Although more firms are buying tablet PCs than ever before, the pen-driven portables still represent only a fraction of the total laptop market and high prices are hampering wider take-up, according to new research from analyst company Canalys.

Tablet PC sales across Europe were up by 25 percent in the second quarter compared with the same period in 2003. However, total sales of tablet systems amounted to less than 35,000 units, and 3.6 million laptops shipped during the same period.

"There is clear demand for increased workforce mobility and we continue to see it in the sales of notebooks, handhelds and smartphones," said Mike Welch, Canalys vice-president. "But the Tablet PC is not riding that wave nearly as well as it should, particularly outside the US, where customer requirements, for example in language recognition and country-specific vertical apps, are much more fragmented."

While vendors have had some positive feedback from buyers regarding Tablet PCs, cost remains a barrier to sales, according to Canalys. For example, an HP Tablet PC 1100 is listed on the vendor's web site for £1,299 with a 1GHz Pentium M chip and 512MB memory, while an HP nx5000 laptop with the same memory and a 1.6GHz processor costs only £799.

A separate survey found almost two-fifths of vendors thought that lowering prices would be the best way to encourage more sales of Tablet PCs, while a third said the best incentive would be more tablet-specific applications. However, 12 percent said that the format was doomed to failure regardless of the action that is taken. "Do the extra benefits justify the price premium over a comparable notebook? With today's price differentials and the lack of applications for Tablet PCs, the answer for most remains a no," argued Canalys analyst Rachel Lashford.

However, sales of the Tablet PC could be buoyed by Microsoft's new Service Pack 2 for Windows XP, which contains improvements to the platform, such as better handwriting recognition software.

Tablet PC systems run a special version of Windows XP with extensions for pen input, and ship in two main versions: so-called slate designs that lack a keyboard, and convertible models that can be used like a standard laptop. About 80 percent of Tablet PCs sold were the convertible type, said Canalys. Fujitsu Siemens is the only leading vendor to offer a pure slate model.

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