Microsoft was proud to announce that over its lifespan, more than 66 million consoles have been sold and that 40 million users have signed up for an Xbox Live membership.

To be sure, the Xbox continues to be one of the top-selling videogame consoles, beating both Sony’s PlayStation 3 and Nintendo’s Wii for the past year.

But breathing new life into the device is the motion-controlled accessory called the Kinect, which was introduced right before the holidays in 2010.

Microsoft provided a sales update last night for the Kinect, saying it has now sold 18 million of the units, which represents about one in four Xbox owners. The last update — that 10 million had been sold — was provided 10 months ago when Microsoft said the Kinect shattered the Guinness Book of World Records for fastest-selling consumer device ever.

But the device’s future is a little hazy.

On the Xbox, one of the most popular use cases has been to play dance simulation games. The controller has yet to break substantially into the more hardcore titles. More recently, Microsoft has made it clear that the Kinect will be an integral part of the user interface by providing a wider selection of entertainment options in the living room.

On Dec. 6, the company rolled out a free update to Xbox Live that allowed people to use the Kinect to conduct a Bing search to find games, music and video across several providers. The user interface also allowed people to control the box with voice commands instead of the game controller.

During the keynote, Microsoft’s CEO Steve Ballmer announced the Kinect will be coming to Windows on Feb. 1.

In a follow-up blog post, Microsoft said the hardware will have to be optimized for the Windows platform, and the price will reflect that. The Windows-based device will cost $250, more than double the price of the Kinect for Xbox, currently $120 on Amazon.

Microsoft also points out that it can mark down the cost of the hardware for the Xbox because it is subsidized by the purchase of games.

The biggest change to the hardware perhaps is that the camera will be able to see objects as close as 40 to 50 centimeters away from the device, whereas the Xbox version requires you to stand a few feet away from the TV and use most of your living room.

Microsoft also said Kinect for Windows will support gestures and voice on Windows Embedded-based devices, such as systems in manufacturing, retail and other industries.

There will be a slightly cheaper version, priced at $150, for qualifying educational users, to fuel additional innovation on the platform.

Coming up with compelling reasons to buy the technology will be important, especially since Microsoft is charging such a premium price.

MORE CES NEWS:

• Complete coverage
• HP’s Former CTO: Ultrabooks Are Nothing New, webOS Still Has Life Yet
• Walt Shows Off CES Gadgets for Fox Business News (Video)
• What Kind of Web Video Plans Does Sony Have? (Video)
• Fujitsu Seeking Way Into Crowded U.S. Smartphone Market
• Why Rhapsody Is (Probably) Bigger Than Spotify — In the U.S.
• Microsoft Beefing Up CeBit Presence Even as It Pulls Back on CES
• Inside the CES Lost & Found
• FCC Chairman Has New Tablet, but Same Script: More Spectrum!
• Verizon Wireless: We Want to Connect Five Devices for Every Subscriber
• Ultrabooks From HP and Lenovo That Are (Kinda, Sorta) Different
• Walt and Katie Take a Tour of CES (Video)
• Schmidt-Storm Alert: The Google Chairman Didn’t Like Your Question
• T-Mobile Expands Bobsled Messaging Service
• Intel Shows Just How It Plans to Get Into Phones (Video)
• Motorola CEO: We’re Going to Release Fewer Phones This Year
• Kinect Helps Keep Aging Xbox at the Top of Its Game
• More From T-Mobile CEO: On Pricing, LTE and That Ever-Elusive iPhone
• Exclusive: New Boss Acknowledges Windows Phone Still Has “Awareness Problem”
• And You Thought Jawbone UP Was Going to Miss the CES Party!
• Interview: T-Mobile CEO Says No Second AT&T Deal Out There
• Grover Is at CES and I Am Missing It
• BlueStacks Bringing Android Apps to Windows 8
• Why the Future of TV Won’t Be Here Soon
• Nvidia’s Tegra 3 Tries to Save Battery in All Sorts of Different Ways
• Dynamic Dual Coverage: Ballmer’s Last Act in Vegas and the BCS Championship in 3-D
• Microsoft Phoning In Its Last CES Keynote
• Myspace — Yes, Myspace — Says It’s Going to Sell You Web TV
• Samsung Unveils “Super” 55-Inch OLED TV
• Nokia Unveils That LTE Windows Phone It’s Been Dying to Share
• Steve Ballmer Gives Ralph De La Vega a Very … Vigorous Greeting (Video)
• Interview: AT&T’s De La Vega on LTE, Tablets and Life After T-Mobile
• AT&T’s De La Vega: Shared Data Plans Still in the Works
• LG: 55-Inch Glasses-Free 3-D Screen Is on the Way
• LG Pushes 4G Smartphone Through Verizon: The LG Spectrum
• Live: AT&T’s Vegas Act Stars LTE and, Making Her Return to the Stage, Nokia
• CES Notebook: The Constant Search for Power and Vegas’ Worst-kept Secret
• Belkin Bringing Mobile TV to Lots of Cellphones, Will Anyone Tune In?
• Acer Introduces “World’s Thinnest” Ultrabook and a “Me-Too” Cloud Service
• There Better Be Some Cool Stuff at CES, Because CE Holiday Sales Data Bytes!
• CES 2012: Snooki and Bieber Are In, Gaga Is Out!
• Coming to a Smartphone Near You: Gorilla Glass 2
• RIM Hopes Next PlayBook OS Will Impress at CES
• Ultrabooks, the Ultra-Fancy New Name for Laptops
• At CES, Expect More Gadgets Telling You to Get Off the Couch
• Intel to Detail Its Phone Plans at CES Next Month
• Microsoft Pulling Out of CES After Upcoming Show
• Intel to Detail Its Phone Plans at CES Next Month
• Dell Will Drop the Flashy Vegas Act for CES This Year
• Ultrabook Conga Line Preps for CES 2012

The company kicked off 2012 by announcing six new Android devices, all running on LTE, as well as new LTE-capable Windows phones from HTC and Nokia.

Moments after he left the stage, AT&T Mobility CEO Ralph de la Vega sat down with AllThingsD to talk about a wide range of issues facing his company, various mobile device makers and the industry as a whole.

Here’s an edited look at what he had to say.

