Gates pitches products at CES
In a historic moment for the Consumer Electronics Show (CES), Microsoft Chairman Bill Gates delivered his annual opening speech last night without the customary PowerPoint slides...
Seattle Times technology reporter
LAS VEGAS — In a historic moment for the Consumer Electronics Show (CES), Microsoft Chairman Bill Gates delivered his annual opening speech last night without the customary PowerPoint slides.
Instead, Gates opted for a talk-show-style presentation featuring actual host Conan O'Brien presenting a mock version of his own show, with Gates as the guest. For about 90 minutes, they gave the latest version of Microsoft's pitch for the "digital lifestyle."
O'Brien teased Gates — and other tech luminaries such as Jeff Bezos and Paul Allen — but the humor wasn't enough to disguise several embarrassing technical glitches that interrupted demonstrations of Windows Media Center software and a new Xbox game.
"OK, and right now nine people are being fired," O'Brien said as he and Gates waited for a slide show to appear.
The slides were of a fictional night of carousing the two had in Las Vegas. "I got too drunk, I woke up with a hooker," O'Brien said. "Bill got too drunk, he woke up with an Apple computer."
From his comfortable chair, remote in hand, Gates demonstrated technology for using digital music, video and photos and moving it between computers, TVs and handheld devices. There's more work to be done — to make such activities even easier and more automatic — before the digital lifestyle becomes mainstream, but Gates said that should happen within five years.
"I think we can see here in 2005 that this is the decade it's coming together," he said.
Even with a well-attended event, Gates risked being upstaged by competitors at the big, loud and frenetic trade show, where more than 2,000 companies are trying to stand out and win a bigger share of the $126 billion consumer-electronics market.
As he spoke, exhibitors in adjacent halls frantically bolted together displays and plugged in thousands of TVs, speakers, stereo components and computers they'll hawk over the next four days.
Sony made an early grab for attention yesterday by unveiling its new PlayStation Portable handheld video-game player just before Gates began speaking. Drawing on the star power of its movie and music divisions, Sony played a preview of its upcoming movie "Hitch" and had rap star Xzibit demonstrate how to transfer music (his) from a PC to the PSP, which goes on sale in the U.S. in March.
Hewlett-Packard also dropped its news before Microsoft, announcing a new "Media Hub" based on the Linux operating system that will record and play TV shows and digital music. The product will go on sale next fall.
For their part, Gates and Microsoft are trying to sell more than a few new products. They're trying to convince the digital entertainment industry that Microsoft software is the best way to make all their products work together.
"It's the way they work together that really makes a difference," Gates said.
Microsoft is continually searching for markets with more potential for growth, and sales of digital media products are outpacing PC sales by a wide margin. Sales of digital media players grew 177 percent in the first half of 2004 alone, according to the Consumer Electronics Association, which hosts CES.
"Microsoft isn't in the Windows Media business just to sell Windows Media on its own," said Meta Group analyst Steve Kleynhans. "They're in this to create a complete ecosystem to ensure there's a little piece of what Microsoft's doing in this space in anything you do that touches digital media."
Microsoft and other companies from the computer industry also must take a different approach to sell their digital lifestyle vision. That's why Microsoft, Intel and Hewlett-Packard set up mock living rooms in malls to demonstrate their products this holiday season.
It's also partly why Gates opted for the talk-show format instead of his standard speech on the potential of technology advances.
"It's a bit of a love-hate relationship most people have with their PC, and particularly Windows PC," Kleynhans said, "so they have to come in and try to show they aren't trying to make things more complex, that Windows does have a place in the living room and at the heart of your entertainment experience, and as such they're going to have a fairly soft sales approach."
Microsoft's director of consumer strategy, John O'Rourke, put it a little differently: "Microsoft thinks it's much more important to look at the big picture and in some ways the harder problems," he said.
Those challenges include making it simpler for consumers to do what Microsoft has found to be their most important "digital lifestyle experiences." They include handling digital music, photos and video; communicating by phone, e-mail or text messages; and playing games.
Microsoft also wants to let its consumer-electronics partners at the show know its efforts are starting to pay off, citing growing sales of Windows Media Center PCs — computers that have a version of Windows designed to make it easier to handle digital media.
In addition, more than 50 digital media products are using Microsoft "Plays For Sure" technology to make devices work well together; and Windows-based phones are available from 61 phone companies in 28 countries.
"The momentum is building on the foundation and the groundwork we've built over the past years," O'Rourke said. "This is the holiday season when the digital lifestyle broke through to the mainstream."
Microsoft is also planting seeds to expand its presence in the consumer-electronics and entertainment industries. Gates announced MTV Networks will use Microsoft technology in its media delivery systems; TiVo users will be able to play recorded shows on Microsoft Portable Media Center devices introduced last year; and that BellSouth will try out Microsoft's software for delivering television over the Internet through phone lines.
Gates also announced that this year Korean conglomerate LG will start selling the first standalone digital video recorder based on Microsoft technology. The player, which includes a built-in hard drive as well as a DVD recorder, can share media with PCs, uses Microsoft's antipiracy software and has the same onscreen controls as the Media Center PC.
"This is the first of potentially many partnerships in this space," said Kevin Unangst, Windows XP product-marketing director. "Anywhere we can develop software that adds value to that experience, whether it's connecting to the PC or making a great experience for DVR or DVD burning, that's absolutely the goal."
Also demonstrated during Gates' speech was a new Nikon camera that can connect wirelessly to a PC, so that users can transfer digital photos without memory cards or cables.
Gates also announced that two companies will produce alarm clocks that display current weather reports, using the Microsoft "Smart" technology for watches and other devices that he introduced at the 2003 CES.
Conspicuously absent was the traditional humorous video that lightened Gates' keynotes in past years, such as one depicting Gates and CEO Steve Ballmer pretending they were Harry Potter and Luke Skywalker.
O'Rourke said the video was not a victim of Microsoft's recent cost-cutting. "Given the host that we have here, we think there's going to be enough comedic content," he said beforehand.
Still, the promise of hearing Gates was enough to have fans line up for seats four hours before his speech and the surprise appearance by O'Brien. The wife of the late-night talk-show host is from Seattle and went to Lakeside School, Gates' alma mater.
"I want to hear about what's for the future, about that Longhorn thing — what's it going to do for me that XP doesn't?" Cindy George of Prescott, Ariz., a Microsoft systems expert who works for an auto dealership, said as she waited in a line snaking through the Hilton's casino.
"The last year we came here, if you weren't here four hours early you didn't get in," said Bruce Marler, an information-technology specialist at Oregon State University in Corvallis who was in line a few yards behind George. "It's always good to get the first view, as opposed to what's reported. Plus he puts on a good show."
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