That was the message Microsoft delivered Tuesday, hours after formally announcing that it was buying the internet telephony pioneer for a staggering $8.5 billion — staggering because it’s more than the Redmond giant has ever paid for anything, and because Skype doesn’t exactly print money.

But in an early morning press conference, as Google strutted for its Android developers in another part of town, an increasingly mobile-minded Microsoft made the Skype acquisition seem like the most logical thing ever. And, it said, it has no intention of messing with the brand which has become a consumer favorite and synonymous with the disruption of the telephone business.

We know what we’re doing, Microsoft CEO Steve Ballmer said on a noticeably small stage he shared with Skype CEO Tony Bates to explain why the merger of their two companies makes sense.

“We’re irrepressible,” said Ballmer. “This Skype acquisition is completely consistent with our ambitious, forward-looking, irrepressible nature. Microsoft and Skype will bring together hundreds of millions — or as Tony said, billions! — of consumers and empower them to connect in new and interesting ways. It’s core to our mission, and it’s core to our technology direction.”

Microsoft’s acquisition of the Luxembourg-based Skype will close this year, assuming it passes regulatory muster, the executives said.

Skype is the poster child for voice-over-internet-protocol — or VOIP — services, which allow customers to place telephone calls using the internet’s infrastructure instead of the phone company’s. Most people use Skype to place free calls to other Skype users. After its founding in 2003, eBay paid $3.1 billion for Skype in 2005, then sold the majority of it to an investment group in 2009 for $1.9 billion.

Skype is popular, especially among people who use its services to place international calls cheaply or for free. But it hasn’t exactly captialized on the social networking revolution and has faced carrier resistance in its efforts to create fully featured mobile clients. Meanwhile, Google acquired a competing service, Grand Central, for a reported $50 million in 2007, eventually launching it as Google Voice in 2009. Google recently struck a deal with Sprint, enabling Sprint customers to integrate their phone numbers with Google Voice.

Microsoft’s purchase of Skype is arguably as much about defense as offense. It denies Skype to, say, Facebook and Google, both of which were reported just days ago to be interested in in partnering with, and possibly buying it. As carriers de-emphasize what are becoming commoditized calling minutes in favor of pricier data bytes, Microsoft’s strategic alliance with Nokia also gives it huge reach in the distribution of Skype-integrated handsets.

However, that seems like a rich price tag for a company that only generated $860 million in revenue in the most recent year and $264 million in operating profit — yet no net profit at all. Microsoft is paying about $50 for each of Skype’s 170 million users, or about $1,000 for each of its 8 million paying customers.

Ballmer seemed optimistic about Skype’s ability to integrate into Microsoft’s current businesses, such as Windows Live Messenger and the corporate-oriented Lync. He said he expected to apply “classic” business metrics to evaluate the success or failure of the new Skype division.

Charles Golvin, an analyst with Forrester Research, said that while Skype probably wouldn’t generate much revenue for Microsoft directly, it could be a valuable addition to other internet-based services, in which e-mail, voice and video are all becoming part of the same stream of data.

“Part of the bet that Microsoft is placing is that this technology helps them do a better job of delivering to that river of communications,” Golvin said.

For instance, Golvin suggested, the company could integrate Skype into Xbox and Xbox Live, which — with the addition of Kinect — have become more voice-centric products in the last year.

Both executives sought to reassure Skype customers who might be worried about Microsoft’s ability and willingness to support the multiplatform software, which is available for Windows, OS X and Linux PCs; Android, BlackBerry and iOS smartphones; and even televisions.

“We’re one of the few companies that has actually has a track record of doing this,” said Ballmer, pointing to the company’s Mac support over the years. “Fundamental to the value proposition of communications is being able to reach everybody, whether they happen to be on your devices or not.”

“The commitment from Microsoft to support multiplatform clients is absolutely critical,” Bates said, indicating that Skype got assurances from Microsoft that it would continue to support all of Skype’s platforms.

Finally, Ballmer indicated no intention to take on the carriers in an aggressive attempt to bring VOIP services into Windows Phone 7. Indeed, Ballmer said, “the partnership and collaboration that we have today [with carriers] is fundamental.”

Bates pointed to Skype’s track record of striking deals with carriers to offer Skype services as a differentiating feature.

