In true Hollywood fashion, Gates was joined by "Titanic" director James Cameron, Beatles producer Sir George Martin and musician LL Cool J in showing off the technology. Not to be outdone, Gates also starred in a video presentation where he played the roles of fictional magician Harry Potter and comedic secret agent Austin Powers.
"This is a real milestone for us," Gates said. "All of this fits into an overall vision of the next decade, which we see as the digital decade (where the) PC will play a central role."
But to get to that point, he said, "we have to improve the quality and ease of use" of the technology. That is already happening, thanks to faster computer processors, cheaper storage and "the magic of software," he added.
During his speech, Gates described a future in which millions of homes would be connected wirelessly, while residents used various electronic devices to share music, videos and other content.
Windows Media Player 9, formerly code-named Corona, has been in development for nearly four years at a cost of about $500 million, Gates said. It improves on earlier versions of Microsoft's digital player and server technology on a number of fronts. For businesses, the technology includes improved media management features. For consumer media playing, the system is updated for speed and seamless playback to create a more TV-like experience on the PC.
With the introduction of the updated media player, which is in the final testing stage and not yet commercially available, Microsoft is aggressively courting Hollywood, which is at the crossroads of the convergence between television and the Internet. The software debut also puts the company intowith RealNetworks, the forerunner of digital media playback software, which introduced an improved version of its technology earlier this year.
"From Microsoft's perspective, digital entertainment and digital media are important catalysts for driving the next big cycle of PC upgrades," Directions on Microsoft analyst Matt Rosoff said.
"But the challenge for Microsoft is to convince content creators their intellectual property won't be pirated" in the process, Rosoff added.
The piracy problem
Gates noted that piracy remains a major hurdle in getting Hollywood to embrace digitization of its content. Piracy, he said, reminded him of the early days of the PC, when much of the commercial software was pirated. At the time, Gates wrote an open letter to encourage software licensing.
To change attitudes toward piracy, Gates proposed making content available digitally in a way consumers could easily pay for it. He also stressed education, the enforcement of copyright laws and wider use of piracy-prevention software.
Microsoft has made several changes to Windows Media Player 9, some of which will be available only with Windows XP. Microsoft issued a release candidate, or near-testing version, on Wednesday for Windows 98 Second Edition, Windows Me, Windows 2000 and Windows XP.
Many of the biggest improvements were made to the audio and video performance. As expected, Microsoft released new audio and video codecs, which, like MPEG-4, use a smaller file, or bit, size. The company estimates that content creators can get 20 percent smaller files with the same quality that they get now. Another audio enhancement lets content providers stream in 5.1 sound, which would improve the quality of sound for concerts or movies streamed over the Web.
Windows' latest audio with 5.1 surround sound, will be featured with the Sept. 25 release of musician Peter Gabriel's new CD, "Up."
Microsoft envisions Windows Media Series 9 as a way for third parties to deliver and sell digital content services, whether streamed or downloaded.
With the launch, Microsoft announced more than 60 partners that will support Windows Media 9, including movies-on-demand services Intertainer and CinemaNow, and audio sites FullAudio and Pressplay. Those partners will be added to a "services" tab on the new media player.
The software maker also said that BMW Films will use Windows Media 9 to project its in digital theaters in the United States in the coming year.
National Public Radio is planning to use Microsoft?s newest audio component to play several programs digitally.
Limited MP3 support
Like its predecessor, Windows Media Player 9 offers only limited support for MP3 files, unless the consumer pays for an add-in product. The media program will play MP3s but won't rip files in the format without extra costs and third-party components from CyberLink or InterVideo. As it did with Windows Media Player 8, Roxio provides the CD-burning engine.
The software behemoth also has beefed up consumer privacy, giving consumers control over whether Internet sites can identify the player, and whether Windows Media Player 9 can track CD and DVD song history, among other features.
"We're creating a breakthrough playback experience," said Michael Aldridge, lead product manager for Microsoft's Windows Digital Media division.
To the player, Microsoft added Auto Playlists, which are in some ways similar to the SmartPlaylist feature part of Apple Computer's iTunes 3. Both features help to quickly organize digital music files. The new Windows Media comes with more than a dozen preconfigured Auto Playlists for organizing songs such as by genre, rating or most played.
Like iTunes 3, which Apple released in July, Windows Media Player 9 Series rates songs on a one- to five-star scale. Both programs also can organize playlists based on rating. By default, Windows Media Player assigns all songs three stars.
Windows Media Player 9 comes with an ample selection of "skins," or different colors or motifs; but on Windows XP, consumers also can manually change the color scheme of the player.
The player is updated to improve the quality of video playback so that viewers don't have to wait for the video, a process known as buffering. Called FastStream, the technology uses the available bandwidth to the PC to deliver more of content at once, enabling the viewer to fast-forward or rewind relatively seamlessly.
The new player offers other enhancements for organizing songs such as more intuitive file folders, a Windows XP feature. Windows Media Series 9 Player also can categorize from the metadata or even clean up and add missing metadata from older songs ripped without the information.
Microsoft's media player adds cross-fading between songs, similar to the transitions heard over the radio, giving the consumer control over the duration of overlap between two songs. Apple introduced a similar feature with iTunes 2 and increased control over it in the new version. RealNetworks' RealOne now supports the feature, too. Windows Media 9 also can even out the sound level among songs, a longstanding feature of MusicMatch and new to iTunes with version 3.
When consumers minimize the program to the Windows Task Bar, a player control appears on the task bar for listening to digital media, adjusting sound or accessing other commonly used features. A video pops up in a window when the task-bar control is enabled.
Microsoft also improved digital rights management, which could be important forand other premium services providers. Consumers can now back up the licenses for the songs they purchase so they are not lost should the PC hard drive become corrupted or infected with a virus.
The Real rival
In contrast to Microsoft, RealNetworks is aiming to become the online equivalent of a cable operator, in which it provides exclusive content to subscribers. The strategy has already helped the company gain 700,000 subscribers for entertainment including audio and video clips of TV shows and live baseball.
In contrast, Microsoft is planning to provide the technology for other subscription services to provide quality video and audio playback.
"We're about creating technology innovations to enable a bouquet of subscription services," said Microsoft's Aldridge.
RealNetworksits Helix Universal server this summer in a move to improve its chances in the server market by supporting most media formats. On Wednesday, RealNetworks said that its Helix Universal server and RealOne Player would support Windows Media 9 Series Beta content delivery and playback.
"We are delighted to add support for Windows Media 9 as a new feature of our universal media server and player products," said RealNetworks CEO Rob Glaser. "Now consumers can use a single player--RealOne--to manage and play all of the digital media on their PC and on the Internet. And broadcasters and enterprises can now deliver Windows Media 9 along with every other major format via an operating system-independent, carrier-class platform."