Bill Gates' CES Keynote: Vista To Drive Downloadable Apps

In a speech at the computer industry's largest convention of the year, Microsoft chairman Bill Gates said the company's imminent Windows Vista operating system will accelerate its efforts to turn software into a product that's continually updated rather than bought once and left alone.

In his annual opening keynote speech at the Consumer Electronics Show in Las Vegas Sunday, Gates reiterated the financial importance to Microsoft of its first new PC operating system since 2001, and said Windows Vista will offer computer users the ability to gain additional features over time--for a price. For Microsoft, merging its huge PC software franchise with the emerging world of Internet software is critical as it competes with Google and other companies more adept at turning Net usage into revenue.

During his speech, Gates and other Microsoft employees demonstrated new features of Windows that buyers of the the most expensive retail version will be able to download from the Web. An app called GroupShot from Microsoft's research labs can stitch together the best elements of two digital photos to create a composite. Software called DreamScene lets users play full-motion video stored on their hard drives as their PC's desktop wallpaper. "We've come a long way from the idea that this is just a product you get one time and it stays the same," said Gates. "A huge part of that value is the ongoing work that we do" that the company can deliver "through that Internet connection," he said.

Gates' speech comes three weeks before Microsoft is due to release Vista to the general public. The much-delayed product is Microsoft's bid to retain PC market share against incursions by Apple Computer, and to head off competition from Google, Yahoo, and other purveyors of Internet software. Vista contains a new Microsoft search engine that can scan both a PC's hard drive and the Web; on Sunday, the company for the first time showed the ability for a search query typed into Vista's Start menu to crawl the contents of any PC on a home network as well. "This is by far the most important release of Windows," said Gates. "Vista and the PC continue to be very, very important."

Vista, along with Microsoft's new Office 2007 productivity suite, could also help to more quickly usher in era of 64-bit computing on the desktop. This is the first time a new version of Office has arrived together with an upgrade to Windows since 1995, and both products greatly expand the software's ability to take advantage of computer memory, which continues to fall in price. The new Office suite includes a graphical user interface that largely dispenses with drop-down menus, but aims to expose more advanced features to users without them having to wend their way through multiple commands. Gates said Microsoft's user studies have shown that the new design works, but acknowledged the danger of confusing customers. Said Gates, "The new user interface was actually a risk, a leap that needed to be taken at some point." This is the eleventh time Gates has given the kick-off speech at CES, and next year may be his last. Gates said he would speak at the conference a year from now, but indicated he might hang up his CES spurs after that. He plans to leave day-to-day operations at Microsoft in the summer of 2008 to work full time at his charitable foundation. "I might talk a lot more about infectious diseases than great software," he joked.

Beside showing new features of Vista, and the ability to download new functions to enhance Microsoft's Windows Vista Ultimate software, Gates discussed efforts to bring versions of Windows to new types of computers beyond traditional desktop and notebook PCs. Making those devices, and the networks they connect to, compatible, will be key to digitizing more work and entertainment, he said. Right now, consumers can't easily perform tasks that span different types of computers, like updating their PC calendars from their cell phones, or easily listening to their digital music collections in their cars. Connecting electronic environments is even more important now, as people use the same computing devices and online services to manage both personal and work tasks. "We can't even just say 'consumer,' because these experiences span into business environments," he said.

Gates showed a Windows Home Server due from Hewlett-Packard later this year that can let computers on a home network access common programs and files, and automatically back up each machine. He discussed a touch-screen PC from HP, a laptop with a wireless docking station from Toshiba, and an "ultramobile" PC designed for reading and watching video from German company Medion AG that will come pre-loaded with Vista this month. Ford Motor Co. executive VP Mark Fields showed a new Windows-powered entertainment and messaging system called Sync that will appear in a dozen models this year. And Microsoft entertainment division president Robbie Bach demonstrated the ability to watch Internet Protocol TV on the company's Xbox 360 video-game system.

Capping off the keynote, Gates personally demonstrated a new Microsoft concept for the "connected home of the future." Strolling from a faux bus stop, to a home's kitchen, to its bedroom, Gates showed how next decade's consumer might use computer technology to make their day easier.

Standing in a mocked up bus stop--"Because I'm very familiar with bus stops," he quipped--Gates glanced at a digital display of schedules and ads, and used a cell phone to zap his signature to a package delivery guy outside his front door. In the bedroom, Gates morphed a wall-sized display from a racing game to "soothing" images of an aquarium. And in the kitchen, he placed RFID-tagged groceries on a counter, which triggered a projected computer display of suggested recipes. Using his voice to navigate the options, Gates drilled down into a few menus until he found instructions for a loaf of focacchia. Microsoft plans to show the demonstration on its campus in Redmond, Wash., as well.