Microsoft is preparing to unfold what it hopes will become a new type of computer: The Lifestyle PC.

The software giant intends to bring to market a new class of smaller and more versatile, battery-powered computers that offer users greater utility—they could connect to networks and download e-mail or make Voice Over IP (VOIP) phone calls, as well as manage photos, music and videos —but still use a full versions of Windows.

Despite the fact that many others have failed at attempting to create small computer that run full versions of Windows, Microsoft appears to believe it can win, thanks to improvements in processors, screens as well as its own internal efforts.

The first of the new devices will be a based around a platform code-named "Origami." Prototypes of the first Origami ultra-mobile devices are expected to be shown by a handful of PC makers on March 9 at next week's CeBit show in Hanover, Germany.

Signs point to Intel and Microsoft working together on the Lifestyle PC concept, which could dovetail with an Intel initiative, dubbed the Ultra-mobile PC. Intel will share more information on its small portable PC platform at its Developer Forum in San Francisco next week.

One source suggested that the Lifestyle PCs could use low power and low-cost single-core chips from Intel, allowing them hit the $500 mark, but still offer lengthy battery life. Although, given that Windows can run on all x86 chips, the possibility for PC makers to pair the platform with Advanced Micro Devices' or VIA Technologies' could remain, as well.

Thus far Microsoft has declined to comment on the aim of the Origami project. Instead it has used its www.origamiproject.com Web site to tease curious viewers. The site, however, appears to tip the company's hand slightly by proclaiming "Origami Project: the Mobile PC running Windows XP" inside the HTML source code of one page.

The new devices will be smaller than the smallest of the slate or convertible-style Tablet PCs that are available today. But they will be bigger than PocketPCs and Smartphones and are unlikely to ship with keyboards. They are instead being designed with touch and a stylus as the preferred input mechanisms, sources familiar with the matter said.

Although some prototypes are slates with buttons on either side, Origami systems are expected to come in a variety of form factors. Among them will be a convertible-style Tablet device with a hinge, code-named "Kinesis," sources added.

Samsung is rumored to be one of the companies who will show off a device at CeBit next week, according to James Kendrick, a Microsoft Most Valuable Professional (MVP). Kendrick posted a photo of the alleged Samsung prototype on his blog last month. The photo shows a device with a Kinesis-style hinge.

Nickolas Landry, mobile business manager with Infusion Development Corp., a Microsoft partner based in New York. "But it will of course be ideal as a media device for pictures, music and movies, especially since it will have a hard drive, of course.

"Makes you wonder how relevant the Portable Media Center will be after this hits the market. Hopefully the visions will merge. Hello winPod!!!" Landry, a Microsoft Most Valuable Professional (MVP), added.

Still, with price tag that's expected to start at around $500 and which could potentially range up to $1,200, some sources are wondering whether Origami-based devices will be lifestyle devices, in the true sense of the word.

Will they allow users to carry everything from data, videos, music, photos, e-mail contacts, calendar information and more – while still maintain an easily portable size and weight? Will users go for an all-in-one device, rather than carrying multiple gadgets, such as Apple Computer iPod music players, cell phones and Blackberries?

Microsoft is likely to answer all of those questions with a "yes," sources who attended a recent partner briefing held by Microsoft's Mobile Platforms division said.

The software giant isn't likely to try to take on the iPod directly, or to replace laptops with these devices. However, Microsoft is counting on its Lifestyle PCs to replace the role held by many gadgets.

"Lifestyle is changing, with greater emphasis on context. It used to be that location defined work and home life. That no longer applies. Even people that work in an office sometimes take work at home," said Joe Wilcox, an analyst with JupiterResearch.

"With this change in lifestyle there is much commingling of work and home behavior and even data," Wilcox said. But "No one device has been able to handle it all. In our surveys we typically see that people carry at least two devices. If Microsoft is smart, Origami will be like a piece of paper than can be folded many different ways that can be used in many different contexts, whether for home or office. But it's a big challenge and one no single device has yet to meet."

During 2007, when the first of these devices are expected to debut, they will run Windows XP Tablet PC Edition 2005, according to partners.

By 2008, the ultra-mobiles will be running Windows Vista, some SKUs of which will include Tablet-specific functionality baked in, Microsoft is forecasting, and will be complementary devices to users' existing consumer and business laptops and notebooks.

That means that, in time, Microsoft Touch technology integrated into Vista will allows users of Lifestyle PCs to jump in and use their fingers, not just a stylus, to interact with the devices.

This story was updated on March 3, 2006, to include information on Intel's possible involvement in the Origami effort.