In other words, expect Microsoft to try to sell Skype to carriers, not use it to bash them about the head with VOIP services that reduce their billable minutes.

Story originally published on Wired.com: Ballmer to Skype Fans: You Can Trust Us | Epicenter | Wired.com.

“In an all-white environment, the white version of the iPad 2 will have a better chance of hiding from predators.”

via Gallery: Apple’s Jobs Unveils Upgraded, More Colorful iPad 2 | Gadget Lab | Wired.com.

SAN FRANCISCO — Sony is blurring the line between portable game consoles and larger consoles currently trapped inside TV cabinets.

With a high-resolution screen, a powerful processor and graphics card, and massive amounts of memory, the upcoming Sony NGP will be closer to the capabilities of a PC or PS3 than it is to Sony’s current portable, the PSP, according to a Sony executive speaking at the Game Developers Conference Wednesday.

The NGP’s 5-inch screen is substantially bigger than the PSP’s 4.3-inch screen, and has 4 times the resolution, or 960×544 pixels. That’s about midway between the PSP and the PS3, according to David Coombes, a platform designer for Sony Computer Entertainment America.

“People get choked up, they get tears in their eyes when they see that screen,” said Coombes.

Inside, there’s a 4-core, 32-bit ARM9 processor.

There’s also a PowerVR SGX543MP4+ GPU inside, which should deliver impressive video rendering. This is also a multi-core chip with the ability to dynamically load balance between its cores.

The NGP also includes some dedicated chips for media playback.

“It’s very similar to a modern PC” in terms of its processing power, said Coombes. And while Coombes wouldn’t state specifics about memory, he said it’s closer to the PS3 than to the PSP in terms of available RAM.

Games can be loaded via game cards with a capacity of either 2GB or 4GB, giving developers lots of room to create huge, complicated software and datasets.

A big NGP game will take about 4GB, compared to around 9GB for a PS3 game. By contrast, Coombes said, a typical iPhone game occupies only 10MB. The point is that an NGP game can include a lot more data, making it potentially far more complicated, with richer graphics, more detailed and larger worlds, and so forth.

For big games, developers will be able to reuse a lot of assets from existing Xbox or PS3 games, Coombes said, although naturally models, shaders and textures will have to be simplified for the NGP.

A demo of Uncharted for the NGP showed a rich, complicated environment and a variety of ways to control the little man on the screen, from using the analog controls and buttons to swiping on-screen to make him climb from handhold to handhold or to throw enemies into the abysses below. (See below for video.)

Other features included in the NGP include a second analog stick, plus a 3-axis accelerometer and a 3-axis gyroscope, for 6 axes of motion sensitivity.

There’s a touchscreen on the front and also on the back, which you can manipulate with the fingers you’re using to hold the NGP. Both touchscreens support multitouch, and can register how hard you are pressing them as well. A quick demo with a developer from BigBig studios showed the rear touchscreen being used to deform a cartoon landscape to roll a ball around, while touching the front touchscreen changed the camera angle and position.

Like nearly every other portable device hitting the market this year, the NGP has a camera on the front and one on the back. The cameras are meant for game play, said Coombes.

“We need high frame rate, so we can get sharper images” for fast-moving game play. So the cameras are optimized for high-speed, low-light video, not for taking pictures.

Wi-Fi-only and 3G/Wi-Fi models will be available, although the final configurations are not yet settled. The 3G models will also include GPS support, although the Wi-Fi models can also do positioning via Skyhook Wireless, which uses data about Wi-Fi hotspot locations to get relatively accurate location information.

Originally published on Wired: Sony Touts Console-Like Power of Upcoming NGP | GameLife | Wired.com.

U.S. iPhone users frustrated with AT&T’s frequently dropped calls, limited geographic coverage, delayed delivery of iPhone tethering, elimination of unlimited data plans, poor customer service, and alleged cooperation with warrantless wiretapping by the NSA may soon have an alternative.*

Verizon yesterday sent out invitations to a Tuesday, Jan. 11 press event in New York.

Many believe that this event will be the debut of the iPhone on Verizon.

Full story:

Reports: Verizon iPhone Likely Coming Jan. 11 | Gadget Lab | Wired.com.

LAS VEGAS — Microsoft unveiled its vision of the future, where everything from phones and tablets to big-ass tables runs Windows.

