Bill Gates opened the Consumer Electronics Show in Las Vegas last night calling this the decade of the digital lifestyle and workstyle. While his keynote speech only touched on search in general terms, he played down the threat of Google in an earlier interview and noted IBM as Microsoft’s chief competitor.

Gates spoke of a future in which an individual using a micro-device such as a cell phone can work in any public space, remaining connected through a series of WiFi hot-spots enabled by that individual’s unique digital signature. Much of his speech was dedicated to reminding his audience that Microsoft’s core business is writing software for all types computers.

“2005 was a very big year. A big year for the personal computer, growth of over 11 percent in Windows PCs, a big year with the introduction of the Xbox 360 that we’ve been building up to for over five years. But this next year, in some ways, is probably even bigger. This is the year that [Windows] Vista, Office 12 and many other products will come out, and the realization of [Windows] Media Center as a volume mainstream product will really be clear to everyone in the marketplace. Consumers are getting more and more connected. They’re getting richer experiences, and software is really at the center of that.”

The second part of his keynote speech was used to unveil the latest pre-release version of the long-awaited operating system Windows Vista. Gates promised Vista would be shipped, “… by the end of the year, and so we’ve got a few months here, …”, before introducing Vista Product Manager Aaron Woodman who gave the full demonstration.

Vista has been in development for over two years and was formerly known by its development name, Longhorn. Vista is meant to act as a general operating system, much like the current Windows XP does but since five years has passed between the release of XP and the scheduled release of Vista, a lot has changed from the introduction of a translucent graphic interface to much wider support of other systems by the OS.

The overall goals of Vista appear to be the merging of and support for all forms of home electronics, ease of use, and a seamless integration of software serving the desktop and the Internet. Another goal was to create a better gaming platform as Woodman demonstrated with MS Flightsimulator10. According to Gates, that all comes down to the “magic of the software”.

Gates used the word magic to describe the work done by Microsoft software engineers and their partners a number of times during his speech. He obviously feels it is the software Microsoft creates that separates his company from highflying rival Google.

In an earlier interview with Reuters, Gates downplayed the threat of Google by likening them to media darlings. “People tend to get overfocused on one of our competitors. We’ve always seen that,” said Gates. “I’m never going to change the press’ view about what the cool company to write about is. That’s Google number 1 and Apple number 2. Too bad for Nokia, Sony and all those others.”

Gates said unequivocally that IBM was the biggest threat to Microsoft, not Google. “The biggest company in the computer industry by far is IBM. They have the four times the employees that I have, way more revenues than I have. IBM has always been our biggest competitor. The press just doesn’t like to write about IBM.”

The last part of the CES keynote address covered Microsoft’s new music distribution partnership with MTV Networks, the URGE music service. Taking a page from Apple, Microsoft used the talents (such as they are) of Justin Timberlake and MTV President Van Toffler to introduce the new service. Toffler was the creative genius behind both Milli Vanilli and Vanilla Ice in the early ’80’s. While responsible for a previous wardrobe malfunction, Timberlake’s presence did not precede any technical malfunctions, a rarity in Microsoft demonstrations.