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Consumer Electronics Show (CES) 2008: A SuperSite Special Report

With all due respect to the world's richest man, you've clearly worn out your welcome. Microsoft chairman Bill Gates delivered his first Consumer Electronics Show (CES) keynote address in 1994 when, in his words, "Windows 95 was just coming together (and) the Internet was just getting started." Since then, he's honed his consumer-oriented keynote into the entertainment equivalent of a golf game, slow moving with respectful chuckles and applause at all the right moments. His final CES appearance last night followed exactly the same path.

Unfortunately, what CES really needs is leadership. And as I scanned eagerly through all of the Microsoft and other corporate announcements that were made in the pre-show jitters of Sunday night, I can see I've clearly made the right choice by not attending this too-large show for the second year in a row. Despite its size and the attendance of virtually every important consumer electronics company on earth, CES has become a something of a non-event. And it only has itself to blame.

Part of the problem is that Apple next week will unleash the 2008 rendition of its own tradeshow, Macworld. Despite being much smaller than CES, Macworld is far more influential and important because it features the most powerful consumer electronics company on earth, Apple, and its mesmerizing if mercurial CEO, Steve Jobs. If CES is serious about mattering again, it should already be in talks with Apple to get Jobs to keynote next year. My guess is that will never happen.

But the biggest problem for CES isn't the competition, it's internal. And you only need to look as far as Microsoft to see what's wrong. Despite headlining the event, Microsoft didn't make a single major announcement last night, let alone acknowledge that some of its biggest announcements from last year--Windows Vista, new Media Center Extenders, or an IPTV-based Xbox 360--have yet to materialize or have any real positive impact on the market if they have.

Let's take a look at what Microsoft did announce last night, skipping neatly over the vague promises of a utopian future.

Windows Vista. Microsoft announced that it has sold 100 million Windows Vista licenses since the product first became available in November 2006. This is about 100 million fewer licenses that I would have expected in this span of time, given that PC makers sold over 250 million machines in 2007.

Windows Live. Microsoft highlighted such online services as Windows Live Calendar (currently in beta), Windows Live Events, Windows Live Photo Gallery, Windows Live Spaces, and Windows Live Mobile. The company also mentioned that its Windows Live properties provide a single sign-on across all services.

Microsoft Surface. The company announced its table PC platform last year and promised to ship it by the end of 2007. That never happened, but this year Surface was back with more prototypes. "We see Surface showing up in many, many different situations, maybe even here in Las Vegas as a new flexible interface," Gates said.

2008 Olympics. Microsoft announced that NBC will (sort of) utilize Microsoft's Silverlight Web technologies for its 2008 Olympics. What's really happening is that MSN will be broadcasting video highlights from the Olympics and since MSN is owned by Microsoft, they'll use Silverlight to make it happen.

Xbox 360. 2007 was the "biggest year ever in videogame history in the United States," according to Robbie Bach, the president of Microsoft's Entertainment and Devices Division. He wasn't referring to Microsoft's record $1.1 billion warranty hit to the Xbox 360, which was caused by massive and widespread hardware failures of the device, and not on sales (Microsoft has sold 17.7 million Xbox 360 consoles since November 2005 and 4.3 million since September). Instead, this claim is based on revenues: "In the US, through November, we did US$3.5 billion of business," Bach said. "That's $1 billion more than Nintendo did on the Wii, and it's $2 billion more than Sony did on the PS3." Bach also highlighted Xbox Live, but failed to mention that the service was offline for much of the week following Christmas, angering customers and leading to a free game giveaway. There are now over 10 million consumers signed up for Xbox Live, though Microsoft failed to mention that most of them are not paying for Xbox Live Gold but are rather using the free version of the service.

TV shows and movies on Xbox Live. The company announced that ABC and Disney (which are the same company) will be bringing their TV shows to Xbox Live this month. Likewise, MGM is bringing their movie collection to Xbox Live.

Media Center Extenders. Microsoft announced Vista-based Media Center Extenders at last year's show and they never materialized in time for the 2007 holiday selling season. This year, the company announced that Samsung and HP will build the technology into new set top boxes and TVs this year. Really.

Mediaroom. Last year, Microsoft showed off an IPTV-based Xbox 360 console that never materialized. This year, the company announced that Mediaroom, its IPTV-based service for "HD television, DVR and interactivity," will ship via top service providers like British Telecom, Deutsche Telecom, AT&T and 17 others around the world. Microsoft is adding a technology called DVR Anywhere to the mix: This lets you record Mediaroom content at home and distribute it to other TVs in the home that are connected via a home network. BT will offer a Mediaroom-based Xbox 360 console that works as an IPTV-based set-top box.

Zune. Microsoft didn't release sales figures for the second generation Zune but revealed that it is "doing very, very well." No new features or improvements were discussed, but Microsoft said it would sell the Zune outside of the US and Canada "this spring."

Zune Social. Microsoft's beta Web service for the Zune, which essentially copies the Xbox 360 Gamertag system, was demonstrated. I believe it's still in beta.

Microsoft Sync. In 2007, Microsoft introduced its Sync automobile platform, a voice controller for music players, cell phones, and other devices. The software is currently used in Europe by Fiat and in the US by Ford. "Ford expects to ship nearly a million Sync-enabled cars next year," Bach noted. The company announced an upgrade to Sync called 911 Assist.

Windows Mobile. No new announcements here, but Bach did claim that "Windows Mobile today outsells Blackberry, outsells iPhone. We're on pace this fiscal year to sell 20 million phones, which is almost double what we sold last year, with Windows Mobile software on it."

Scanning through this list, you may discover, as I did, that there are lots of topics discussed, but no major blockbusters. It will be interesting to compare and contrast this with Steve Jobs' Macworld keynote address next week. But surely there were other interesting news items out of CES Sunday night. Here's what's happened so far.

Warner Bros. Drops HD DVD, Adopts Blu-Ray Exclusively. Late last week, Warner Bros. (and its New Line subsidiary) announced that they would drop support for HD DVD to focus on Blu-Ray exclusively. This announcement had a number of immediate ramifications: The HD DVD camp cancelled their CES press conference, HD DVD backer Toshiba slashed prices on its HD DVD notebook computers, and Microsoft scuttled plans for an HD DVD-based Xbox 360 console. Folks, the format wars are over: Blu-Ray has won.

Napster Will Adopt DRM-Free MP3. Online music seller Napster announced that it sell music in DRM-free MP3 format. "There's now enough top-tier content out there," Napster CEO Chris Gorog said, as if this were the plan all along. However, Napster still plans to focus on its subscription music business, which will continue to use Microsoft's Windows Media Audio (WMA) format and digital rights management (DRM) technologies. Napster is also raising the price of its basic subscription plan from $9.95 to $12.95 a month beginning at the end of January. The company has 750,000 paid subscribers.

And... that's about it. I'm sure we'll see more throughout the week. In the meantime, call me jaded if you must, but CES has lost something. My advice to the industry is simple: Move the show closer to the holidays and ensure that anything you're showing off will actually ship that year. Focus more on product and less on the nebulous vision stuff. And for crying out loud, start talking to Steve Jobs. That the most influential consumer electronics company in the world isn't at CES is a crime.

An edited version of this article first appeared in the January 7, 2008 issue of WinInfo Daily Update. --Paul

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