Microsoft CEO Steve Ballmer delivered a somnolescent and nearly news-free keynote presentation on the eve of the Consumer Electronics Show here, laying out his company’s strategy for home entertainment, mobile content, PCs and tablets.

“Whatever device you use, now or in the future, Windows will be there,” Ballmer said.

Full story: ‘Windows Will Be Everywhere,’ Ballmer Promises | Gadget Lab | Wired.com.

LAS VEGAS — Intel is preparing a new line of processing, graphics and wireless technologies aimed in part at bringing video to consumers — and preventing them from copying it.

The content protection scheme, known as “Intel Insider,” is a feature built into its second-generation Core processors, which Intel unveiled Wednesday at the Consumer Electronics Show here.

The feature will prevent playback or copying of HD video content through insecure channels within a PC. For example, video can be delivered to a secured HDMI port, but not over an unsecured PCI bus. It also provides a mechanism for online content providers to recognize Intel Insider computers, and deliver copy-protected content only to them.

“It’s like an armored truck, if you will,” Intel marketing director Josh Newman told Wired.com. “It’s a way of securing the content once it’s inside the PC.”

Full story: Intel Beefs Up CPUs With Graphics Power — and Content Protection | Gadget Lab | Wired.com.

Apple is planning an announcement Tuesday morning regarding iTunes.

Count us among the cautiously optimistic. ITunes is one of the most successful software packages in history, installed on more than 125 million computers worldwide and used for about 70 percent of all digital-music purchases. (Exact numbers are hard to find, but it’s huge.) Its reach would seem to make iTunes a terrific platform for transforming the media landscape — if it weren’t such a bloated, hard-to-use, overloaded mess.

We don’t know what Apple will be announcing Tuesday morning (7 a.m. Pacific/10 a.m. Eastern). The Wall Street Journal, citing “people familiar with the situation,” says it will include the long-awaited coming of the Beatles catalog to the iTunes Music Store. It could be the addition of a streaming-media subscription service to iTunes. It might be an overhaul of Apple’s abortive attempt at a social network, Ping. Or it could be something completely different.

Regardless of what Apple does announce, here’s what we’re hoping for.

Full story: What We Wish Apple Would Do With iTunes | Gadget Lab | Wired.com.

Painting of Basho meeting two travelers, from the Library of Congress. http://www.loc.gov/pictures/item/2008660384/

Savvy journalists have adapted (or have been forced to adapt) to a new, more collaborative publishing model online. Here are my notes from a keynote presentation I delivered on this topic at the OCLC Collaboration Forum, held at the Smithsonian, on September 21.

Matsuo Kinsaku was born around 1644 in Japan. As a young man, he became a master of a form of collaborative poetry.

It was a kind of party game: A poetry master would kick things off with a pithy short verse, and then other people in the group would collaborate (and compete) to come up with subsequent verses, each one subtly or cleverly linked to the one before.

He was very successful and popular, but around 1682 Matsuo became dissatisfied and started traveling around Japan.

As he went, he wrote compressed travelogues interspersed with very short poems. They were kind of like those kick-off verses, except they stood on their own.

Over time, his new approach gained popularity, power and subtlety. He took on the poetic name of Basho, and his artform is known today as haiku.

Since the 17th century it’s been primarily an individual activity, like other poetry.

But in my work over the past decade publishing an online journal of haiku, tinywords, I’ve seen haiku come full circle. On tinywords.com, haiku are published as poems, like on any other literary journal. But like many websites, we also allow readers to post comments, or as I like to call them, “responses.”

In some cases, those responses are simply comments like “great work” or “beautiful imagery.” But sometimes, people post their own haiku in response. On occasion, that’s sparked a whole chain of linked verses, each one responding to the one that came before.

Sound familiar?

A similar thing, I think, is happening in journalism.

In the 18th century, American journalism emerged as a boisterous supplement to the mail. Postmasters were the earliest publishers, because their jobs put them at the center of the community, where they’d hear rumors and news from locals as well as far-off lands.

Publishing a newspaper was both a way of taking advantage of the postal infrastructure, and a way of drawing together a community’s conversation.

Not surprisingly, early newspapers were argumentative, opinionated, political, and sometimes even slanderous. They reflected the political and social conversations of their time and place.

