Gates Unveils Microsoft's Next Digital Decade

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Bill Gates is calling this period in the company's history the dawn of a new digital decade, and his annual, keynote address at CES was chock full of news, both technologically and financially.

His speech was dotted with a number of new partnerships: a key new relationship with NBC/Unversal (CNBC's parent company and a subsidiary ofGeneral Electric) in connection with the 2008 Summer Olympics in Beijing, spotlighting Microsoft's "Silverlight" media software.

At the same time, Microsoft is also announcing a digital content download relationship for a bunch of Walt Disney content, not the least of which will be the red hot Hannah Montana franchise. Programs from the ABC network, including "Lost, "Desperate Housewives," The Disney Channel, and many others are also a part of this deal.

Microsoft's Bill Gates being interviewed at CES 2008.
(Photo by: Jeff Sandquist)
Microsoft's Bill Gates being interviewed at CES 2008.

Microsoft has signed a similar deal with MGM studios, making the James Bond and Rocky series available for download on the Xbox.

Speaking of Xbox, the president of the entertainment and devices division, Robbie Bach, will announce tonight that 2007 was the best year ever for game consoles, particularly Xbox. The device, its accessories and software generated a staggering $3.5 billion in total revenue, $1 billion ahead of Nintendo's Wii and $2 billion ahead of Sony's Playstation.

Xbox Live, the company's online service is also surging, despite recent problems of widespread outages. Membership has exceeded 10 million members, a plateau six months ahead of schedule.

Zune, Microsoft's mobile media player, also launched the interactive Zune Social recently. In just six weeks, Microsoft will report tonight that 1.5 million users have signed up for the service, far ahead of the company's internal projections.

Gates highlighted the convergence of many technologies, that flat screens are everywhere and that mobile devices will be ever smarter. Microsoft, he said is better positioned to take advantage of all these key trends. But it's the growth of these key sectors for the company, and the new content partnerships that will move these shares and grab the most headlines.

Gates will also announce that Microsoft has now sold 100 million Vista licenses, making it by far the fastest operating software adoption ever. It's a figure also well ahead of Microsoft's own internal forecasts for Vista sales.

The speech is just beginning with literally thousands of media on hand. Stay with us on Monday when Robbie Bach will join me in a first on CNBC interview at the top of "Squawk on the Street."

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