Rival Google Inc. may be nipping at its heels, but Microsoft Corp. wasn't flashing any defeatist signs Wednesday as it showcased its latest plans to help make living in the digital world safer, easier and more fun.
In his 10th keynote to kick off the International Consumer Electronics Show, Microsoft Chairman Bill Gates highlighted the Windows Vista program, a major operating system upgrade set for release later this year.
He also discussed how Microsoft's Xbox game console and media-oriented software for PCs and electronics gadgets are aiming to help consumers connect more easily with each other, get more entertainment and deliver more high-definition video.
"Consumers are getting more and more connected, and software is at the center of that," Gates said.
Gates' speech was just two days before Google hosts its first CES keynote, in a sign of the Internet giant's rising influence.
Rumors are swirling among analysts that Google may unveil a Google-based PC, or some kind of Google-based software that would compete directly with or at least indicate the increasing irrelevance of Windows desktop software, Microsoft's bread and butter.
In a memo to his top executives in November, Gates acknowledged that Microsoft should act quickly in offering Web-based services to best formidable competitors.
But in a phone interview preceding his address, Gates downplayed a Google threat.
"I hear they're coming out with a robot that will cook hamburgers, too. Let's spread that rumor — there's nothing they can't do," Gates said in jest.
On a more serious note, Gates added: "Whatever they announce, they announce. They're in their honeymoon period, and anything they announce gets hype ... They will obviously branch out beyond Internet search, but I think the expectations won't live up to reality."
For now, Microsoft is cheered by its own progress in promoting digital entertainment and services, and bringing its platform to an increasing number of electronics devices.
Some examples: the brand new Windows-based Treo smartphone from Palm Inc.; the upcoming movie download service from Starz Entertainment Group that will allow users to view full-length films and TV shows on a crop of new Windows-based portable devices; and a growing slate of entertainment-oriented machines based on the Windows Media Center Edition. One of the PCs will be smaller than a shoebox and cost under $1,000.
Gates also announced a multiyear partnership with satellite TV provider DirecTV Group Inc. to get the company's satellite video directly onto Media Center-based devices.
Media Center-based PCs picked up a lot of traction in 2005, Gates said. Cumulative unit sales to date are 6.5 million worldwide, of which 5.5 million were logged last year, he said.
In addition, Intel Corp., which is promoting its so-called Viiv chip technologies aimed for multimedia machines for the networked, digital home, will require that Viiv customers base their products on Microsoft's Media Center Edition.
Meanwhile, demand for the Xbox 360, which debuted in late November, is exceeding the company's own expectations.
Microsoft is on track to have shipped 4.5 million to 5.5 million units by the end of June, Gates said. Shortages experienced during the holidays were due to high demand and normal manufacturing complexities in building a new product, he said.
The Windows Vista operating system is also on its way, though a specific release date in 2006 has not yet been announced.
Gates discussed and demonstrated for the first time some of the new components of Vista during his keynote.
Vista will feature faster, improved searches for data, music, photos or video content. It will have an updated media player allowing users to more easily play digital content from any PC in the house. Vista will also integrate parental controls for the first time, specifying hours of use, or limiting, for instance, the kinds of video games a child can play, based on the industry rating.
Plus, Vista will add support for high-definition video via the burgeoning "CableCard" technology that lets users get digital cable simply by inserting an access card from their cable operators.
The year 2006 will be an exciting one for high-definition video, Gates said, as more content — from films to video games — will be produced in the higher-resolution format.
The Xbox 360 will later this year have an external drive to play HD-DVDs — one of the newest high-definition DVD formats.