On the failure of the T-Mobile deal and where AT&T goes from here:

We’re very pleased that the FCC approved our purchase of the Qualcomm spectrum. We’ll be working to put that into play as quickly as possible. And we are always going to be on the lookout for new spectrum that comes on the market. We hope that the FCC also makes more spectrum available.

We’ve put that behind us and we are moving on to have a great 2012.

On BlackBerry maker Research In Motion, which was notably missing from AT&T’s announcement on Monday:

BlackBerry has got some interesting things coming up. I’m encouraged by some of the things that I understand they are bringing to market.

BlackBerry has been a great partner and, you know, people love their devices. They love the keyboards. I think they are working on all of the things customers want. I am very pleased with, at least, the things that are on their roadmap. As soon as they can get them I think they are going to have a lot of customers knocking on their door.

On Motorola, which was also absent from AT&T’s Vegas announcements:

They are going to have some exciting stuff. They are just not ready to announce them with us. It’s really early in the year.

On Sony’s future in the smartphone market:

As you know, they bought out the Ericsson interest. I think they are going to have a more focused approach and put what I call more “Sony-ness” into their smartphones. We’ve met with their team and I am very encouraged.

On whether AT&T will offer fewer tablets this year after so many iPad rivals failed to make a dent in the market:

I think you are going to see us find models that have a particular differentiated approach to the tablet market. Obviously Apple sets the bar with the iPad, so Pantech is now looking at a very low-end device, still a great device, but I think that kind of distinction is what customers want.

On why the 5.3-inch Samsung Galaxy Note might stand a chance:

That’s the first hybrid device that tries to fill in a niche between a tablet and a smartphone. I’ve been using that device and it is, surprisingly, an amazing device. I didn’t understand whether we were going to be able to make that transition work, but you ought to try it. I think you will get hooked on it.

I think it is for somebody that wants to make it their primary device and doesn’t want to carry around a tablet as well. It’s surprisingly thin. It fits in your pocket.

That’s an iconic device. It’s exclusive to us. We’re going to put a lot of marketing effort behind it.

On whether we will see LTE phones that work across multiple carriers even though the first devices don’t support that.

The first ones are done that way because of technology limitations. How many antennas can you squeeze into one of those things? It’s the first generation. As the technology matures, you will incorporate more bands into the devices. I think you will have as many bands as customers are going to want. It’s not inexpensive, but I think technology will allow us to do that at a reasonable price.

This year, much of the focus is going to be on the company’s just-launched LTE network and all of the devices that the company plans to have running on it soon.

On Thursday, AT&T announced that it has added service in several more cities, including three of the biggest markets: Los Angeles, New York and the San Francisco Bay Area. In all, the carrier is now in 26 spots, though its network remains far smaller than the LTE footprint of Verizon Wireless.

The company has announced several LTE devices, but a bunch more are expected to be shown later on Monday. The most closely watched of these will be a new Nokia device running Microsoft’s Windows Phone, though we’re also expecting to hear from AT&T about other gadgets, including Samsung’s 5-inch Galaxy Note and Sony’s PlayStation Vita.

AT&T’s act runs from 9 am to 11 am PT. We’ll spare you a full recitation of the script and instead just offer the Playbill summary, along with insight on the performance and maybe a little inside info about the cast.

Earlier:
8:48 am: The good news: AT&T is passing out 5-Hour Energy bottles, more than enough for its keynote. The bad news: No power outlets. Many in the press row are fretting their laptops won’t have enough juice to make it through.

8:50 am: To keep everyone entertained, AT&T has been posting a set of “Would you rather” questions. My favorite one so far was, “Would you rather telecommute using a 14.4Kbps modem or commute two hours each way carpooling with the Kardashians?”

Modem all the way, personally.

Other questions include, “Would you rather use a cellphone from the 1980s or a pager from the 1990s?” and, “Would you rather only be able to text during the day and make calls at night or only be able to make calls during the day and text at night?”

It’s entertaining, but I’m not sure making people choose between two painful options is the branding message you need, AT&T.

8:55 am: OK, we should be getting started in a few minutes. Going to save laptop juice.

By the way, sponsors of AT&T’s developer summit include the expected array of partners — Samsung, HTC, Microsoft — as well as Nokia.

Somehow they managed to get RIM to pay twice, as both QNX and BlackBerry are sponsors.

9:03 am: We must be getting close. AT&T just put a slide on the big screen with its SEC-appeasing “safe harbor” warning. Basically, if things change, you can’t say they didn’t warn you.

9:08 am: AT&T Mobility CEO Ralph de la Vega takes the stage. Overview so far, no news yet.

Expect the new devices toward the end.

9:12 am: Handoff to head marketing guy David Christopher, who is taking a stroll down memory lane, going back 16 years to when the company launched its developer program. I’ll let you know when we get back to the present.

9:13 am: AT&T is announcing a few new programs for developers, including some new programming interfaces to tie into its network.

Lots of carriers are doing this and there are benefits to developers that want to do the extra work. The downside is that developers already have to support multiple operating systems and HTML5. For many, writing to each carrier’s developer tools is too much extra work.

Among the new APIs, though, is carrier billing for payment — that appeals because it helps developers actually get paid.

9:20 am: AT&T is bringing an interesting developer out — Viva Vision chief and former NFL player Joe Tafoya.

Tafoya is showing an app his firm built for Dallas Mavericks player Jason “Jet” Terry. Incidentally, Terry went to high school with our own Tricia Duryee, who is helping out with this live blog, via Webcast.

9:25 am: Some stats on AT&T’s TV product, U-Verse. It’s up to 3.6 million customers, as of last year’s third quarter.

9:31 am: Lots of talk about partners and stuff. Apparently developers have to pay a $99 registration fee and can get unlimited access to the programming interfaces this year.

I’m ready for that energy drink.

Anyway, now up is Chief Technology Officer John Donovan.

He’s talking about the company’s 4G strategy, which includes both its HSPA+ network as well as the LTE network it is just building out now.

“AT&T delivers the best possible blended speed,” Donovan said, noting this is paying off for iPhone 4S users, since that phone supports HSPA+ but not any other 4G network.

He’s talking about the company’s network investments including 80,000 new antennas and 150,000 network improvements.

