Can Microsoft Out Apple The Pod?

From USA TODAY:

Microsoft showed off its ultra-compact computer Wednesday, which the software giant was scheduled to officially unveil Thursday at the CeBIT technology trade show in Hanover, Germany.
The product, heretofore code-named Origami, has been christened the Ultramobile PC, Mika Krammer, a company spokesman told the Associated Press.

Looking a bit like a handheld video game console, with the heft of a large paperback book, the inch-thick PC features a 7-inch screen and weighs less than 2½ pounds. It runs a full Windows XP computer operating system, accessed with a pencil-like stylus, and supports Bluetooth and Wi-Fi wireless hook-ups.
The battery lasts up to three hours, and it is equipped with a 60-gigabyte hard drive. Two models are expected to hit store shelves by early April, priced at around $600 to $1,000.
Microsoft hopes to jump-start a new category of PC sales to consumers on the go, while also closing the gap on Apple’s iPod. The iconic iPod dominates the paid music download market and is rapidly expanding into paid TV programming downloads.
The Ultramobile PC plays back music and video, but also lets users do other computer tasks, such as e-mail and Internet searches.