Gates takes wraps off new Vista package

Microsoft chairman Bill Gates yesterday unveiled the long-awaited new version of his Windows software, touting search engine and digital photo advancements in a bid to stem losses to Google.

Called Windows Vista, the new version will have a built-in search engine for scouring the web and files on personal computers, and an application to organise and display photos.

Gates demonstrated the functions during a speech at the Consumer Electronics Show in Las Vegas.

The features may shore up efforts by Microsoft, the world's largest software maker, to fend off Google.

Microsoft posted its slowest sales growth last year, partly because Windows for PCs accounts for more than 30 per cent of revenue and it has not had a major upgrade for five years.

"Every new product release is becoming more and more important," said Alan Davis, an analyst at Seattle-based McAdams Wright Ragen, which manages $2.5 billion including Microsoft shares. "Google is breathing down their neck in a lot of areas."

Gates' speech also marks a renewed push to take on Apple in the digital music market.

The 50-year-old multibillionaire announced companies - including Toshiba - that will make portable video and audio players that use the Windows operating system.

He unveiled new software which allows home users to record live television and transfer music and video around homes. This will let consumers connect to high-definition cable TV without a set-top box.

Vista, already delayed by two years, will be critical to Microsoft's attempts to tap a larger share of the $16.6 billion internet advertising market. The company is creating new "live" versions of applications that have closer links to the web.

Software called Photo Gallery will allow users to organise and manipulate photos by resizing them or removing red-eye. That sparks competition for Google's Picasa and Adobe's Photoshop Album, a simplified version of its flagship photo program.

Users will be able to switch tasks more easily through a feature displaying a list of applications and files that are open, along with thumbnail images of photos or presentations.

Vista, available in the second half of this year, will have a new version of the Windows Media Player for watching videos and listening to music and a new Internet Explorer web browser.

The software also includes tools to protect users from viruses and scams on the web, and items to let parents control what children do online.

Gates also demonstrated a new version of Microsoft's 25-year-old "Flight Simulator" game that takes advantage of Vista's improved graphics.

Windows hasn't had a major upgrade since 2001's XP, the longest gap yet. Microsoft planned to release Vista in 2004 and delayed it after reassigning engineers to fix security flaws in XP and to boost protection against viruses.

To renew growth, Gates is also pushing music and video software to fight Apple's Computer iPod. Tokyo-based Toshiba, Taipei-based Tatung and Seoul-based LG Electronics will make devices that run on Windows.

iPod has 72 per cent of the digital market.

- BLOOMBERG