He’s suggesting the network is going to become like oxygen. Personally, I’m happy that I am able to get oxygen on my own, without having to pay AT&T or rely on them (or anyone else) to deliver it. But that could be just me.

And, as Tricia points out, wireless connectivity is inherently more limited than oxygen molecules, which are abundant, even if increasingly in the shape of carbon dioxide.

9:39 am: AT&T also has a cloud strategy, with droplets and other features that I am a little cloudy on. Got distracted by the clouds on the PowerPoint slide, which look like fluffy little pillows to me.

Donovan promises the ability to pay hourly or monthly for its cloud services and pledges more news on this front this year.

Now he’s talking more about programming interfaces. Developers do care about this stuff, but pretty sure they are all here or watching the Webcast. So I will spare you most of the details.

Donovan said the company expects to see 10 billion calls to its interfaces this year, more than double what it saw in 2011.

9:47 am: Pretty sure we will get some new devices at some point.

But sadly that point is not now.

9:52 am: Promising sign — now up is Senior VP Jeff Bradley who heads AT&T’s device business.

First up, though, are the winners of a developer conference …

Still a bit away from the device news. AT&T is talking about a technology for developers designed to allow their apps to be more power and bandwidth efficient.

10:08 am: Zynga and Pandora talking about how that tech helps their apps be smarter about when and how to connect to the network.

The tool also works across other devices and networks, Zynga noted.

And, Bradley said, it will be made available as open source code later this year.

10:11 am: And, just ahead of the device news, AT&T is talking about AppCenter — its new tool for app discovery. It’s more of a magazine pointing to existing app stores and mobile Web sites than yet another marketplace.

10:12 am: Back on stage are David Christopher and John Donovan. They are talking about three apps created in last night’s hackathon.

It’s similar to what AT&T does at its foundries, but this time live. The winner gets backstage passes to AT&T’s concert with Nickelback as well as the opportunity to be featured in an AT&T ad.

First up is Action X-Ray, which lets you share your extreme sports injuries with friends. It’s really good for targeted ads. Say, if you have a head injury, you get an ad for a helmet.

Next is HopiChest, a health-tracking app for kids to enter stats about their exercise and health habits and tweet it to their friends.

Finally is Sleepbot, which is a mobile and web app designed to help users get a better night’s sleep and compare one’s sleep with others who are tracking their Zzzzzs.

Now the audience is being asked to vote by text message for a winner.

10:19 am: AT&T isn’t the only carrier making news at CES today, by the way. Verizon has just announced the Verizon Jetpack, a new hotspot from ZTE and a new phone from LG.

10:22 am: AT&T is ready to start with its device news as well, with emerging devices head Glenn Lurie on stage. First up is gaming and Sony’s PlayStation Vita.

AT&T has already said it will have the wirelessly connected game console (an announcement made almost a year ago). It will debut next month.

Now it is sharing the fine print.

Sony’s SVP Kuni Suzuki is out, but decides to talk first about Sony’s Tablet P, a dual-screen clamshell device that folds out into a tablet-size screen. Sony announced the device last year and said it would come to AT&T, but again, we’ve been waiting on final details like price and availability.

10:30 am: Now he’s showing off the PS Vita, which is already on sale in Japan, Hong Kong and Taiwan.

He’s showing pictures of the long lines that accompanied the launch. However, after a strong initial burst, sales trailed off.

The Vita is coming to the U.S. on Feb. 22, by the way.

Data plans for the Vita will be similar to the iPad, AT&T announced. For $15 a month, gamers will get 250 MB of data and for $25 a month, they will get 2GB.

However, since the Vita is a designated gaming device, it will be interesting to see if consumers will be willing to pay just as much for wireless connectivity.

The device itself will cost $299.

10:34 am: OK, back to de la Vega for more devices. But first, the results of that developer live pitch. And the winner is…

Action X-Ray, the one that lets you share your injuries with friends.

10:40 am: Device time, starting with six new Android devices, all with LTE.

Sony Xperia Ion, an exclusive to AT&T, will pack a 12 megapixel camera and a 4.6-inch screen. Planned for second quarter (with Sony branding now that it has bought out Ericsson).

Samsung Galaxy S II Skyrocket HD adds a bigger 4.6-inch Super AMOLED screen to the current Skyrocket model as well as a removable battery. Also, as widely leaked, AT&T is getting the Galaxy Note, a 5-inch cross between phone and tablet.

W.P. Hong, Samsung’s head of global product strategy, comes out to explain why we actually need such a thing.

It’s coming to the U.S. exclusively with AT&T and comes in blue and white. U.S. head Kevin Packingham is brought out to add to the Galaxy Note pitch.

He touts the pressure-sensitive pen capability, 5.3-inch screen and other features.

“And yes, it does make phone calls,” Packingham said.

De la Vega says AT&T also wants to bring LTE to the masses and is doing so with a lower-end LTE phone and tablet from Pantech as well as entry-level phone from Samsung.

10:50 am: De la Vega said the Pantech phone will be available for under $50, with a bundle coming that offers the tablet and phone for $249 (as long as you sign up for contracts for both, of course.)

The tablet, the Element, is also waterproof, notes Pantech marketing chief S. Jay Yim, who is now on stage.

Yim ends his talk by dipping the tablet in water, with de la Vega handing him a towel to dry off himself — and the tablet.

The Samsung Exhilarate, an eco-friendly budget LTE phone, will also be priced at less than $50, AT&T said.

10:57 am: OK, Windows Phone time, with de la Vega saying it sees a lot of promise in the platform. AT&T has been the biggest backer of the technology.

AT&T will be first with LTE Windows Phones. And, out comes CEO Steve Ballmer.

“The devices are blindingly fast,” Ballmer said, promising more details will come throughout the day. (Think Nokia event at 3 pm.)

Ballmer draws a contrast between Windows Phone and its app-centric rivals and says that others’ approach puts distance between a user and what they want to do.

“That doesn’t mean we don’t love apps,” Ballmer insists. Microsoft’s approach lets apps work together more easily, he said.

Ballmer notes that the company now has 50,000 apps in its marketplace, with 300 more coming each day.

As for Windows and Windows Phone getting more similar, Ballmer said, “We’ll continue to move in the direction of sharing more technology.”