Skipping forward to the 20th century, as newspapers became big businesses, journalists adopted a loftier, more impartial, “objective” tone.

That’s partly because they wanted to reach bigger, more diverse audiences. But it also had to do with the need to not piss off advertisers.

Whatever the result, the act of creating journalism became a more isolated activity, and less conversational.

With the advent of the internet, journalism is again become more conversational, more collaborative.

I think that’s a wonderful and exciting thing, much like the return of spontaneous, collaborative linked verses on tinywords.

But it does have its moments of terror, anxiety and frustration.

I’d like to give you some stories, by way of example, to show how that process is happening, and some of the things we’ve learned about what works and what doesn’t.

Now, what’s going on in journalism is also reflected in other fields of communication. Music, television, movies are all undergoing similar upheavals. Even product design and product marketing are being forced into more collaborative models.

Case in point: Old Spice guy. This phenomenally successful advertising campaign drew all kinds of attention this summer when, for several days, the advertising company behind it recorded a series of spots in response to public comments on Twitter, Facebook, Reddit and more.

Not everything I’m going to talk about will be transferable to those fields, or to the fields of libraries, museums and archives. But I hope there will be some lessons in what follows — or failing that, at least some comfort. You’re not alone.

Before I get to some illustrative stories, let me just outline that we’re seeing increased collaboration on several levels:

• with other journalists (content swaps, for instance)
• with sources (who increasingly have their own voices)
• with readers (who are also empowered via comments, Twitter, etc)

Social Media

Social media is increasingly important to journalists as a research and promotion tool.

Example: We increasingly rely on Twitter to find, research and promote stories
Why? Because that’s where our readers are — and in many cases our sources.
(The growing importance of interlinked networks of humans and content)

Sometimes stories are driven by the use of social media: e.g. How I used Twitter to live-blog the opera

Comments

We’re publishing — and revising — in public. That means we’re subject to far greater scrutiny than journalists used to be accustomed to. (Or, as some would say, what people are saying about us hasn’t changed — it’s just that we can hear it now)

Case study: Why the Japanese hate the iPhone
We made some sourcing errors, and when we corrected these, we were insufficiently transparent about that. Combined with the article’s provocative headline, that meant we came in for even more grief (viewed as a coverup). In the end we had to publish an explanation that was as long as the original article.
LESSON: Transparency matters.

Gawker Media’s comment system: infinitely promotable commenters
Carefully tiered system allows anyone to comment, but only “starred” commenters are readily visible. Star system lets editors delegate moderation to the most trusted commenters. Each commenter also has an identity. Result: comments are often highly entertaining — as much if not more so than original article.
Example: See this hugely entertaining comment thread
LESSON: Moderation/community mgmt tools can make a huge difference.

I’ve seen this on tinywords, too: It took many iterations to find a comment system that encouraged the right kind of interaction, not just long-winded debates.

With the right comment system and a smart, engaged community, journalists are not the last word — they are conversation starters.

Wired’s global iPhone network study
Recruited more than 2,600 respondents to help measure, and map, AT&T’s 3G network coverage.
LESSON: You can accomplish a lot with free tools (eg ZeeMaps). Cleaning up data is going to take a lot of work. Have a backup plan in case of server overload (eg static image).

Crowdsourcing Stories

Assignment Zero
Joint effort between Wired.com and NewAssignment.net, led by Jeff Howe and Jay Rosen. Aimed to report and produce a series of stories about crowdsourcing.
Result: mostly failure. Volunteers came on board before there was anyone to manage them. Articles were long and poorly edited.
LESSONS: Engage editors/managers early. Crowdsourcing works best with well-bounded, clearly-explained problem sets. Professionals can help clean up / bring amateur work to a higher level.

Haiti Rewired
Launched in February 2010. Community built around technology & technical needs in rebuilding Haiti. Goal: to be a long-term, persistent community hub.
Success story: Translated construction manual
LESSONS: Defined problem set, good tools make a big difference. Also, hire a good, committed community manager.

Reinventing Publications

Some publications are going beyond just crowdsourcing individual stories, and are basing their entire existence on a more collaborative foundation. Two recent examples:

Everywhere — crowdsourced travel magazine edited by Todd Lappin
Crowdsourced enthusiast magazine. Readers are natural contributors because they’re enthusiastic about the subject.
LESSONS: “structuring the test so people can pass.” Lappin’s term for making the assignment achievable (eg short, 400-600 word articles, not long-form narrative). And rigorous editing.

