CES 2009

LAS VEGAS--With my time at the Consumer Electronics Show having drawn to a close, here's a roundup of my observations from the show:

Sign that the economy used to be good
My Sin City accommodations included dual 42-inch flat screen TVs, plus another small LCD screen in the bathroom.

Sign that the economy has tanked
The only reason that spot was for rent (and could be had for as little as $159 a night) is that it was a condo that didn't sell.

Sign No. 2 that the economy has tanked
There were $5 blackjack tables at the Palms in the evening. (Last year it was hard to find a table with less than a $20 minimum.)

Weirdest mix of Silicon Valley and Las Vegas I spotted this year
The giant eBay slot machine I saw as I wound my way through the Venetian casino.

Less swag, less sushi
Two other visible indicators that things aren't so hot: Both swag and sushi were far less present at the show, notes colleague Rafe Needleman.

Ballmer talks to CNET
It took a bit to get the video up (there's a lot of video being shot and streamed over at the CNET stage). But it's worth a look to hear Steve Ballmer talking about the economy and Windows 7.

Other random CES observances? Feel free to send them my way...

Microsoft CEO Steve Ballmer delivers the CES keynote speech Wednesday.

(Credit: Corinne Schulze/CNET Networks)

LAS VEGAS--Microsoft CEO Steve Ballmer arrived at the Consumer Electronics Show with his usual optimism, but he also brings a clear sense of reality: The tech industry is in for some rough times.

"The fact of the matter is, this is not a downturn, this is a bit of a reset. Those are quite different and we're trying to really suss through what we think that means for us," Ballmer said in an interview here with CNET News Thursday, a day after delivering the keynote address at the conference.

Ballmer talked about what the "reset" will mean for Microsoft, as well as lessons learned from Vista and Microsoft's move to put Office on the Web. When it comes to what worries him most, most days it's still Google, although he concedes he has had to spend more time recently on economic issues and making sure Microsoft makes the adjustments it needs to. He wouldn't go into detail on what (and who) Microsoft plans to cut, but it is clear that some changes are coming.

The following is an edited version of that interview:

CNET News: Obviously, Microsoft didn't necessarily get everything it might have hoped for in terms of the critical response for Vista. What are you guys planning to do differently with Windows 7?

Ballmer: Well, I think we made some choices in Vista to improve security at the kind of expense, if you will, of compatibility. With Windows 7, we're able to build compatibly off of Vista and really sort of just tune, if you will, the user interface, the performance, and at the end of the day, it'll be what the users think of the product that we're building, and we'll start getting beta feedback this week.

Q: How hard are you pushing the team to get Windows 7 out this year?

Ballmer: I'm not pushing the team hard, the team is pushing itself. They set some goals and objectives and of course we'll ship the product when it's--as I said last night--both right and ready and when we know when that is, we'll share that.

This story was co-written by Marguerite Reardon.

LAS VEGAS--Microsoft is hoping two new distribution deals will give its Live Search a much-needed boost.

The company is announcing on Wednesday a global deal with Dell that will see Live Search be the default search engine and a Windows Live toolbar bundled on the bulk of consumer and small-business PCs sold by the computer maker over the next three years. That deal is in addition to a five-year deal with Verizon Wireless, which leaked out earlier on Wednesday.

It's the latest effort for Microsoft, which has been trying--and struggling--for the past four years to build a search business that can offer a substantive rival to Google. But the latest market share numbers indicate that Microsoft is falling even further behind. Searches at Windows Live Search fell 16.7 percent year over year, giving Microsoft 9.1 percent market share in the U.S. in November, according to Nielsen Online figures released earlier this week. Google's searches rose 21.7 percent, for 64.1 percent market share, and Yahoo's searches dropped 1.4 percent from November 2007, for 16.1 percent share.

In an interview, Microsoft Senior Vice President Yusuf Mehdi said that the search product has gotten good enough that the time is right to start promoting it more heavily. Microsoft has already struck deals with HP and Lenovo to increase the distribution for Windows Live and Microsoft's search engine.

"We've gotten to a point where the product is now in a good enough state that we want to start to get it out more formally in front of more customers," Mehdi said. "These two partnerships are very significant for us, because it...gives an opportunity to put our search offering out before a broader audience now in a pretty mainstream way, and I think you should think about it as the first step of us slowly bringing up the dial on how we start to promote our product.

