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The development, sure to draw huzzahs from Apple HQ in Cupertino, was first reported by bloggers at Gizmodo, who cited unnamed sources in proclaiming the project shelved indefinitely.
"Microsoft execs informed the internal team that had been working on the tablet device that the project would no longer be supported," Gizmodo said.
The supposed move by Microsoft comes just months after CEO Steve Ballmer touted an HP-made tablet at the Consumer Electronics Show in Las Vegas. And only weeks ago, an HP official posted videos showing a prototype in action.
"With this slate product, you're getting a full Web browsing experience in the palm [italics added] of your hand," said Phil McKinney, HP's VP and chief technical officer for its Personal Systems Group, in a statement that revealed either insider knowledge or uncanny prescience.
"No watered down Internet, no sacrifices," wrote McKinney—in an apparent slam at Apple's decision to forego Flash support on the iPad.
But Steve Jobs may have the last laugh. Until this week, Microsoft and HP had been cozying up in an effort to counter Apple's dominance of the smartphone market and Oracle's expanding grasp on the enterprise space.
Many observers now believe HP's decision to buyout Palm for $1.2 billion—a move that puts it into direct competition with Microsoft in the key smartphone market—all but kills the marriage between Palo Alto and Redmond.
Palm's Web OS goes head-to-head with Windows Mobile in the cell phone market, and Microsoft's planned debut of Windows Phone 7 later this year will further stoke the competition. Microsoft officials declined to comment.