CES: What’s Next for Microsoft?

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Microsoft CEO Steve Ballmer delivered a keynote address on the eve of the Consumer Electronics Show in Las Vegas, focusing on his company’s Xbox 360 entertainment initiatives, the new Windows Phone 7 mobile platform, and what we can expect to see from future versions of Windows PCs.

Xbox 360 Kinect

Microsoft’s “Kinect” motion controller for the Xbox 360 game console launched before the holidays and has so far appeared to be a big win for the company. Ballmer noted that 8 million of the $150 Kinect peripherals were sold in the first 60 days of its release.

Microsoft has been consistently highlighting its “You are the controller” slogan to differentiate the Kinect system (which uses cameras and microphones to translate body movements into game commands) from competitors such as the Nintendo Wii and Sony’s PlayStation Move peripheral—both require the use of handheld controllers.

Aside from Kinect’s uses when gaming, Microsoft has expanded its functionality into the Xbox 360’s entertainment features, specifically the console’s built-in Zune audio and video playback capabilities.

Instead of using an Xbox 360 controller or optional remote control with Zune, Kinect owners can play videos and music via a series of simple voice controls and motion gestures. For instance, saying, “Xbox, play Elvis Presley” begins playing any Elvis tracks found on the system. Users can then hold one hand up in front of the TV and swipe it back and forth to change tracks. (More on Time.com: Top 10 Failed Gaming Consoles)

While the motion control works well in Microsoft-developed media functions like the Zune software, the company is working to integrate it with third-party services as well. Ballmer announced that Kinect control would be coming to the Xbox 360 versions of both Netflix and Hulu Plus this spring.

Microsoft also demonstrated how Kinect can be used to interact remotely with friends. For instance, four people could virtually hang out together chatting while their body motions and facial expressions were mimicked via their on-screen avatars. The Kinect camera even recognizes when someone stands up to cheer about something. It’s full body recognition, translated into a cartoonish avatars that hang out together on screen even though their respective real-life counterparts may be miles away from each other.

The feature is called Avatar Kinect and will be available this spring to Xbox Live Gold subscribers. (More info on the new Kinect features found here.)

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