Longshot Magazine (formerly known as 48 HR magazine)

Wrap-up

Roger Ebert has pointed out that there are more movie critics than ever now, and in many ways, they’re better than ever.

Clive Thompson’s argument that it’s a golden age of writing:
Cites Andrea Lunsford, a professor of rhetoric at Stanford. Studied 14,000 student writing samples from 2001 – 2006.
“I think we’re in the midst of a literacy revolution the likes of which we haven’t seen since Greek civilization,” she says.

I find that really encouraging. It is true that the economic environment for journalism can be very threatening, and there are many unanswered questions about who will fill the vital role of newsgathering if no one can make a good business out of it.

But the fact that there is so much conversation embedded within journalism now has to be a good thing. And the rise of more and better writing, by far more people, is contributing to that.

People who used to just read the news are now reading it more critically, responding to it, posting comments or writing commentaries and news stories of their own.

Collaboration may be forced upon us. But it is creating a virtuous circle of interactivity that will serve both journalists and the public better in the long run.

SAN FRANCISCO — In a sign that its television “hobby” has turned into serious business, Apple announced an aggressively-priced new set-top box that takes aim at the heart of the cable TV and DVD rental industries.

The new Apple TV, which will go on sale at the end of September for $100, is a puny box just 1/4 the size of the previous model. It has an HDMI port, a power supply built in it, an optical audio port, an Ethernet jack, and built-in Wi-Fi.

“It’s silent, cool and tiny,” said Apple CEO Steve Jobs, showing off the diminutive metallic box.

Despite rumors, the product was not re-branded as “iTV.” Jobs did not state whether it was running a version of iOS, although the Apple TV’s new interface includes some very iOS-like touches, such as icons that jiggle when you are rearranging them in your Netflix queue.

Apple joins an increasingly crowded and risky scrum of companies trying to reinvent television for the internet age. Netflix and Hulu both have been offering streaming video playback of movies and TV shows, with some success, for over a year. Google is working on a set-top box that would blur the line between TV and internet fare, YouTube is said to be planning mainstream film rentals and Amazon is rumored to be planning its own Netflix-like video streaming service. But the real threat are the cable companies and TV networks, which have a lock on the shows that people want to watch — and so far, there’s been little incentive for them to open up their tightly-controlled ecosystems to internet upstarts.

Apple’s play is for convenience, but it’s not the cross-platform strategy needed for dominance, wrote Andrew Eisner, a director at online electronics retailer Retrevo.com.

“A TV OS vacuum exists at the moment and unfortunately for consumers, TV manufacturers appear to be filling it with their own proprietary offerings,” Eisner wrote recently. “Apple needs to gain control of the third screen or TV screen, after smartphone screens and computer screens, and the TV industry needs to move away from closed environments and let their connected TVs work with all the apps and streaming content that consumers are finding so appealing.”

The company will also be providing a feature within iOS 4.2 that customers can use to share videos wirelessly from their iPhones, iPod Touches or iPads. Called “AirPlay,” the feature will let customers display a video from their mobile device, on an Apple TV-connected TV screen, with a single tap. IOS 4.2 won’t be available until November.

AirPlay “puts iPhones and iPads in the driver’s seat and makes the TV just an output device for the Apple ecosystem,” said Forrester analyst James McQuivey. “Expect Apple to gradually push more and more in that direction.”

“But,” McQuivey added, “as of this moment in 2010, Apple has not yet made a significant play for control of the TV.”

In an implicit acknowledgment of Apple TV’s poor sales to date, Jobs again referred to the product as the company’s “hobby.” He showed the new Apple TV at a press conference here on Wednesday.

But Jobs was careful to cast the company’s previous product as a learning experience, and indicated his intention of throwing more of the company’s weight behind the upgraded Apple TV.

Apple TV customers will be able to rent first-run HD movies for $5, at the same time as they’re released on DVD. That’s a substantial improvement from the past, when there were significant time lags before movies were available through iTunes.

Customers will also be able to rent HD TV shows from ABC and Fox for $1, a discount from the previous price of $3. The shows will run without commercial interruption.

