Microsoft CEO takes CES stage amid tablet crush

One year ago, Microsoft Corp. CEO Steve Ballmer took the stage at the tech industry's premier gadget show to showcase a Windows tablet computer to an audience that had yet to meet the iPad.

This year, with tablets marking the hottest items at the show and Windows lagging far behind Apple Inc.'s popular iPad, the stakes are higher. Slipping is Microsoft's status as a technology oracle, which has landed it a standing appointment delivering the trade show's night-before keynote each year.

On Wednesday, Ballmer focused the first hour of this year's talk not on tablets but on its Xbox video game system and on Windows Phone 7, Microsoft's updated smart phone software.

In fact, tablets seemed to be almost an afterthought. Ballmer left it to an employee to demonstrate a Windows 7 tablet from Asus that responds to touch and a special pen, and that comes with a wireless keyboard.

Ballmer said Microsoft sold 8 million of its new Kinect sensor, an add-on for Xbox 360 that lets people control games and other features by moving around and speaking. That's 3 million more than expected.

The CEO himself demonstrated new Kinect avatar software that will more closely mimic game players' behaviors and facial expressions after an update this spring.

Microsoft also said that this spring, people who have Kinect will be able to wave their hands or speak aloud to browse and play video from NetFlix and Hulu.

Beyond tablets, there are other major themes emerging at this year's International Consumer Electronics Show in Las Vegas - areas where Microsoft has also failed to take the lead despite spending years developing products.

Among them: smart phones and Internet television, two areas where Google Inc. and Apple, which aren't even attending the trade show, are getting most of the attention.

Gadget makers including AsusTek Computer Inc. and Vizio Inc., the TV company, have already unveiled new tablet computers this week, and more were expected from the likes of Motorola Inc., Dell Inc. and Toshiba Corp. Many of the new tablets will use Android, Google Inc.'s operating software that was initially designed for smart phones.

So far, none of the tablets running Microsoft's Windows 7 have made waves with mainstream consumers.

This year's trade show, which runs today to Sunday, will also see TV makers adjusting strategies for selling 3-D televisions after a year of tepid sales. LG Electronics Inc. said Wednesday it will be among the TV makers switching from sets that require expensive battery-powered glasses to ones that work with cheaper glasses like those used in movie theaters.

For Microsoft, a software maker, Internet-connected televisions or set-top boxes from competitors such as Google and Apple are more of a concern. Microsoft has had an Internet TV system for many years, but its customers have been telecommunications companies that repackaged the service to their own subscribers - not consumers directly. Google and Apple, however, have gone straight to consumers with Internet TV offerings under their own brands, while Microsoft has stuck with the Xbox as its main entertainment play.

This was Ballmer's third year leading the gadget show address. He took the mantle from Microsoft co-founder and chairman, Bill Gates, who had used the stage for the preceding 10 years to talk about his vision for the future of technology.

While Windows 7 remains a question mark for its prospects as a tablet system, analysts are already talking about Windows 8, expected to launch in 2012.

Microsoft showed a very early version of an unnamed Windows update Wednesday. And the company confirmed that a version will run on cell phone chips, providing an alternative for the first time in many years to the chips based on Intel Corp. technology.

Microsoft's smart phone system may also get some time on the stage. The software maker, which is based in Redmond, Wash., launched its answer to the iPhone and Android toward the end of 2010.

Windows Phone 7, as the system is called, has a lot of catching up to do in terms of both the number of users and the number of "apps" available for the phones. On Wednesday, handset makers Motorola Mobility Inc., HTC Corp. and Samsung Electronics Co. showed off several upcoming smart phones that will run on AT&T Inc.'s higher-speed "HSPA+" network. All the phones will run a version of Android, not Windows.