Xbox 360 sells 50 million, Kinect ships 8 million, XBL hits 30 million

LAS VEGAS--As is the case each year, one of the centerpieces of the Consumer Electronics Show is the keynote address from the CEO of Microsoft. Since 2009, that job has fallen to Steve Ballmer, the software giant's current chief executive, who will be on hand Wednesday night to deliver a presentation outlining Microsoft's latest wares.

Last year, a significant section of that presentation was dedicated to gaming, with emcee duties during that period handled by former senior vice president of the Entertainment and Devices Division, Robbie Bach. (Bach has since left the company.) Last year, the biggest gaming news to emerge from the event was that Kinect--then called Project Natal--would ship during the 2010 holiday season. The company also took the wraps of Game Room for Xbox Live, which would let gamers revisit classic games in a virtual arcade, complete with original cabinet art.

This year, it appears one of Microsoft's big CES game reveals may have been blown, courtesy of some apparently leaked photos of the presentation's rehearsal. One such photo showed a slide for something called "Avatar Kinect," possibly a new service involving Xbox Live avatars controlled by the motion-sensing system. Microsoft declined to comment on the slide, which appears authentic.

Other possible CES reveals include the next wave of Kinect games, Windows Phone 7 games, and the latest sales statistics for the Xbox 360, which was the top-selling console in the US during several of the last months of 2010.

[6:38] Following the obligatory too-hip music montage blaring over the PA system comes the obligatory introduction of Gary Shapiro, president and CEO of the Consumer Electronics Association.

[6:41] Surprise, he says, "This is my favorite week of the year."

[6:41] There are 2,700 companies displaying this year.

[6:45] After discussing the show's various aspects and keynote addresses, Shapiro introduces Steve Ballmer, who joined Microsoft as its first business manager in 1980.

[6:46] Ballmer lived down the hall from Bill Gates when they were both at Harvard.

[6:47] Cue Microsoft credits--and booming music--as Ballmer takes the stage.

[6:47] He begins with a rundown of 2010.

[6:48] The year saw the launch of Internet Explorer 9, Windows Phone 7, and Kinect.

[6:49] Tonight, we want to show "a little bit of what's coming next."

[6:49] He begins with the Xbox, which launched 10 years ago this year.

[6:50] Next was Xbox Live in 2002, a service that provided online gaming and eventually included music, video, and social networking, such as Facebook.

[6:51] Next up is Kinect, introduced last year, which was the biggest year in Xbox 360 history.

[6:52] No figures are offered, but a slick video montage shows people enjoying the Kinect and watching ESPN on Xbox Live.

[6:52] Cue celebrities promoting the game.

[6:53] Ballmer back, promising a sneak peek of what's in store for the Kinect later this year.

[6:55] First up is a demo of the Zune video marketplace, which will suggest movies via voice commands.

[6:55] He browses videos with his hands and then selects a movie by saying "Xbox. Play this."

[6:56] The movie--the latest Twilight film--picks up where he left off.

[6:57] He then navigates to the music hub of Zune with voice commands and skims through a playlist.

[6:58] The demonstrator then announces that this spring, Netflix movies and Hulu Plus will be able to be controlled sans controller with the Kinect.

[7:00] Now the subject moves to ESPN, and a clip is shown of the demonstrator trash-talking with his sister via Xbox Live while watching the Rose Bowl on Xbox Live.

[7:01] The demonstrator leaves, and the screen is suddenly filled with the Xbox Live avatar of Ballmer, who is now giving the presentation.

[7:02] He then shows how the Kinect will soon be able to recognize facial features, including smiles and even eyebrow raises.

[7:02] This will be done via a new feature called…Avatar Kinect.

[7:03] The service will let players interact as their avatars in 15 different settings and hang out.

[7:03] Due out this spring and free for all Xbox Live Gold members.

[7:04] Xbox Live now totals 30 million members, a new milestone.

[7:04] One person joins Xbox Live every two seconds.

[7:05] Over 50 million Xbox 360s sold worldwide.

[7:05] Kinect beat its 5 million forecast handily, selling 8 million units in just 60 days.

[UPDATE] Microsoft has since confirmed that 8 million Kinects were sold to retailers (sell-in) not to consumers (sell-through).

[7:06] Ballmer is now moving the subject to Windows Phone 7, which is integrated with Xbox Live.

[7:07] "It's Xbox Live on the go."

[7:07] A new game, Fable Coin Golf, will join other game spin-offs on Windows phones.

[7:07] Money made in the game will go right to a player's character in Fable III.

[7:08] Cue montage of Windows Phone 7 games, like Fruit Ninja, and how Game Room Arcade titles will work on the device. Sims 3, Avatar Gadgets, and many other games also shown off.

[7:10] In developing the Windows Phone 7, Microsoft asked how it could simplify tasks and make applications easier to use.

[7:10] Nine phones were launched across 60 mobile operators in 30 countries.

[7:12] In recent weeks, the device received a Kindle application.

[7:12] More than 20,000 developers have registered with Microsoft to develop apps.

[7:13] Nine out of 10 Windows Phone 7 customers would recommend a Windows Phone 7 phone to others.

[7:15] To put the device through its paces, Microsoft senior marketing manager Liz Sloan takes the stage, displaying levels of Cammie Dunaway-like pep.

[7:15] The Windows Phone 7 has a dedicated camera button, which works even when the camera is locked.

[7:15] Once taken, photos can be uploaded to Facebook with the touch of a button.

[7:18] She then shows off voice search, which she uses to find the nearest In & Out burger in seconds.

[7:18] She then shows "live tiles," dynamic tiles that show off such things as time of day and Facebook updates.

[7:18] The phone also uses Bing, Microsoft's new search engine.

[7:21] More than 5,500 new apps in the marketplace, including Amazon.com.

[7:22] She then shows off the Xbox Live section, which will feature such games as Need for Speed and Fruit Ninja, which Sloan plays….badly.

[7:23] Ballmer returns to talk about Windows PC.

[7:23] Windows 7 PCs now represent over 20 percent of all PCs connected to the Internet.

[7:24] 20 million people are using the Internet Explorer beta, and over 500 million people use Windows Live.

[7:26] Mike Angiulo, corporate vice president, takes the stage.

[7:27] He shows off a new line of PCs, including ones featuring Intel's new chips that have both GPUs and CPUs on them.

[7:28] The next PC uses the new AMD chipset, Fusion, in an HP DM1 laptop.

[7:30] Next up is a dual-touch laptop from ACER, which features two touch screens, the bottom one of which can become a keyboard when 10 fingers are pressed on the lower screen.

[7:33] Next up is a Microsoft Surface light table, which is hooked up to a dual-processors.

[7:37] The screen not only can recognize touch, but it can also read text placed on it.

[7:37] Ballmer is back.

[7:37] Now he is talking about the next version of Windows, which will support system on a chip from Intel, AMD, and ARM.

[7:39] Angiulo, who speaks incredibly fast, returns to talk about platform support for system on a chip.

[7:42] He shows some more far-off projects. One version uses a future version of Windows on an Intel Atom system on a chip. The large experimental motherboard can be shrunk down to something the width of a pack of cigarettes.

[7:42] He also shows Qualcomm and Texas Instruments systems based on ARM chipsets, which run Windows natively. To prove his point, he runs Word on the latter system and prints out something on a standard USB printer.

[7:44] He then shows off the Iron Man trailer running on an Nvidia-ARM-based chipset in high definition. The video doesn't stutter at all, running very smoothly.

[7:54] Ballmer returns to the stage to beat a hasty treaty. And that's it from Microsoft!