Netflix customers will also be able to stream video from Netflix via Apple TV, and can also use the device to browse and view YouTube videos and content uploaded to Apple’s MobileMe service.

Customers can also stream content from their computers, including photos, videos and music, with no syncing required.

Apple is already accepting pre-orders for the new Apple TV on its site.

For full coverage of Apple’s press conference, see Wired.com’s live blog of the event.

Photos: Jon Snyder/Wired.com
Originally published on Wired, September 1, 2010.

How OK Go’s Amazing Rube Goldberg Machine Was Built | Gadget Lab | Wired.com.

Siri’s visual interface displays a transcription of what you say, then hands the data off to an appropriate web service or search engine.

Siri, an artificial intelligence-based voice-recognition startup, launched an iPhone app incorporating its technology on Friday. With the app running, you can address requests to your phone verbally, asking it things like, “Will it rain today?” or “Where is a good place for pizza nearby?” and “I’d like a table for two at Il Fornaio tomorrow night at 7.” The Siri app parses the sound, interprets the request, and hands it off to an appropriate web service, such as OpenTable, Yelp, CitySearch, and so on. It displays the results onscreen as it goes, giving you a chance to correct or adjust your request via onscreen taps.

It’s the most sophisticated voice recognition to appear on a smartphone yet. While Google’s Nexus One offers voice transcription capabilities — so you can speak to enter text into a web form, for instance — the Nexus One doesn’t actually interpret what you’re saying.

The voice recognition and interpretation abilities built into Siri have their origins in artificial intelligence research at SRI, a legendary Silicon Valley R&D lab that was also the birthplace of the mouse and of the graphical user interface. Spun out of SRI in 2007, Siri garnered a lot of attention for its ambitious plans to develop a virtual personal assistant. Actually bringing the product to market has taken quite a bit longer than expected.

In a demo shown to Wired.com, Siri responded quickly to spoken requests, answering questions about restaurants, directions and the weather with relative ease. It’s well-integrated with about 20 different web information services, and Siri representatives say that their application programming interface will allow many others to connect in the future.

From our initial testing on an iPhone 3GS, the app was zippy and smooth. Siri understood broad requests like “Find Chinese food nearby” and more specific ones like “Find Nearest Chase bank.” Impressive, and much more efficient than searching for businesses in the Yelp iPhone app.

The Siri app is free, and the company says it has no plans to charge end-users; the goal is to make money from referring customers to services via affiliate fees.

Siri is available for download in the iTunes App Store. It requires an iPhone 3GS, because it relies on that phone’s faster processing power, but Siri representatives say a version compatible with the older iPhone 3G is in the works.

Siri Launches Voice-Powered iPhone ‘Assistant’ | Gadget Lab | Wired.com.

Now Sprint has one-upped Verizon with the Overdrive, which takes a 4G signal and turns it into a Wi-Fi hot spot.

On Sprint’s WiMax-based 4G network, the Overdrive, which is about the size of a drink coaster, will reliably deliver 3 to 4 Mbps of download bandwidth, Sprint executives say, with peak speeds as fast as 10 Mbps. Upload speeds will be slower, but could peak as fast as 4.5 Mbps.

Because the 4G network isn’t available everywhere yet, the Overdrive also works with Sprint’s widely deployed 3G network, which delivers 600 Kbps down and 100 Kbps up, Sprint says.

The router then takes that internet connection and blasts it out as an 802.11b/g signal, with an “extended range” of up to 150 feet. It will support up to five simultaneous device connections.

In demos, the Overdrive router was used to deliver streaming Netflix movies, Skype conversations, and webcam views simultaneously.

Overdrive also contains a GPS receiver (accessible to network applications via a programming interface Sprint provides) and a MicroSD card slot, which can be used to store up to 16 GB of data for local access.

Overdrive will sell for $100 with a 2-year contract at $60 per month for unlimited 4G data downloads, and up to 5 GB of monthly data on the 3G network.

Sprint Leapfrogs Verizon With Fast 4G Hot-Spot Device | Gadget Lab | Wired.com.

It was the second year as CES headliner for Microsoft CEO Steve Ballmer, who took over the keynote spot from his former boss, Bill Gates, last year.