Ballmer’s also sneaking in a quick pitch for Windows 8.

There have been 3 million downloads of the developer preview version of Windows 8, released at the Build conference last fall, Ballmer said.

Beta coming in February, Ballmer reminds developers.

And, he wraps up with his now-familiar chant of “developers, developers, developers.”

11:08 am: On to Windows Phone devices. Nokia is coming, but first up is HTC.

HTC CEO Peter Chou comes on stage to show that company’s first LTE-capable Windows Phone.

He shows off HTC Titan II, with its whopping 16 megapixel camera.

“I’ve tested it,” Chou said. “It’s blazing fast on the AT&T network.”

The press conference is running over and it’s fingernail biting time in the press row as our laptop batteries all dip into the red.

11:15 am: Chou is cracking up Ballmer and de la Vega. Maybe if he keeps it up there won’t be any time for Nokia.

11:16 am: Nope, here’s Nokia CEO Stephen Elop.

De la Vega said AT&T is betting on Nokia and on Elop. “We have bet on this person because I think he is the right person for this job.”

Elop starts out with his now-familiar line about the battle of devices turning into a war of ecosystems.

He also repeats his assertion that Lumia 710 and Lumia 800 were “the first real Windows Phones,” a phrase that is now doubt giving Chou fits backstage.

Elop promises first 4G LTE phone will be with AT&T.

But he also says that Nokia will share “more details” later this afternoon at its press conference.

And with that, the presentation is over.

MORE CES NEWS:

• Complete coverage
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• Walt Shows Off CES Gadgets for Fox Business News (Video)
• What Kind of Web Video Plans Does Sony Have? (Video)
• Fujitsu Seeking Way Into Crowded U.S. Smartphone Market
• Why Rhapsody Is (Probably) Bigger Than Spotify — In the U.S.
• Microsoft Beefing Up CeBit Presence Even as It Pulls Back on CES
• Inside the CES Lost & Found
• FCC Chairman Has New Tablet, but Same Script: More Spectrum!
• Verizon Wireless: We Want to Connect Five Devices for Every Subscriber
• Ultrabooks From HP and Lenovo That Are (Kinda, Sorta) Different
• Walt and Katie Take a Tour of CES (Video)
• Schmidt-Storm Alert: The Google Chairman Didn’t Like Your Question
• T-Mobile Expands Bobsled Messaging Service
• Intel Shows Just How It Plans to Get Into Phones (Video)
• Motorola CEO: We’re Going to Release Fewer Phones This Year
• Kinect Helps Keep Aging Xbox at the Top of Its Game
• More From T-Mobile CEO: On Pricing, LTE and That Ever-Elusive iPhone
• Exclusive: New Boss Acknowledges Windows Phone Still Has “Awareness Problem”
• And You Thought Jawbone UP Was Going to Miss the CES Party!
• Interview: T-Mobile CEO Says No Second AT&T Deal Out There
• Grover Is at CES and I Am Missing It
• BlueStacks Bringing Android Apps to Windows 8
• Why the Future of TV Won’t Be Here Soon
• Nvidia’s Tegra 3 Tries to Save Battery in All Sorts of Different Ways
• Dynamic Dual Coverage: Ballmer’s Last Act in Vegas and the BCS Championship in 3-D
• Microsoft Phoning In Its Last CES Keynote
• Myspace — Yes, Myspace — Says It’s Going to Sell You Web TV
• Samsung Unveils “Super” 55-Inch OLED TV
• Nokia Unveils That LTE Windows Phone It’s Been Dying to Share
• Steve Ballmer Gives Ralph De La Vega a Very … Vigorous Greeting (Video)
• Interview: AT&T’s De La Vega on LTE, Tablets and Life After T-Mobile
• AT&T’s De La Vega: Shared Data Plans Still in the Works
• LG: 55-Inch Glasses-Free 3-D Screen Is on the Way
• LG Pushes 4G Smartphone Through Verizon: The LG Spectrum
• Live: AT&T’s Vegas Act Stars LTE and, Making Her Return to the Stage, Nokia
• CES Notebook: The Constant Search for Power and Vegas’ Worst-kept Secret
• Belkin Bringing Mobile TV to Lots of Cellphones, Will Anyone Tune In?
• Acer Introduces “World’s Thinnest” Ultrabook and a “Me-Too” Cloud Service
• There Better Be Some Cool Stuff at CES, Because CE Holiday Sales Data Bytes!
• CES 2012: Snooki and Bieber Are In, Gaga Is Out!
• Coming to a Smartphone Near You: Gorilla Glass 2
• RIM Hopes Next PlayBook OS Will Impress at CES
• Ultrabooks, the Ultra-Fancy New Name for Laptops
• At CES, Expect More Gadgets Telling You to Get Off the Couch
• Intel to Detail Its Phone Plans at CES Next Month
• Microsoft Pulling Out of CES After Upcoming Show
• Intel to Detail Its Phone Plans at CES Next Month
• Dell Will Drop the Flashy Vegas Act for CES This Year
• Ultrabook Conga Line Preps for CES 2012

For 2012, they are focusing on making TVs “smarter” by enabling them to connect to the Internet for apps and video services on the Web.

But that doesn’t mean 3-D is going away. It’s just riding shotgun with smart TVs.

Smart TV is not a new concept, of course. Up until now, it has been defined as Internet-connected television achieved through a separate box or device that connects to the TV and streams Internet content, or via a computer-like processor built directly into the TV.

On the showroom floor in Las Vegas next week, electronics makers including Samsung Electronics, Sony and LG Electronics are expected to show off more television sets that bring Internet connectivity to entertainment centers for the home. Yesterday, Google announced that LG will join the list of companies supporting Google TV; Samsung, Sony, and Vizio Inc. have also adopted Google’s Internet TV technology.

With Apple rumored to have a possible Internet-connected HDTV in the pipeline, TV makers are making all kinds of pushes to bring to market devices that offer consumers a full range of options. For many consumers, the answer for now will still be external devices that offer easy, upgradable solutions, like the Microsoft Xbox, Apple TV, Google TV and even Roku’s latest gadget.

