At 2005 International CES, Bill Gates and other Microsoft officials show how the power of software is transforming the world of consumer electronics and enhancing the lives of millions around the globe.

LAS VEGAS -- Jan. 5, 2005 -- With the 2004 holiday season complete, the 2005 International Consumer Electronics Show (CES) here this week provides an ideal opportunity to look back at the breakthroughs from Microsoft that made the past year a watershed in the development of key consumer technologies — and to look forward to software innovations that will extend the reach of software and give consumers even richer and more personal experiences in the near future.

Microsoft Chairman and Chief Software Architect Bill Gates holds an iRiver H-10 digital music device at the 2005 International Las Vegas, January 5, 2005.

Microsoft Chairman and Chief Software Architect Bill Gates holds an iRiver H-10 digital music device at the 2005 International Las Vegas, January 5, 2005.

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In his keynote address at CES tonight, Microsoft Chairman and Chief Software Architect Bill Gates demonstrated how Microsoft products and technologies are making it dramatically easier to create devices and software that work together seamlessly. He also demonstrated new offerings from Microsoft and its partners that will make it easier than ever for people to access favorite TV shows, photos, music and video on a wide range of devices.

Gates -- who shared the CES stage with television personality Conan O`Brien -- said 2004 marked the year that the digital lifestyle truly entered the mainstream, driven largely by the power and the versatility of Microsoft software and the Windows platform. Evidence includes Windows Media Center PCs, which surpassed 1 million in sales during 2004, and new devices and services that expand the Microsoft PlaysForSure Logo Program, which helps take complexity and uncertainty out of digital media, making it easier for consumers to play the digital audio and video they want.

He also revealed that Xbox had market-leading sales for the 2004 holiday season, with year-over-year growth in consoles, software and peripherals and expected sales of more than 20 million consoles by July 2005. ``Halo 2,`` which has sold 6.3 million copies, generated US$125 million in revenue in its first weekend on the shelves, surpassing the mark of the Hollywood hit ``Spider-Man,`` which in 2002 had the biggest opening weekend in film box-office history, $114.8 million.

``This holiday season is a significant milestone for us -- we’ve seen how the power of software can enhance consumers’ digital experiences, ensure that they work together seamlessly and offer people more choices than ever before,`` Gates said. ``The digital lifestyle is here to stay.``

Added John O’Rourke, senior director of Consumer Strategy for Microsoft, ``Our holiday sales were extremely strong. But it`s not just the solid market performance that shows how the digital lifestyle has arrived. It`s also the sheer buzz around the world -- people are IMing their friends, sharing their holiday pictures with relatives or playing Xbox Live games for hours on end.``

One key to Microsoft`s success has been its focused innovation in five scenarios crucial to making the digital lifestyle real: music and video, memories, television and movies, communications and gaming. New devices and software developed by Microsoft and its partners during the past year have provided consumers with a wide range of new experiences.

Examples include Windows Mobile-based Portable Media Centers that enable people to enjoy digital music, recorded television, movies and pictures while on the go; portable audio players that can play music seamlessly from consumers’ PCs, and a new wave of subscription services. Windows Media Player 10 has made it significantly faster and easier to enjoy digital music and video, and 60 million people have downloaded the player since its launch in October. MSN Music provides over 1 million songs to discover and download. Windows Movie Maker 2.1 enables people to create and edit movies on their home PCs and utilize dozens of Hollywood-style special effects in the process.

But even more important than the sheer number of innovative new products is Microsoft`s continued emphasis on breaking down the barriers between software and devices so that people can enjoy and share digital media experiences in ways that suit the way they live.

``A year ago, your ability to enjoy TV or pictures or music was pretty much limited to one device in a single room,`` O’Rourke said. ``Now, with new devices and technologies like the Media Center Extenders, Portable Media Centers and Windows Media Connect, you can enjoy family photos in the office, watch recorded TV in the bedroom or listen to your digital music through your stereo. It`s all part of our ongoing effort to use the magic of software to break down the barriers between all these devices.``

Many of the new products being announced by Microsoft and its partners during CES are designed specifically to further the trend toward ever-easier access to digital content. One example is a new set of technologies for digital video recorders (DVRs) that combine DVD recorder and DVR functionality with access to content from Windows XP and Media Center PCs. In his CES keynote, Gates demonstrated the first such device, a soon-to-be-released DVD recorder/DVR produced by LG Electronics.

Gates demonstrated a number of other innovations that demonstrate the opportunities software creates for the consumer-electronics industry, including a digital camera from Nikon that uses built-in wireless connectivity and smart software to send pictures to a Media Center PC or a Smartphone automatically and a 46-inch, high-definition LCD television from Digitrex that is the first network-connected television to use Windows Media Connect to access digital content from home PCs and PlaysForSure online services.

The world of digital content continues to expand, as well. Gates announced a groundbreaking new partnership with MTV Networks that will create new ways for consumers to access MTV content, including MTV, VH1, CMT and Comedy Central. As part of the partnership, MTV will target its content offerings to Media Center PCs and Portable Media Centers and will launch a new, PlaysForSure-compliant MTVN Digital Music Service with portable subscription capabilities, available in the Windows Media 10 Digital Media Mall.

In addition, a partnership with TiVo will enable consumers to transfer recorded TV content to their Windows XP-based PCs with ease. Within 60 days, consumers also will be able to transfer the same content from the PC to Windows Mobile-based devices, including Portable Media Centers, Smartphones and Pocket PCs.

``With the TiVo partnership, you`ll be able to unleash the programming stored on your TiVo. You can bring your favorite TV shows on the plane or give the latest episode of `SpongeBob SquarePants` to your kids in the back seat of the car,`` O’Rourke said. ``As we continue to develop great products, you can expect to see better and better integration across a wider range of devices and services, and you’ll see more and more personalization in ways that matter most to you, so that you`ll be able to experience the digital lifestyle in ways that are completely seamless and natural.``