During his first-ever Consumer Electronics Show (CES) 2009 keynote address last night in Las Vegas, Microsoft CEO Steve Ballmer announced the pending public availability of a feature-complete Windows 7, the final version of Windows Live Essentials, and crucial business agreements for Live Search, among other milestones. The speech, which spanned almost 90 minutes, also involved numerous other Microsoft product groups, and provided a sort of "State of Windows" briefing for attendees.

"At Microsoft, we're continuing to drive innovation to really make a difference in people's lives," Ballmer said, launching into a discussion about the economic recession and the effects it will have on Microsoft and the tech industry. "It feels like we've entered a period of reduced expectations, a time when we may be tempted to temper our optimism and scale back our ambition. But ... I believe that companies and industries that continue to pursue innovation during tough economic times will achieve a significant competitive advantage positioning themselves for growth far more effectively than companies that hold back."

To that end, Microsoft is upping its research and development expenditures in the coming year to over $8 billion. And it will expand into what the company sees as "the three screens that people use every day": The PC, the phone, and the TV. These three screens formed the basis for much of Ballmer's talk, with Microsoft's focus on Windows 7 and Windows Live for the PC, Windows Mobile (and, unspoken for now, Zune) for the phone, and Xbox, Media Center, and Media Room (IPTV) on the TV.

The bulk of Ballmer's keynote centered on Windows 7, the eagerly awaited follow-up to Windows Vista, which has sold well but been dogged by bad publicity. Windows 7 is "the best version of Windows ever," according to Ballmer (of course), and a combination of "simplicity, reliability and speed." Ballmer announced that the feature-complete Windows 7 Beta is immediately available to MSDN and TechNet subscribers. And starting Friday, the first 3 million people who sign up for the public beta at Microsoft.com will be able to download the Beta version for free.

"Windows 7 should boot more quickly, have longer battery life, and fewer alerts," Ballmer said. "Windows 7 makes entertainment better with a new Media Center experience, and the ability to easily access your media across PCs and play it on other devices. And Windows 7 enables cool new user interface things like touch."

Microsoft also announced that the Beta version of Windows Server 2008 R2, which is being developed concurrently with Windows 7, is now available for public download.

On the Windows Live front, Microsoft issued a final version of its Windows Live Essentials application suite, which Ballmer described as "an essential companion to Windows and your PC." The final version is identical to the release candidate version that shipped a few weeks ago. Microsoft also announced a Windows Live tie-in with Facebook, a deal with Dell to ship both Essentials and Live Search on all of their consumer and small business PCs, and a deal with Verizon to offer Live Search on all of that company's mobile phone offerings. That last deal is particularly important for Microsoft as Google had been vying to get their dominant search service on the phones as well.

Microsoft president Robbie Bach, who heads the company's Zune, Xbox, and other devices and entertainment products, came on stage and only briefly discussed Microsoft's Ford Sync, Zune, Media Center, and Media Room efforts. He then touted last year's Xbox 360 sales and talked up future entries in the Halo game franchise. But Bach declined to discuss the upcoming Zune Mobile platform and barely mentioned Windows Mobile at all. In fact, the only Windows Mobile discussion in the Bach segment centered around an application for the Netflix DVD rental service.

Ballmer ended his keynote with a largely pointless look at some Microsoft Research projects, one of which was a vaporware flexible display. "This could become the future Surface," Microsoft Research's Janet Galore said. "It's a possibility." Sure it is, Janet.

All in all, Ballmer's keynote was at least as entertaining as the last several Microsoft CES presentations, all of which were given by Bill Gates. OK, that's not a very high bar. But compared to the boring and pointless Macworld keynote address earlier in the week, Microsoft's presentation was both more interesting and relevant to the world at large. And that's perhaps the most amazing thing that came out of CES last night: For once, Microsoft was more entertaining than Apple.

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