Analysts believe that Internet-enabled TVs will begin to take a larger share of the market by default, eventually becoming a check-off item for consumers, rather than a special feature. Some 60 percent of new televisions being sold in 2012 are expected to have Internet connectivity. According to NPD’s DisplaySearch, connected-TV shipments are expected to reach 138 million globally by 2015, accounting for 47 percent of all flat-panel TVs.

So where does 3-D fit into all this?

TV makers will still be touting 3-D at CES 2012, as many smart TVs will also include 3-D capabilities. Samsung Electronics, for instance, says that more than half of its 2012 TV models will support 3-D. “Our commitment to 3-D is only deepening,” says Ethan Raisel, director of communications at Samsung.

Tim Alessi, Director of New Product Development at LG, estimates that around 20 percent of all LG TV units will support 3-D, and notes that 3-D is featured in 50 percent of the company’s lineup for this year.

But despite the fact that 3-D TV sales in 2011 showed some encouraging gains — with an estimated 21.5 million 3-D units reported to have shipped last year and sales showing significant gains from quarter to quarter — the forced exuberance over three-dimensional screens has been tempered a bit.

That’s likely because it doesn’t matter how well 3-D TV units are selling — for the consumer, anyway. “It’s not really the penetration that matters, it’s the use,” says Forrester Research analyst James McQuivey. “You’d be hard pressed to find a 3-D TV owner that actually uses it in 3-D mode even once a week. That’s not a formula for building consumer momentum.”

For TV, 3-D presents a three-headed monster: To start, there are the technical and psychological obstacles of those pesky 3-D glasses — and while autostereoscopic (glasses-free) 3-D technology is being worked on in many R&D labs, industry experts all agree that quality 3-D without glasses is at least a few years away.

Secondly, 3-D presents a chicken-and-egg dilemma that doesn’t exist with smart-TV features — the question of where the viewable content will come from. Many content creators have been holding off on making 3-D programs. The Discovery Channel and ESPN made headlines two years ago when they announced 3-D channels; but in terms of sports, 3-D has been relegated to key events, due to high production costs.

An increasing number of 3-D movies are available on DVD, but moviemakers that hopped aboard the 3-D train early — think Pixar Animation Studios and DreamWorks Animation — were likely doing so to plant a flag in the ground for when 3-D finally does hit critical mass in the living room, says Scott Steinberg, head of strategic consulting firm TechSavvy.

Sony Chairman and CEO Howard Stringer even said recently, regarding the company’s 3-D TV push, that he hadn’t realized all of the challenges in getting 3-D content in place.

And the third issue affecting the uptake of 3-D has been the cost of the sets. On average, the cost of 47-inch to 50-inch 3-D TV sets is $400 more than similar HDTVs, according to a 2011 report from Retrevo. And while the entire consumer electronics industry has been hurt by a weak U.S. economy, TV sales have been hit particularly hard.

Steinberg says that for the average American household, television purchasing is about being practical right now. “It’s much more important to have the maximum-value TV with Internet capabilities and apps, than to invest in a still-unproven technology like 3-D.”

A December 2011 report from Parks & Associates on consumer purchasing intent also indicates that smart TVs are what’s grabbing the interest of consumers right now.

Even that report points out that smart TVs won’t deliver the killer blow to 3-D. As smart TVs are punched up with even more features — from apps to motion remotes to voice-command capabilities — more middle-class households looking to purchase smart TVs may buy in to 3-D, whether they’re actively looking for it or not.

Whether consumers actually want to sit in their living rooms and wear 3-D glasses to watch TV remains to be seen. For now, TV makers will still insist that they do.

MORE CES NEWS:

• Complete coverage
• HP’s Former CTO: Ultrabooks Are Nothing New, webOS Still Has Life Yet
• Walt Shows Off CES Gadgets for Fox Business News (Video)
• What Kind of Web Video Plans Does Sony Have? (Video)
• Fujitsu Seeking Way Into Crowded U.S. Smartphone Market
• Why Rhapsody Is (Probably) Bigger Than Spotify — In the U.S.
• Microsoft Beefing Up CeBit Presence Even as It Pulls Back on CES
• Inside the CES Lost & Found
• FCC Chairman Has New Tablet, but Same Script: More Spectrum!
• Verizon Wireless: We Want to Connect Five Devices for Every Subscriber
• Ultrabooks From HP and Lenovo That Are (Kinda, Sorta) Different
• Walt and Katie Take a Tour of CES (Video)
• Schmidt-Storm Alert: The Google Chairman Didn’t Like Your Question
• T-Mobile Expands Bobsled Messaging Service
• Intel Shows Just How It Plans to Get Into Phones (Video)
• Motorola CEO: We’re Going to Release Fewer Phones This Year
• Kinect Helps Keep Aging Xbox at the Top of Its Game
• More From T-Mobile CEO: On Pricing, LTE and That Ever-Elusive iPhone
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• AT&T’s De La Vega: Shared Data Plans Still in the Works
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But just barely: Digital sales accounted for 50.3 percent of all U.S. music purchases last year, according to Nielsen SoundScan.

And if you want to caveat that number, that’s easy to do: For starters, the Nielsen number refers to unit sales, not revenue. So the music company’s books might still show that analog sales make more money for them. And recall stunts like Amazon’s Lady Gaga almost-giveaway last spring, when it sold nearly half a million albums at 99 cents a pop.

Still, the big picture finally resembles the one we’ve been hearing about since Napster showed up in 1999, or at least since Apple started selling music via iTunes in 2003: One day, files would beat discs.

The milestone happens to have occurred in the same year that music sales finally ticked up again. You can pick a couple different metrics to illustrate the rise, but they’re all single-digit increases. The important point is they’re not decreases.

That could simply be a one-off, and perhaps the result of lots of people buying Adele songs — Sony’s new star sold more albums than anyone has done since 2004 — or there could be a larger change afoot. Won’t know about that for a while.

But an industry that hasn’t had good news since the Backstreet Boys were big can afford to be patient.

The drop-off in players affected almost all developers, but did not hit all titles equally.

For example, Electronic Arts saw 1.2 million fewer monthly users over the past week for its top title The Sims Social; Zynga’s Empire & Allies game lost one million monthly users, and its newest game, CastleVille, lost 900,000, according to AppData, which publishes such information.

On the flip side, many of the games that performed well were old favorites; these logically would have longer-term, more-committed players, who would make a point of returning during the holidays to take advantage of seasonal promotions.

