Gates gives Consumer Electronics Show keynote

The Microsoft chairman unveils company's latest

Las Vegas – For eleven consecutive years, Microsoft chairman Bill Gates has been the opening act at the Consumer Electronics Show, and since 2002, he has used part of his stage time to spin out his vision for how Microsoft will break into television. But for all the forecasts, Microsoft has yet to be welcomed into the living room.

But Microsoft has a reputation for persistence. This year, Gates and other Microsoft execs highlighted ways that Microsoft products can deliver video to the desktop PC, the television set-top box, and the Xbox 360 gaming console. Among the company’s new content partners: Starz Entertainment, Showtime Interactive, Fox Sports, Lionsgate, and Nickelodeon.

Robbie Bach, president of Microsoft’s Entertainment Devices division, boasted that Microsoft has sold more than 30 million copies of the Media Center Edition of its Windows operating system, intended to make it easier to download and manage digital video and music. But the company has never disclosed how many people use the Media Center software to view video, or connect it to a television.

Starz Entertainment has, since last January, run Vongo, its own subscription-based movie download service on the Web. But Bob Greene, executive vice president of advanced services at Starz, says, “Consumers have told us that digital downloads are limited if they’re only on a PC. Now, with [Windows] Media Center Edition, it enables Vongo to seamlessly and easily connect to the television.” Greene says that about 30 percent of Vongo subscribers have done so, prior to the new Microsoft partnership.

Forrester analyst Josh Bernoff observes that several companies will introduce new approaches to delivering Internet video to the television at this year’s trade show. “The big question is whether this is a problem consumers feel urgent about solving,” Bernoff says.

Microsoft’s new operating system, Windows Vista, due in Janaury, will enable PC users with a cable TV connection to watch high-definition sports programming from networks like Fox on a PC, surrounded by live scores and sports news headlines, a feature dubbed “Sports Lounge.”

Bach noted that Xbox Live Video, a service that presents video on the Microsoft gaming console, now offers more than 1000 hours of content from partners like Comedy Central, Paramount, Warner Bros., and CBS.

A new feature will allow users to connect their Xbox 360s to an IP TV link, bringing them far more content. Bach also said Microsoft is now working with five telecom companies, including AT&T and British Telecom, to deploy set-top boxes that deliver television programming packages over Internet lines (known as IP TV, or Internet protocol TV.)

Bach also plugged the HD DVD format, which Microsoft supports, crowing that it was the most affordable high-definition format, offered the most movies, and was out-selling its rival, Blu-ray.

Bach also offered an update on Microsoft’s music and gaming initiatives. Bach said that the company was “on track to ship and sell” one million of its Zune portable media players, a rival to Apple’s iPod. He said the company had also sold 10.4 million of its Xbox 360 gaming consoles around the world. Bach said that “Halo 3,” a new installment of its popular first-person shooter game, would be “the big story of 2007,” but also touted a new game called “Gears of War.”

Gates introduced a new computer, which will be produced by Hewlett- Packard, called the Windows Home Server, designed to store a user’s digital media like photos, documents, and videos in one safe place, and make it accessible, even when a user is traveling. Gates said that the product will be available in the second half of 2007.

A partnership between Microsoft and Ford Motor Co. will allow drivers to make hands-free calls on their cell phones, have incoming text messages read to them, and link one of Microsoft’s Zune portable music players to the car’s audio system. The system will be included in 12 of Ford’s 2008 models; Apple Computer already has deals in place to integrate iPods with vehicles from several other manufacturers, including Ford, GM, and BMW.

Gates began his keynote by announcing that he expects to come to the Consumer Electronics Show once more, before he begins ramping down his daily involvement at Microsoft in order to spend more time on his charitable work. This year’s keynote was short on star power and laughs; in the past, Gates has shown videos in which he has danced nerdily with Napoleon Dynamite and dressed up as Harry Potter, or trotted out TV personalities like Jay Leno and Conan O’Brien to dazzle the audience. But unlike past years, all of Gates’ product demos went smoothly; in 2006, O’Brien joked about Microsoft employees being summarily fired when a demo went awry.

The Consumer Electronics Show, which runs through Thursday, is expected to attract about 150,000 attendees, including a record 11,000 from the media industry. The trade show is the largest one in the U.S., with 2700 exhibitors and the equivalent of 30 football fields of exhibit space.

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