Microsoft has also made other moves, including building its own ad-serving engine, spending billions to acquire Aquantive, and trying promotions such as its Live Search Cashback and other efforts designed to give consumers a financial incentive to use its search engine.

The Dell deal will kick off next month, while the Verizon deal will begin in the first half of this year and includes both mobile search and other mobile advertising services. "It's a big win for us and by far the largest search and mobile display relationship we've entered into with any mobile operator," Mehdi said.

Mehdi acknowledged that Microsoft needs more than distribution deals to truly compete with Google. "These distribution partnerships are part of our strategy," he said. "We know we have to do a lot of other things, including improve the product, including being able to market direct with consumers, and build loyalty and brand around our offering."

Mehdi wouldn't say how much market share Microsoft expected to gain with the Dell deal or talk about Microsoft's other plans, including a rumored rebranding effort. He did say the Dell deal is flexible enough to accommodate a name change.

Microsoft had supposedly been in a bidding war against Google for the Verizon deal, according to earlier reports from The Wall Street Journal. Verizon Wireless and Microsoft have declined to discuss financial details of the deal. But a source close to the company said the five-year arrangement is worth a minimum of $650 million with Microsoft paying Verizon on a per handset basis.

This is believed to be the largest mobile search and advertising deal to date. The Journal reported last year that Google's deal to offer search on Sprint Nextel phones was about half what Microsoft was willing to pay for the Verizon deal. Details about Yahoo's deal with AT&T announced last year weren't disclosed either, but it's believed that Yahoo promised AT&T about $400 million in guaranteed revenue to become its default search provider.

As for the details of the Microsoft/Verizon deal, starting in the first half of this year, Microsoft Live Search will be preloaded on new Verizon Wireless phones and smartphones to provide all local and Internet searches. Microsoft will also power search for Verizon Wireless' VCast content, allowing subscribers to search for ringtones, full music tracks, videos, and other VCast entertainment content and news.

Depending on which device they use, Verizon subscribers will be able to search for content either by voice command or by typing their queries. And the search tool will also provide location-based results, meaning subscribers will be able to search for restaurants, movie theaters, and other businesses nearby.

Also as part of the deal, Microsoft will manage all search and display advertising for Verizon's mobile Web services.

Today mobile search is still in its early days. Only about 9 percent of cell phone subscribers search the Net from their cell phones, according to ComScore M:Metrics. But usage is growing, especially as more consumers upgrade to smartphones like Apple's iPhone or Research In Motion's BlackBerry devices.

Despite its small size today, the big search companies see the mobile market, with more than 3 billion subscribers worldwide, as a huge opportunity. Winning Verizon Wireless, which is currently the second largest cell phone carrier in the U.S., is a big deal for Microsoft. Yahoo is powering search for AT&T, the largest cell phone U.S. carrier. And Google has a deal with Sprint Nextel, the third largest U.S. operator.

But it's still unclear how important these carrier deals will be. Microsoft and Yahoo have previously struck similar multi-year portal deals on the PC side with Verizon Communications and AT&T, but Google still dominates the overall search market. And just as they can on the PC, users still have the option to use any search engine they wish from their cell phone browsers.

So far, Google has managed to continue its search dominance on mobile devices with 60 percent of mobile subscribers who search the Internet from their phones using its search engine. About 36 percent of subscribers use Yahoo and 10 percent use Microsoft, according to ComScore.

Google may also have another advantage in mobile, as carriers start rolling out more devices that use its Android operating system. Android is an open-source mobile operating system that tightly integrates several Google services into phones, including Google's search products.

So far, T-Mobile is the only carrier selling a Google phone, the G1. But other Android phones are expected to hit the market later this year. HTC, the maker of the G1 is planning another Android device, as is Sony Ericsson. Motorola has also said it plans to use Android as one of its main operating systems in future phones. And LG and Samsung, members of Google's Open Handset Alliance, are also expected to release Android phones.