The games that benefited from the holidays include Zynga’s Words With Friends and FarmVille, which gained 1.3 million and 800,000 monthly active users, respectively, according to Inside Social Games. Other gainers rounding out the Top 5 were Tetris Online’s Tetris Battle; Wooga’s kingdom-building game, Magic Land; and Men vs. Women, a role-playing game by Social Point.

Still, the general direction for the week was heading down.

That contrasts with other game platforms, such as consoles, PCs and mobile, which largely benefit from the holidays and from more free time in general.

Console games often skyrocket in popularity as kids and adults unwrap new titles for Nintendo, Xbox or PlayStation on Christmas morning.

PC gaming also typically surges during the season. EA timed the launch of Star Wars: The Old Republic ahead of the holidays, in hopes of drawing new players who would be sold on sticking around for months, after spending time on the game during their time off.

But perhaps the biggest competitor came from mobile, which benefited from breaking records for the number of new Android and iOS devices that were gifted during the holidays. Flurry reported that more than one billion apps were downloaded worldwide during the last seven days of 2011, breaking the all-time weekly record. Games are often one of the most-downloaded categories of apps.

So the more important question to ask is, why would Facebook be an exception, if other platforms performed well?

Clearly, all of the platforms are competing for a limited number of minutes in the day, and so are other forms of media, like the Internet, TV and the movies. But when it comes to Facebook, a larger driver may be the environment — after all, it’s no big secret that a lot of social networking and social gaming is done in the workplace.

In a study conducted last summer, advertising agency Saatchi & Saatchi found that 47 percent of respondents said they play social games at work during a typical day, and that 28 percent play for at least 30 minutes. Without that dedicated time in front of the computer every day, people may have had the opportunity to be more obsessed with other screens, such as phones or TVs.

Another potential reason that Facebook and social games did not see a lift from the holidays is because they have not yet figured out how to capitalize on the Christmas economy.

For years, console games have been timed with the end of the year, so they could be wrapped up and placed under the tree. More recently, smartphones and gift cards for music and apps have helped mobile prosper. Perhaps there wasn’t enough hype and promotion for social games to compete for people’s dollars.

Regardless of the reasons, the drop may ultimately be a small a blip on the radar screen for most game developers, who also see several spikes in activity during the year.

The bigger impact may be felt at Facebook, which takes a 30 percent cut of all virtual goods sold inside social games, and would feel the cumulative impact across all of the games.

I wrote then:

“The unvarnished fact is that the networked society to which we’ve become accustomed in the last several years has a soft, vulnerable underbelly.

And the more we rely upon it, the more people with a combination of advanced technical skills and repugnant motivations are going to look for ways to turn it against us.

Some will do so as a means of making a personal profit. Others may see it as a way of advancing a political or ideological agenda.

But others will want to use theirs skills to do serious harm to innocent people on a large scale.”

Part of these predictions or ruminations or whatever you care to call them makes me think of the hijinks of the group that started out in the spring variously known as LulzSec, Anonymous and later adopted the moniker AntiSec. This loosely affiliated group emerged from the wake of the various attacks against Sony, and seemed to have nothing to prove but that it could make mincemeat out of whatever security measures had been put in place by Sony or whatever video game outfit it had targeted on a given day.

Sony’s Playstation Network was a favorite target, and its service was at least partially offline during two months ended in July.

Then, as summer dawned, the group’s members became aware of global politics and teamed up with Anonymous, the Wikileaks-allied band of hackers known for their campaigns of digital civil disobedience. Together they declared “immediate and unremitting war” on governments and corporations, and said their top priority would be to steal and leak any classified government information, including but not limited to email and documentation. They attacked an Arizona police agency as a way of making a statement against anti-immigrant laws in that state, and published the names and home addresses of several officers.

Later they sought to earn some street cred by stealing “secret” documents from NATO, only to learn after the fact that the documents they released had not only been released before, but weren’t even really all that secret to begin with. It wasn’t long before alleged members of the group started showing up in handcuffs, which seemed not to faze them. The prospect of body bags and real-world violence during a confrontation with Mexican drug cartels, however, did.

Yet for all the headlines they garnered and the headaches they caused, the LulzSec/Anonymous/AntiSec gang wasn’t anywhere near the scariest thing to appear on the computer security landscape in 2011. To my mind, one of the top three scariest things was the disclosure of Operation Shady RAT, which Intel-unit McAfee said appeared to be the biggest large-scale compromise ever, affecting 72 organizations and governments around the world, including the U.S., Taiwan, Vietnam, South Korea, Canada and India — some of them dating back as far as 2006. McAfee said the attacker was a “state actor,” though it declined to name it. The candidate highest on the short list was, naturally, China.

The second truly scary incident was the attack carried out against RSA Security, a unit of the IT company EMC, the maker of the popular SecurID tokens that so many people have on their keychains and use to create an added layer of security that goes beyond the password. Months later, the U.S. defense contractor Lockheed Martin was attacked with duplicate SecurID tokens.

Finally, the Stuxnet Trojan (used by parties officially unknown, but probably Israel with a little help from the U.S.) continued to fascinate and confound security researchers in 2011. Having caused nuclear centrifuges in Iran to explode in an attempt to set back that country’s nuclear weapons research program, Stuxnet was found to have a sibling called Duqu. Unlike Stuxnet, which messed with industrial control computers and made them do things they wouldn’t normally do, Duqu’s mission was much simpler: Steal everything in sight.

And after that, it was discovered by researchers at Kaspersky labs that Stuxnet and Duqu are part of an even bigger family, with at least three more siblings still undetected by researchers, and that all five were created by the same people and with the same tools. Chances are we’ll see at least a few of those final three in 2012, particularly as tension with Iran heats up.

So while there was much to consider scary happening on the Internet in 2011, I’m grateful for being wrong on one key prediction: That we didn’t see a significant computer attack used to physically harm innocent people on a large scale. That’s one prediction I hope to miss for years to come.

This is the port that gives Macs profoundly fast connections to external hard drives that support the technology, and which also drives high-end displays on a single shared connection.

