At Microsoft's final keynote—a string that stretches back to 1998—CEO Steve Ballmer focused on Windows Phone, Windows 8, and the Metro interface. He showed some new applications and notebooks, and announced that Kinect will be available for Windows on February 1.

Above: Ryan Seacrest and Steve Ballmer

At Microsoft's final keynote—a string that stretches back over a decade—CEO Steve Ballmer focused on Windows Phone, Windows 8, and the Metro interface. He showed some new applications and notebooks, and announced that Kinect will be available for Windows on February 1.

The keynote started out with a video highlight reel of various Microsoft keynotes—11 from founder Bill Gates and four from Ballmer—and a presentation from CEA CEO Gary Shapiro to commemorate the keynotes. He noted that Microsoft is "taking a pause" from keynoting the show.

Radio personality and television host Ryan Seacrest interviewed Ballmer, who displayed interspersed demos of multiple products. Ballmer began by explaining that everything would be focused around the new Metro interface.

The first product shown was the Windows Phone. "It's the first phone that I think puts people first," Ballmer said, pulling out his phone. It does everything other phones do, but also merges information from multiple applications.

Above: Seacrest holding a Windows Phone with Ballmer

Derek Snyder, senior product manager for the Windows Phone, showed the existing Windows Phone platform and demonstrated how it pulls together a conversation that started on Facebook but continued via text message and voice recognition. (He laughed, because this didn't work right on stage.)

Snyder emphasized the "live tiles" aspect of the UI by searching on the phone using Bing and then creating a "quick card" with things like the address, direction, and making a reservation, each using individual apps.

Microsoft has partnered with Samsung, HTC, LG, and Nokia. Ballmer noted that the Lumia 710 and 800 will be coming to Canada, and the Lumia 710 would be coming to T-Mobile in the U.S on Wednesday. (The 800 will come in an unlocked version.) He added that today, Nokia and AT&T announced the Lumia 900, the first LTE Windows Phone in the U.S. with a 4.3-inch display. HTC has a 4.7-inch display with a 16MP camera also coming to the AT&T network.

Moving on, Ballmer said he loved competition, but was glad he had Windows. Worldwide, 1.3 billion Windows PCs are in use. People don't want to compromise, Ballmer said, and they don't want to give up anything as they move to new things.

With Windows 8, Ballmer said Microsoft has "reimagined Windows" all the way from the chipset to the user interface, and would represent "the best of the PC and the best of the tablet." But in the meantime, he talked up Windows 7 and Intel's work on the Ultrabook. He showed a video of devices from Sony, Asus, Acer, Toshiba, Dell, Lenovo, Samsung, and HP.

Windows Chief Marketing Officer Tami Reller said Windows 8 is more than the next version of Windows, but a new way of working with your PC. She demoed the new software, starting with a locked screen that includes notifications from multiple applications, such as email and calendar items, and then continuing to a picture password. Of course, Windows begins with the Start screen, which is now based on the Metro interface with live tiles. It is designed to work with touch and with a mouse and keyboard.

The new system uses "charms" to access all of the applications and Metro-style apps use the entire screen. It will run on both x86 and ARM, and Reller showed a demo based on an Nvidia Tegra 3 chip. (I saw a similar demo earlier at Nvidia's press conference. Reller said it would be a "no compromise" experience, but didn't show older Windows apps running on that platform, so there may in fact be some compromises.)

It will also work well with AMD and Intel. She ran other apps on the Samsung tablet passed out at the developers' conference last summer. On that tablet, she showed off the Windows Store and a game called "Cut the Rope." The store is due out in February in more than 200 world markets and 100 languages.

Windows 8 works great with touch or with mouse and keyboard, and the OS seems to have evolved a bit since the developer preview. It has a semantic zoom feature and makes better use of the keyboard and mouse, which I think will be crucial if desktops and notebooks are really going to run this.

Applications have contracts, Reller explained, and she sent a recipe from one app via another app using a "charm" on the side of the screen. She ran a Metro app and a traditional desktop app side-by-side, as well as the new Metro version of IE, in which websites fill the whole screen and users swipe from the bottom of the screen to get the various commands. Metro UI is "plug-in free browsing" using HTML5 and the beta will be available in late February.

Next, Reller displayed the HP Envy 14 Spectre notebook and the new Samsung Series 9 that is just 13 mm thick and includes a 15-inch model. Dell is planning another new Ultrabook this morning.

Windows 7 is the bestselling operating system of all time, Ballmer said, and more than 500 million copies have been sold to date; about 25,000 copies are sold each day. Every Windows 7 PC will be ready for Windows 8 on day one, Ballmer assured the audience.

Switching to Xbox, Ballmer pointed to the growth of the platform over the past 10 years. There are over 66 million Xbox users and over 40 million active Xbox Live subscriptions. Xbox Live is becoming an on-demand hub, Ballmer said, and there are now more than 14 million Kinect users.

Craig Davison, senior director of Xbox, showed the new Xbox interface, launched in December. He used Kinect for voice control and running the user interface. He also searched for Star Trek and Josh Duhamel on both of Bing and across providers and then found out which services had the new Transformer movie and played it. Xbox Live on a Windows Phone can also do voice search, and Davison searched for the BCS Championship, showed it on the phone, and then transmitted it out to a big display. The voice demo was particularly impressive.

Microsoft has partnerships with Verizon, Comcast, and New Corporation to show cable content on the Xbox, and is working with many content providers create new two-way experiences for the TV. As an example, Microsoft showed off an upcoming Sesame Street application in which a child can interact with a TV show.

But Microsoft is just getting started with a natural interface such as Kinect, Ballmer said. "It's going to be amazing." Kinect will be available for Windows on February 1, with apps coming from 200 partners, including United Health Group, American Express, and Boeing.

In other numbers, Ballmer mentioned that Sync with Ford is predicted to sell nine million more units over the next three years. Office 2010 is the bestselling version of Office ever and Office 365 was "a stunning success." The Skype acquisition resulted in 300 billion minutes of communications in the past year and Bing now has a 30 percent market share in the U.S. in conjunction with Yahoo.

In the end, Seacrest asked Ballmer what's next. "Overall, nothing is more important at Microsoft than Windows," Ballmer answered. He is now focusing on moving Metro to Windows, Windows Phones, and Xbox, and integrating natural user interface going forward.

In 2012, Ballmer said Microsoft will be about "Metro, Metro, Metro, and of course, Windows, Windows, Windows."

For more, see PCMag's year in review for Microsoft, the CES 2012 photo gallery, and complete CES coverage.