LAS VEGAS -- Bill Gates has seen the future, and it's digital. You'll be forgiven if you've had a similar prognostication -- or heard one.In a lengthy conversation with late night television host Conan O'Brien that served as the kick-off for the International CES trade show here, Gates expounded on the emerging digital future -- and Microsoft's ( MSFT) central role in that vision. But while he announced several new partnerships and products based on Microsoft's Windows operating system, Gates offered no big surprises. "We predicted that this would be the decade that the digital lifestyle would be taken for granted," Gates said. "This show lets us come and see what the progress is." "I think it's been pretty phenomenal," he added. "It's going faster than even we expected." Much of the presentation was devoted to Microsoft's Media Center and Windows Media software. Using such programs, consumers can or soon will be able to download movies and television shows to their PCs or set top boxes and easily transfer them to other PCs on their network, to LCD televisions or to portable devices such as handheld computers. Additionally, consumers will be able to use their wireless phone to instruct their personal video recorders to record a television program remotely or browse photos on their home network. "2005 -- this is the decade that it's coming together," Gates said. "This is an amazing opportunity for us to mess around and have fun." Of course, Microsoft faces a challenge trying to realize this vision. Although the company is the dominant player on the desktop PC, Microsoft has found trouble extending that dominance to other devices. The company has basically fought tooth and nail to reach parity with the Palm OS on handheld computers. And now that such personal digital assistants are largely being replaced by smartphones and other wireless handhelds, the company faces entrenched competitors, particularly the Symbian operating system, which is backed by Nokia ( NOK).
Likewise, many cable operators and other companies have been reluctant to partner with Microsoft for fear of giving it the same control over their networks that it has over the PC industry. Still, Gates noted that a number of companies are embracing its vision. SBC Communications ( SBC), for instance, is incorporating Microsoft's technology in its rollout of IPTV, its new data and communications service that will offer high definition television to SBC telephone customers. Another noteworthy new partner is TiVo ( TIVO). Under a deal announced by Gates, users of TiVo's latest players will be able to transfer shows they've recorded to any PC on their network. "This will show up on devices that you can take with you," he said. "We're making portable media come into the mainstream." Central to this vision, though, is the use of so-called digital-rights management software, which protects copyright holders by limiting what users can do with digital content. Consumers have generally been reluctant to adopt such protected content, and consumer groups have challenged that such protections often violate consumers' fair-use rights. Notably absent from Gates' presentation was much mention of the company's next generation Xbox game console. While he said that the next Xbox will offer games meant for high-definition televisions, he didn't say when the new Xbox would be released, how much it would cost or any other details. Some analysts had speculated that Gates might use his appearance at CES to debut the new console.