CES: Steve Ballmer Keynote

Steve Ballmer is delivering his annual state-of-Microsoft address at the Consumer Electronics Show in Las Vegas tonight–his second since assuming the duties of former CEO Bill Gates.

If anything like last year’s, Ballmer’s address will offer a broad overview of Microsoft’s (MSFT) consumer strategy for the year, touching on everything from the company’s hardware-software ecosystem to its home entertainment offerings.

Likely to figure prominently in tonight’s address: Windows 7 and the new touch-enabled PC form factors it has evidently inspired; Bing; and Natal, Microsoft’s controller-less game control system, which will launch in time for the 2010 holidays.

• The keynote begins with, what else, some introductory remarks from Consumer Electronics Association President Gary Shapiro: “Happy New Year and welcome to 2010 CES, the World Cup of innovation. The past year has been a challenge. The global recession has affected all companies. Fortunately, signs are pointing upward, and I believe CES will be remembered as a turning point.”

  Let’s hope so.

• Shapiro welcomes Steve Ballmer to the stage, and the Microsoft chief begins by noting that 2009, in case you hadn’t noticed, was a year of profound economic turbulence. But innovation persisted. And with that, he rolls a first video designed to demonstrate his point. It features “one random guy’s” experiences with technology this past year, namely Seth Meyers of “Saturday Night Live.” Seth talks to his grandmother on a Web cam. He plays videogames with a kid and loses. “Before texting existed, I never sent the wrong person a letter telling them they’re a jackass. Thanks, technology….Before Twitter, if I knew what someone’s cat was thinking, I would have had to be an idiot.”

• Ballmer: “We’re going to focus on three things tonight. The [first is the] increasing importance of the small screen, the ever-evolving PC and the future of TV. The second is the cloud. Third is natural user interface–NUI technology. The last few decades have been absolutely stunning in the changes they’ve brought.”

• And here’s the sound byte of the evening: “We Bing. And we Bing. And we Bing Bing Bing. At least in my world.” Ballmer says 2009 is a year in which the company has made incredible progress with Bing. “We added 11 million new users….We redefined what search should do for users–we work to understand user intent and anticipate what users are really looking for. We know we’re at the beginning of a long journey, but we think we’re off to a good start.”

  There’s some news about Bing today, a distribution deal that makes it the default search engine on HP PCs in 32 countries.

• Also figuring prominently in 2009: Xbox. Microsoft first launched it at CES in 2001. Today, there are over 39 million Xbox 360s around the world. And more than 500 million games. The console has generated $20 billion in total game revenue.

• Ballmer is moving on to the mobile space now. Windows Phone–technically Windows Mobile 6.5, a necessary stopgap on the path to 7.0–which debuted last fall in a nimbus of disappointment. Ballmer notes that Microsoft is announcing a new Windows Phone partnership today with T-Mobile, which is bringing HTC’s HD2 phone to the U.S. He says little about Windows Mobile 7, Microsoft’s “modern” mobile operating system, which at last check was scheduled to arrive at market sometime in late 2010.

• Ballmer is talking up Windows 7 now. PC sales jumped 50 percent the week the OS debuted, he says. And according to research outfit NPD, sales of Windows PCs grew 50 percent over the 2009 holidays and retailers sold 63 percent more PCs than they did this time last year. Gartner (IT) now sees three percent PC unit growth in 2009–nearly 300 million PCs shipped in 2009. For 2010, Gartner sees a jump of more than 12 percent.

  “Windows 7 is by far the fastest-selling OS in history,” says Ballmer. “Clearly, consumers are saying there’s never been a better time to be a Windows 7 PC….Windows 7 is a rising tide that’s lifting all boats in the PC business.”

• Ballmer calls Ryan Asdourian, senior product manager for Windows, to the stage. “We’re going to see some of Ryan’s favorite hardware and software,” he says. Among them the Sony (SNE) Vaio L–an all-in-one built for high-definition entertainment–and the Asus NX90, a slick-looking laptop designed with help from legendary audio firm Bang & Olufsen.

  “Being in Vegas, you’ve got to look sexy,” says Asdourian. Ballmer: “Good thing we brought some PCs.”

• Next, some software demos–Ray Kurzweil’s Blio Ereader App?, then a new Skydrive collaboration in Windows Live. Ballmer: “Developers baby! Developers! I love the people who’ve built this stuff.”

• Ballmer moves on to Windows Media Center and Mediaroom 2.0, which will now deliver live and on-demand TV through set-top boxes, PCs, and Windows Mobile devices like the HD2. It is coming to AT&T’s (T) U-verse. Streaming video on the HD2 looks pretty slick.

• “The world of entertainment and content will come in different forms and flavors. But no matter what the source, Windows PCs will offer the greatest entertainment experiences in the world,” says Ballmer. And with that, he shows offs some new slate PCs. Sadly, the Courier–the dual-screen multitouch device that many had been hoping to see–is not among them, as BoomTown reported earlier today. There are, however, some cool-looking offerings from Hewlett-Packard (HPQ) and Archos.

• Ballmer rolls another Seth Myers video, “Milestones in Technology.” Not funny. Yeah, I don’t really miss “Saturday Night Live” at all anymore.

• Robbie Bach, president of Microsoft’s Entertainment & Devices division, takes the stage. “Computer science is the only science bounded solely by our imaginations,” he says, referring to Xbox. “2010 is going to be a landmark year for Xbox customers. We’ll be offering the best line of Xbox 360 games.” Examples: Mass Effect 2 and Splinter Cell Conviction. Also an episodic “psychological action thriller” called Alan Wake. “Imagine ‘Lost’ written by Stephen King, filmed by David Lynch,” implores Bach.

• Bach: “What ‘Star Wars’ is to film, what Harry Potter is to fantasy books, Halo is to videogames.” And with that, he rolls some video of Halo Reach that I can’t see because I’m watching the event remotely. The game is coming in the fall of 2010, but will be available as a multiplayer beta on Xbox Live this spring.

• Bach announces Game Room for Xbox Live! More precisely, a vintage gaming service that offers 30 classics from Atari, Intellivision, etc. The company plans to add over 1,000 games to Game Room over the next three years.

• And here comes the pitch for Project Natal: “We’re at an exciting inflection point in tech, where we can create an experience that is more intuitive. With Natal we’re freeing you from the last barrier, the game controller.” Bach rolls a video of the folks behind the Xbox’s new natural user interface, or NUI, which is due out later this year. “Project Natal will be available this holiday 2010….It will work with your existing Xbox 360.”

• “When I said 2010 was going to be a big year for Xbox 360, I was lying: 2010 is going to be the biggest year in Xbox history!”

• Bach wraps things up with some big-picture remarks and–well, I guess that’s it. He leaves the stage and the house lights come back up.