialized version of the company's new operating system called Windows XP Tablet PC Edition.

Gates demonstrated Tablet PC prototypes from hardware makers including Compaq and Acer, running a variety of new software applications including one called Journal that blends the company's Word software with handwriting recognition capabilities.

Gates pledged that the portable devices, due out next year, would become the most popular form of the PC within five years.

"Next year a lot of people in the audience will be taking notes with those tablet PCs," he predicted.

Bright future Facing a wall of camera-clicking journalists in a near-filled arena of the MGM Grand, he also showed a preview of the XBox video game console and demonstrated a new Web service built on Microsoft's .Net technology.

Against the backdrop of an uncertain economy and declining PC sales, Gates painted a bright future for technology in which he said the most impressive advances have yet to come. Faster PC chips and improved network connections, combined with widespread use of voice and handwriting recognition, will allow people to get work done faster and more efficiently, he said.

"In the decade ahead, I can predict we will provide over twice the productivity improvements that we did during the 90s," he said.

Some of those improvements will come via a new version of Office XP, Microsoft's suite of productivity applications, which he said will be available in time for the Tablet PC's launch next year. The new version includes the ability to write handwritten notes in applications like Outlook and Word, and to edit those notes as if they were digital text.

He also showed the handwriting feature, or "ink" as he called it, in a future version of Windows Messenger that lets users exchange notes or sketches using the company's instant messaging software. "The use of ink and voice can be explosive - in three or four years that should be absolutely commonplace," Gates said.

Diluting brand Some users who watched the speech were impressed with what they saw. Thomas Lancaster said he'd willingly trade his desktop PC for a Tablet PC. "It's going to make interacting in the office more fluid," he said.

Others were more sceptical. As Microsoft broadens its reach beyond PCs and into new markets it runs the risk of diluting the quality of its products, said Daniel Herzka, president of software consulting company Herzka Associates.

"They won't do the best job if they don't have a specialty," Herzka said.

Elsewhere in the home, wireless networks will allow all kinds of content, including digital music and videos, to be beamed around the house and accessed from any room, Gates said.

"Wireless networking, advanced PCs, next-generation set-top boxes and next-generation video games will come together in a synergistic way as they connect to services on the Internet like MSN," he said.

Challenges include improving security, ensuring ease of use and making faster Internet pipes available to all homes, he said.

Bill is Harry Potter As usual, the Microsoft chief found time for some light-hearted slapstick. He played a video segment that spoofed the U.S. TV show Entertainment Tonight, in which the presenters cut to an interview with Gates in his office. An unprepared Gates was caught dressed up as Harry Potter doing battle with Steve Ballmer, who was dressed as Luke Skywalker.

To the delight of the crowd here Gates also showed a compilation of video clips titled "Monkey Boy" in which an excited Ballmer bounced around the stage at various developer events, yelling, jumping up and down and waving his arms. Some of the video of Ballmer had been leaked and has been making its rounds on the Internet for the past two months or so.

Click here for more on Monkey Boy.

"It's going to take a lot of energy to meet the challenges of the digital decade," as he called the next 10 years, "and it looks like Steve's got enough energy for all of us."