CES: Microsoft CEO Highlights Winning BetsCES: Microsoft CEO Highlights Winning Bets

Top 10 Microsoft Stories Of 2010

Microsoft CEO Steve Ballmer arrived on stage at the 2011 Consumer Electronics Show (CES) in Las Vegas, Nevada, on Wednesday evening to declare that his company's bets have paid off.

Recapping Microsoft's successful product launches last year -- Windows 7, Windows Phone 7, Office 2010, Kinect, the introduction of Internet Explorer 9 and of Office 365 -- and citing growth in its cloud services -- Bing and Windows Azure -- Ballmer thanked the company's one billion customers and attributed the company's success to "big technology bets that we’ve made."

Las Vegas is all about big bets and many in the tech industry have doubted the cards in Microsoft's hand, particularly in the mobile arena. Ballmer came to change that perception by lauding the strength of Microsoft's technological foundation and casting the company as a leader in social entertainment, mobile software, and personal computers.

"A decade ago we took a bold step forward toward transforming entertainment," Ballmer said. "We started with gaming with the launch of Xbox. … The next step in that journey was the launch of Xbox Live which transformed gaming experiences with the cloud. That put Xbox front and center in the social entertainment revolution."

Ballmer then cited Microsoft's successful launch of its Kinect gaming control system two months ago. "There's nothing else like it in the world," he said.

Microsoft plans to extend its innovative motion control system to include facial recognition, through a forthcoming system called Avatar Kinect. It will allow the company's 30 million Xbox Live members to share their facial expressions with their online avatars.

Technology of this sort is having impact beyond gaming. Mouse-driven desktop interfaces have their limits. Other modes of human-computer interaction, including touch, voice, and motion-recognition, are changing the way computing is done by offering alternatives to the desktop tradition. Microsoft, for example, is promising to allow Xbox Live Gold subscribers to use their Kinect system to control Netflix this spring. And much was made of voice control on the Xbox.

In this respect at least, Microsoft's claim to technological leadership is well-founded. However, most of the company's revenue comes not from new technology but from incremental improvements to Office and Windows.

Ballmer's pitch for Windows Phone 7 was a bit more of a struggle. The numbers cited by Ballmer and mobile communication business unit director Aaron Woodman -- the availability of 5,500 apps and sales of more than 1.5 million Windows Phone 7 units in the first six weeks of availability -- aren't exactly compelling. Apple says it has over 300,000 apps and Google says it's activating over 300,000 Android phones daily.

Nonetheless, Microsoft is working to make Windows Phone 7, currently available from AT&T, available to Sprint and Verizon customers at some point during the first half of the year.

Ballmer promised Windows 7 updates in the months ahead, including the addition of copy and paste. Better late than never, but it's still late: Apple made a similar announcement about the iPhone almost two year ago.

Despite its underdog status in the mobile arena, Microsoft clearly intends to keep betting: Prior to Ballmer's keynote, Steven Sinofsky, president of the Windows and Windows Live Division, announced that the next version of Windows, presumably to be designated Windows 8, will support System on a Chip (SoC) architectures, specifically ARM-based systems from NVIDIA, Qualcomm and Texas Instruments. This is about extending Windows beyond the PC, making it more useful for mobile hardware like tablets.

It's not clear when the next version of Windows will arrive, but Microsoft had better get moving. There are only twelve months left in 2011, the year of the tablet, and Apple's iPad has a big head start.