Gates wows Vegas with Vista keynote

After months of touting Vista's geekier side, Microsoft chairman Bill Gates on Wednesday highlighted features designed to convince the average consumer they need the next version of Windows.

During his keynote speech at the Consumer Electronics Show (CES) in Las Vegas, Gates showed new photo-editing tools and a revamped media player designed to improve the way Windows tackles the types of media files that are most used by consumers. Gates also showed the improved remote-control experience that will be part of the Media Center edition of Vista.

As he usually does, Gates offered his vision of the digital future. He showed a typical day from the future that began at home, with an on-demand video clip, and then by looking at a map that showed the location of his family members. After heading into the office, he used three large flat-screen monitors to take part in a video conference.

Finally he headed to the airport with just his mobile phone. At the airport lounge, his mobile connected to a screen and he instantly had a full desktop to work on. The phone could even connect to a nearby camera. "The phone is very different. The idea of a meeting is very different," Gates said.

Gates hit many of the same notes he struck in last year's speech, talking about the increasing role that digital gadgets are playing in everyday life. Since the demise of the fall Comdex trade show, Gates' CES speech has become a virtual state of the electronics industry speech.

Among the new graphics abilities in Vista that Microsoft showed off was Flip 3D, a tool for easily shifting among multiple open windows and the Windows Vista Sidebar, which runs in the corner of the screen and includes RSS feeds, sports scores and other small applications. Microsoft showed Sidebar in the first preview of Longhorn (Vista's code name) but the feature had disappeared from Microsoft's feature list before appearing more recently.

Microsoft's photo-editing program - Photo Gallery - allows users to do basic editing, as well as sort photos by date, keyword and other information. The program, which will be built into Vista, appears to be similar to Apple's iPhoto.

Like iPhoto, the software keeps a separate copy of the photo so users can make changes to their images without losing their original. A new slideshow feature allows users to mix images and still photos.

Microsoft also showed off a forthcoming update to the classic Microsoft program Flight Simulator to show off the graphics and gaming power of Vista. The demo included helicopters and flying birds, among other realistic details.

Along with Vista, Gates is also made his case for HD DVD - one of two competing formats for next-generation DVDs. Gates said Microsoft would offer an external HD DVD drive that can connect to the recently released Xbox 360 game console.

By offering the drive as an Xbox add-on, Microsoft is hoping to win over consumers with a cheaper option than buying an all-new device to play next-generation Blu-ray or HD DVD discs.

Gates demonstrated how the format's guaranteed ability to allow secure copies will allow DVD purchases to be used throughout the digital home.

In an effort to meet demand, Microsoft announced that it is adding a third contract manufacturer, Celestica, to make the Xbox 360. Xbox executive Peter Moore said the company is on track to meet its goal of shipping 4.5 million to 5.5 million consoles by the end of June: "We are working to deliver consoles as fast as we can manufacture them."

Microsoft added it expects to have 50 high-definition games on the market by June.

During his talk, Gates announced a new partnership with DirecTV that will allow subscribers of the satellite television service to move shows from their set-top boxes onto Windows PCs, the Xbox 360, as well as mobile devices that are part of Microsoft's "Plays For Sure" program.

Gates also showed off the new Treo 700w, which uses Microsoft's Windows Mobile operating system. Palm announced earlier on Wednesday that the phone will be available from Verizon Wireless starting this week.

The speech, which is known as a showplace for new devices and technologies, was also the launching pad for two new cordless telephones that can download contacts from Windows Live Messenger, Microsoft's planned successor to its MSN Messenger instant messaging software. The phones - from Uniden and Phillips - can be used to make either traditional or internet-based phone calls. The phones are not planned to arrive until at least this spring.

As for Vista, Microsoft is now moving broader with its Vista sell as it hopes to launch the OS later this year, aiming to have PCs loaded with the new Windows on the market this holiday season.

Beyond the PC, Microsoft is also attempting to catch up in the portable music and video markets, which have been dominated by Apple. Gates was joined on stage by pop superstar Justin Timberlake and MTV Music Group president Van Toffler to talk up the MTV-created Urge music service, which will use Microsoft's technology as well as show off a new crop of portable video devices, known as portable media centers.

The latest devices, including a $299 Gigabeat player from Toshiba, add to the basic music and video experience with other features, such as the ability to directly record audio and video or import photos directly from a digital camera.

Microsoft also hopes to tout better music playing on the PC side with the Windows Media Player 11 software, which will debut with Vista. The new player is designed to make it easier to handle common tasks and new ways to view album art.

One of the big change's to Vista's Media Center will be the ability to view high-definition digital cable. The current Media Center edition of Windows XP supports HD content but only that accessible via an over-the-air antenna. Microsoft announced a deal with the cable industry in November that it said would pave the way for Media Center PCs this year that can receive digital cable - both high-definition and standard - without need for a set-top box.

Among the big-name PC makers expected to have such machines are Alienware, Dell, Gateway, HP, Sony and Toshiba.

Ina Fried writes for CNET News.com