Now there’s word out of Taiwan’s Digitimes that Intel is going to bring the technology to other PC makers as soon as April of 2012. Sony, Asustek and Acer are said to be among the first in line for Thunderbolt. Missing from that list, however, are such major PC makers as Hewlett-Packard and Dell.

Apple, which has a long history of being early to adopt input-output technologies — it was the first to put USB ports on its PCs with the first iMac in 1998, and it invented FireWire — has had Thunderbolt exclusively on the Mac since it debuted new MacBooks in February. Intel reached out to Apple in 2009 in order to popularize the technology, which was originally known as Light Peak.

The transaction, which allows Sony to purchase LCD panels from Samsung at market prices without bearing the responsibility and costs of operating the facility that manufactures them, is expected to save the company some $640 million a year.

That’s significant savings for Sony, which last month warned that it would lose money, for the fourth year in a row, in its current financial year. But is it enough to set the company’s once-core business on the road to recovery? Remember, Sony’s TV division has lost money for seven straight years.

“It’s a step forward for Sony,” Nomura analyst Shiro Mikoshiba told Bloomberg. “Canceling out the venture enables Sony to become more flexible in procuring panels. Still, Sony continues to face falling prices and heavy fixed costs.”

Though it won’t arrive in the U.S. until Feb. 22, Sony’s newest handheld gaming device has stumbled out of the starting gate in Japan. The device sold 321,400 units in two days, but on Monday, Sony issued an apologetic statement after complaints emerged that the Vita was freezing and crashing.

But, for what it’s worth, there is a common thread between the two products: Sony’s new gadget was developed in part by one of the original creators of one of the most successful consumer-electronics devices of all time.

As the PlayStation blog reports today, the look and feel of the Vita was designed by Takashi Sogabe of the Sony Corporate Design Centre. It also notes that Sogabe, who has been at the company for 27 years, worked on the original Walkman.

While it probably isn’t entirely accurate that he worked on the original Walkman (since it came before Sogabe’s time), a bio on Sony’s Web site gives him credit for a “See-through Walkman,” and a “Beautiful Walkman.” He also worked on the PlayStation 3 and Sony’s e-reader.

The PlayStation blog will be posting a full interview with Sogabe later, but today’s post did offer some details.

Sogabe said the design team came up with various versions of the Vita, including one with a sliding back, and another that snapped shut like a clamshell.

He also said that they tried to incorporate two touchpads in place of the dual analog sticks, but that they weren’t accurate enough.

(Takashi Sogabe image courtesy of Sony)

(Walkman images courtesy of Wikipedia)

That’s in spite of Zynga, the rising star of social gaming, garnering much of the media’s attention last week, when it raised $1 billion in its initial public offering.

In November, Nintendo’s portable handheld, the 3DS, had its biggest single month of sales, representing an increase of more than 215 percent over the previous month; it has now sold nearly 2.5 million units since launch.

The Wii had its biggest Black Friday ever, with more than 520,000 units sold — six years into the console’s life.

The Japanese company also set a software record. Super Mario 3D Land, which was released Nov. 11, is now the fastest-selling portable Super Mario title in U.S. history, and Mario Kart 7 was the fastest-selling Mario Kart game.

In an interview with AllThingsD at the company’s U.S. headquarters in Redmond, Wash., Nintendo’s North America President Reggie Fils-Aime explained what’s driving strong holiday U.S. sales this year, and what’s on the horizon for the maker of games and hardware.

He also left the door wide open for Nintendo to experiment with new business models, including free-to-play or subscription, although he questioned the long-term prospects of social gaming companies, like Zynga.

Here’s an abbreviated version of our chat:

AllThingsD: It seems videogame sales this holiday kicked off with a bang.

Reggie Fils-Aime: We had a strong Black Friday for both our Wii and 3DS business.

The time frame from mid-November until the end of the year is critically important to us, and is driven by a number of software and hardware initiatives.

For the 3DS, we launched Super Mario 3D Land in November. It had the fastest sell-through for a handheld Super Mario game. That gave us a lot of momentum going into Black Friday, and right after Black Friday, we launched Mario Kart 7, which ended up being the fastest-selling Mario Kart, as well.

Together, that propelled our 3DS business. We’ve sold through more 3DS’s in eight months time than the original DS sold in the first 12 months. Our handheld business has a lot of momentum right now.

But it took awhile to get there?

What’s interesting is that we had a very good launch. The first week sales [of the 3DS] were fantastic. The initial rush of sales was really strong. But what happened after that in the spring and early summer time frame is — that’s when sales slowed down a little bit.

It was driven by not having great first-party software, and we were late in bringing some of the online functionality to the 3DS, and that’s when sales began to fall.

That’s when we took drastic action to reduce the price, right after the launch of The Legend of Zelda: Ocarina of Time 3D. Our bet was to regain momentum and make the holidays strong. We are having a strong holiday.

A lot of retailers were concerned that we would see a Black Friday rush and then things would trail off after that. Is that what you are seeing?

We haven’t seen that. We have seen things accelerate as we’ve gotten closer to Christmas Day itself. We are anticipating this week, across all of our businesses, will be the strongest sell-through week of the year.

What about the Wii?

The Wii had a strong Black Friday, too, driven by strong retailer promotions. This was our sixth Black Friday, and it was the best Black Friday week we’ve seen to date, so we’ve had very positive results.

It’s driven by software, and in this case, a new Legend of Zelda: Skyward Sword. It’s a game that’s been recognized by the gaming press to be one of the best games of the year.

The momentum continues for our Wii business, and sales are right on objective.

How does it continue to break records six years in? That’s baffling.

It’s because, even today, the Wii provides a family experience that you can’t get anywhere else. I love the stories I hear of grandparents playing with parents and with the grandkids.

Those are experiences that you can’t get elsewhere. That’s why we continue to break records. Plus, this holiday is the first holiday that it’s available for $149 or below. It’s reaching a whole new demographic that’s wanted to buy in, but couldn’t do it before.

And for consumers, there’s over 1,000 games that have been published, so the breadth of the gaming experience is extremely wide. The Wii continues to be the fastest-selling home console ever in the history of the gaming industry in the U.S.

Does that change as we get closer to the next-generation console, the Wii U?