We're coming to you from CES 2009 in Las Vegas, Nevada and it's all about Netbooks today. I'm sure we'll get more buzz about 3D TVs and more later this week. Also, Ellie doesn't like it when we call out the title of the show, but that makes it easier for Jason to find them for his special edition! (And please excuse a bit of distortion in today's episode. Sorry! -Jason)
Listen now: Download today's podcast

EPISODE 886

Yawn— MacWorld (woohoo iTunes DRM free!!)
http://news.cnet.com/8301-13579_3-10133230-37.html
http://arstechnica.com/news.ars/post/20090106-apple-mwsf-announcements-new-macbook-pro.html

Apple activates iTunes downloads over 3G, with a caveat
http://news.cnet.com/8301-17938_105-10133349-1.html
http://arstechnica.com/journals/apple.ars/2009/01/06/apple-labels-both-win-with-drm-free-itunes-tiered-pricing

Free Nine Inch Nails albums top 2008 Amazon MP3 sales charts
http://arstechnica.com/news.ars/post/20090106-free-nine-inch-nails-albums-top-2008-amazon-mp3-sales-charts.html

AMD’s Neo processor debuts in HP notebook
http://arstechnica.com/news.ars/post/20090106-amds-neo-processor-debuts-in-hp-notebook-whoah.html

Asus says Netbooks can be upscale with the S121
http://ces.cnet.com/8301-19167_1-10131423-100.html
http://www.engadget.com/2009/01/06/asus-s121-with-worlds-first-512gb-ssd/

…and new Eee PC with swiveling screen
http://ces.cnet.com/8301-19167_1-10131412-100.html

MSI XSlim MacBook Air-like thing
http://blog.wired.com/gadgets/2009/01/msis-super-thin.html

LG’s Watch Phone: production please?
http://www.engadget.com/2009/01/07/lg-shows-off-gd910-watch-phone-production-later-this-year/

LaCie breaks off quad-interface 2big Quadra RAID drive
http://www.engadget.com/2009/01/06/lacie-breaks-off-quad-interface-2big-quadra-raid-drive/

Google’s Android runs on a Netbook — Google OS in the offing?
http://blogs.techrepublic.com.com/opensource/?p=316
http://arstechnica.com/news.ars/post/20090105-android-netbook-port-leaves-some-pondering-google-os.html

Phishing is a minimum-wage job
http://news.slashdot.org/article.pl?sid=09%2F01%2F06%2F2213256&from=rss

SlingPlayer Mobile for iPhone announced
http://www.cnet.com/8301-19515_1-10131943-234.html

Pay-as-you-go airline charges by the minute
http://blog.wired.com/cars/2009/01/new-airline-pla.html

What piracy? Movie biz sees record box office in 2008http://arstechnica.com/news.ars/post/20090105-what-piracy-movie-biz-sees-record-box-office-in-2008.html

E-MAIL

Hey jamoto,
As one of your UK listeners, I’d just like to clarify the ‘liveness’
of the BBC iPlayer. It actually broadcasts tv shows on the internet an
hour after they are first broadcasted on tv. Just thought that you
should know.

LTS,
DanieInHell

**********

Hey Jamoto++,

Web Developer Matthew Horoszowski (say Horoshofski) here and just
wanted to point out this article,
http://www.telegraph.co.uk/scienceandtechnology/technology/technologynews/4126913/Mind-game-where-players-use-brainwaves-to-float-ball-through-hoops-unveiled.html
,
which talks about a new game that uses your brainwaves to control a
small ball and move it through hoops and things.

Guess that one prediction for this year down!

**********

Hey JaMoTo + 1:

On the dial tone issue from Monday’s show: when someone moves out of a
house or and apartment, the phone company *should* leave dial tone on
the line, but with no account information. This gives access to 911 and
611 (to be able to call the company to fully activate the line). When I
worked for BellSouth, that service was called a QuickServe.

However, QuickServes can be disabled if the line is needed at another
residence or business and no other cable pairs are immediately
available, hence the reason that Tom’s line didn’t have dial tone.
FWIW, no dial tone, no 911.

Barry Stubbs

**********

Stop it!!! Stop with the announcing of the title in the actual show!!

Stop it, stop it, stop it, stop it, stop it, STOP!!!

<3 Ellie

In less than one month, the Consumer Electronics Show will get underway in Las Vegas against the backdrop of an economic recession and a major political transition. But while the macro economy may impact attendance, what about the usual cornucopia of tech toys on display? CNET News' Erica Ogg offers a preview of the 2009 CES.