Microsoft (MSFT) has been doing what it can to finally work on the offensive. Bing search is now   making significant progress against rivals and Windows 7 is getting excellent reviews. There is even talk that the next generation Zune HD will become a serious contender along with the recent upgrade to the Xbox gaming/entertainment console.

The retail stores we are still scratching our heads about, but we will wait to comment until that plan is either launched or squashed.

Now we are seeing the first glimpse of what could be the next generation of tablet computing. If you recall, this has been on the mind of Microsoft and Bill Gates for years. The first attempts were met with luke warm reception. But that was then. Computing power is much more significant and much more energy efficient.

The photo (hat tip Gizmodo) shows a device that opens like a book or traditional day-timer and has both pen and touch-screen input. Could this be a real competitor to Apple’s (AAPL) 10″ tablet announced to become available in February 2010?

For one, it will probably interface much better in an office environment. That would be a big plus. Then, if Microsoft is actually controlling the specs and design we could possibly finally have a more proprietary hardware product that will diminish the problems with comparability. That will help to offset the upgrade problems we have seen on PCs.

I for one have utilized the handwriting recognition software on the early windows devises and new ones. It works very well (with a bit of training) and have found it to be much faster that touch or key entry.

Gizmodo calls it “astonishing”:

Courier is a real device, and we’ve heard that it’s in the “late prototype” stage of development. It’s not a tablet, it’s a booklet. The dual 7-inch (or so) screens are multitouch, and designed for writing, flicking and drawing with a stylus, in addition to fingers. They’re connected by a hinge that holds a single iPhone-esque home button. Statuses, like wireless signal and battery life, are displayed along the rim of one of the screens. On the back cover is a camera, and it might charge through an inductive pad, like the Palm Touchstone charging dock for Pre.

Until recently, it was a skunkworks project deep inside Microsoft, only known to the few engineers and executives working on it””Microsoft’s brightest, like Entertainment & Devices tech chief and user-experience wizard J. Allard, who’s spearheading the project. Currently, Courier appears to be at a stage where Microsoft is developing the user experience and showing design concepts to outside agencies.

When and where is yet to be known. But if this photo/info is true, Microsoft best get moving to try to get ahead of the February Apple move.

Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.