The market is going to continue to differentiate based on the types of experiences that consumers want. As an example, if I’m the head of a household of a family of four, and my disposable income is $50,000 to $60,000, I’m going to continue to look at the Wii because of the software, and it’s a great entertainment device. For consumers who want to have the latest gadgets and have a higher disposable income, that’s for the Wii U.

We haven’t announced pricing or availability or any other details, but given the current pricing of the Wii, it’s not going to be there.

We’ve been very clear, the market is going to decide how long these products will coexist side by side. Our goal is to launch the Wii U and drive it into the marketplace, but it will speak to a different consumer than the one that is buying the Wii today during the holidays.

What about the other consoles? Both Sony’s PlayStation and Microsoft’s Xbox are about the same age.

All of the competitors haven’t talked about what’s next for them, and given the investments they’ve made in their technologies, for them to move to new systems — at least on the same timing we want to move at — would probably be pretty challenging. But in terms of what they are going to do, when they are going to do it, you’ll have to talk to them.

What do you think of Microsoft’s move to make the Xbox the entertainment hub of the living room?

In the end, the consumer decides what equipment to have in the living room. The interesting thing we’ve found — because of the family entertainment we provide, and the inclusion of Netflix — the vast majority of Wiis are set up on the main TV in the living room.

Are you considering adding more content like live TV or movies?

If the consumer wants live TV, they can get it through the options they have today. We always ask the question, ‘What can we do that’s new and provocative?’ And we will continue to think of new and provocative experiences for the user.

I’ve spent the past week covering Zynga’s IPO. What’s your perspective on social gaming?

What’s the share price? It will be interesting when it breaks below $9 … I have a couple of thoughts on social gaming.

Consumers want to be entertained in a variety of ways, like watching TV or reading a book. The thing about entertainment — as consumers have a range of experiences — their desires for what’s new continues to be pushed out. So delivering the same experience all the time … consumers will move on.

So when I look at gaming experiences on social networks, there’s a variety of entertainment value. Some are strong, some are not. But in the end, how will they evolve? Doing the same thing over and over again is no longer fine.

Is that really fair when you have Mario Kart 7 coming out?

We continue to evolve the experience by providing a level of customization that’s new, or different ways to race with a sail and a propeller that allows you to drift under water. What we’ve done with Mario Kart 7, for some of the tracks, you can actually win when you go off the track, which never existed before. We’ve continued to make it more fun and add more enjoyment for the consumer.

You don’t see that innovation happening in social gaming?

The companies that will win in the social gaming space need to show an ability to provide the new and different experiences, and a way to monetize it. In the end, these are businesses that need to make money.

Is that your comment on the free-to-play model? Will you experiment with free-to-play?

I have two comments on that.

First, we make games for Nintendo devices, and that is a competitive advantage for us. You can only play Mario on a Nintendo device, so from that standpoint, I wouldn’t expect to see our franchises on other platforms, and I would argue Facebook is a platform.

My second point, on whether we will experiment with other forms of monetization?

Certainly.

How that comes about, or which ones we do first, that’s all experimentation that’s going on right now in our various studios.

They’re less happy than they used to be. But they don’t seem to be going anywhere.

That’s the cautiously optimistic conclusion of a new survey Citigroup commissioned over the past few months. It finds existing subscribers still fairly pleased with the service Reed Hastings is offering: 57 percent say they’re either “extremely satisfied” or “very satisfied.” But Hastings’ good will has certainly eroded a bit: In May, a similar survey found 50 percent of his customers in the “extremely satisfied” category. That number is now down to 18 percent.

As Citi analyst Mark Mahaney points out, the survey is a bit skewed, since Netflix subscribers who were most disappointed with the service’s changes — a price hike, an ill-fated attempt to spin off its DVD business into a separate unit, and the loss of programming deal that gives the company access to Sony and Disney movies — have already bailed.

But a different survey question suggests one reason customers are sticking around with Netflix: They don’t see many other options.

While Amazon has been building up its catalog of streaming video, only 9 percent of Netflix customers said they’ve watched movies or TV shows there. And while 15 percent said they’ve used Hulu, that number is down from 19 percent in May. Apple’s iTunes comes in at 8 percent. (Perhaps the reason only 27 percent of Netflix subscribers say they use Netflix is because they’re distinguishing between apps and the site. But that seems like a fairly precise distinction for a large number of people to make, so who knows.)

The very big picture is that Mahaney still assumes Netflix will keep growing. He figures its DVD-only subscribers will drop by 800,000, to 9.9 million, over the next year. But he thinks streaming subscribers will increase 9.9 million, to 30.9 million, and that the company will add a few million more as it expands in Latin America and the U.K. He also thinks Netflix will become profitable again by the end of 2012.

But none of that is going to help anyone who bought Netflix stock earlier this year, when shares had climbed as high as $300. Mahaney has lowered his price target for NFLX, and is now hoping it climbs back to $80.

When Nintendo first announced a big 3DS price drop this past summer due to sluggish sales, it promised early buyers of the device — Nintendo 3DS “Ambassadors” — that they would be able to download new NES Virtual Console games at no charge before the games became available in the Nintendo eShop to the general public.

Starting today, even more free games are available to 3DS buyers. This time, they’re Game Boy Advance titles — remember Game Boy? — including The Legend of Zelda: The Minish Cap, Wario Land 4, Mario vs. Donkey Kong, Mario Kart: Super Circuit and a handful of others, numbering 10 in total.

The games are available to customers in the U.S., Europe and Japan a day ahead of the highly anticipated Sony Vita handheld launch in Japan.

The Game Boy Advance is a handheld gaming console introduced by Nintendo in 2001, more than a decade after the original Game Boy was launched and a few years ahead of the popular Nintendo DS’s debut. The device had a 32-bit processor and was described at the time as Nintendo’s fastest-selling game system ever. The last new title for the Game Boy Advance was brought to market in 2008.

For the 3DS, Nintendo can’t give away games fast enough. The freebie games are part of an overall push to sell more of the handheld unit, which had struggled to gain traction since its launch in March of this year. Nintendo said the 3DS got a much-needed boost, driving hardware sales up 49 percent, when Nintendo’s Super Mario 3D Land game hit the market in late November as part of a bundle.

Also, to give credit where it’s due, 3DS is kind of a big deal in Australia, according to the Sydney Morning Herald!