After a power outage briefly plunged the stage into darkness and delayed the start of the keynote by over 20 minutes, Ballmer ambled onstage in his trademark V-neck sweater. He touted the company’s successes with its recent Windows 7 launch, outlined its plans for enhancing home entertainment and tying together the “three screens” through which people experience media today (television, PC and mobile devices). He provided more details on upcoming enhancements to the successful XBox 360 platform and XBox Live online service.

“From the largest screen on the wall to the smallest screens in people’s pockets, we are delivering the entertainment people want,” Ballmer said.

It’s been a good year for Microsoft. Ballmer reprised the launch of the company’s search engine, Bing, which he said has attracted 11 million users since its launch. There are now more than 39 million Xboxes in use around the world, and XBox game sales have totaled $20 billion since the platform’s launch, Ballmer said.

And, Ballmer said, “the Zune HD device is getting rave reviews.” That is true — Wired’s review of the Zune HD is quite positive — but the device still has a single-digit share of the portable media player market.

But the centerpiece of Microsoft’s business in 2009 was Windows 7. After taking well-deserved criticism for its launch of Windows Vista in 2007, Microsoft bounced back with many much-needed enhancements in Windows 7. For the most part, the critical and consumer response to Windows 7 has been excellent. The operating system is more streamlined, easier to use and prettier to look at than Vista, and it seems to have injected new life into what seemed like a staggering personal-computing dinosaur. Ballmer called Windows 7 the fastest-selling computer operating system in history, and touted figures showing that it drove a 50 percent increase in PC sales the week it was launched, and a 50 percent year-over-year increase in overall sales of Windows PCs.

The Mac, it seems, has not killed off Windows.

But with rumors of an upcoming Apple tablet looming large in many observers’ minds this week, Microsoft — along with many other computer industry companies — can’t afford to ignore the persistent irritation that is Apple.

Accordingly, one of the gadgets shown by Microsoft tonight was a tablet-like device, produced by HP and running Windows 7. Not the “Courier” tablet that Microsoft previewed in 2009, this is more akin to old-school Tablet PCs, albeit with no keyboard and running the now-multitouch-enhanced Windows 7.

HP said the device would be available later this year, but provided no details on pricing, availability or specifications.

Another not-so-subtle message from Ballmer’s keynote: Apple’s iPhone hasn’t killed off Windows Mobile, either. Microsoft partners shipped 80 different Windows Mobile-based phones last year, Ballmer said, and indicated that more would be coming in 2010. As an example, he showed off the HTC HD-2, a new WinMo-powered phone that will be available on T-Mobile. The HD-2 will feature a 4.3-inch LCD screen and will be about as thick as two poker chips.

Microsoft pushed the message that it’s an entertainment company, too, on two fronts. One was the announcement of Media Room 2.0, software for viewing multimedia content (videos, audio and photos) on your computer. The new version lets you view content on any screen in your home, from a phone to a PC to a TV, Ballmer said.

And the second entertainment front is the XBox 360. Microsoft entertainment and devices division president Robbie Bach took the stage to show off the company’s achievements here. Fresh from the wildly successful pre-holiday launch of Modern Warfare 2 (one of the highest-grossing videogames in history, according to Microsoft), the company promised more games exclusive to the XBox platform to come in 2010, including Tom Clancy Splinter Cell, Crackdown 2, Mass Effect 2, Fable 3 and Alan Wake.

An update to the Halo series, Halo Reach, will enter beta testing later this year. In an unusual twist, anyone who bought the previous title, Halo ODST, will be invited to take part in the Halo Reach beta test, which Microsoft anticipates will include as many as 2 million testers.

Microsoft also showed off a new XBox Live feature called GameRoom, featuring more than 1,000 old arcade games from the likes of Atari and Intellivision, like Tempest and Pac-Man. Users will be able to create “virtual game rooms” that their XBox Live avatars (and those of their friends) can walk around in. Virtual quarters, one assumes, will be available without limit.

Finally, Bach showed off the company’s gestural interface for XBox 360, Project Natal, which first appeared at E3 last year. Natal will be available in time for the holiday season in 2010, Bach promised, as a camera plus software that will work on all existing XBox 360 systems. Developers are currently working on Natal-enhanced games and applications that will be available when the system launches.

Microsoft Touts Home Entertainment at CES Keynote | Gadget Lab | Wired.com.