Bill Gates started off the Microsoft CES keynote with his thoughts on the rapid advancement that the technology market has undergone in recent years, and quickly tied it all into the release of Windows Vista and the importance of the new operating system along with the other services that Microsoft has planned for the coming year.

As could be expected, the first area of focus was Vista, which as it seems still has plenty up its sleeve. A neat feature, showcased by Justin Hutchinson, is called Shadow Copy, which in essence provides Vista with another safety net from human error. In short, it allows users who accidentally saved an incorrect version of a document or overwrote the wrong file to “restore previous versions of [the] document with just a couple of clicks.” The feature is a lot like the current System Restore, but works on an individual file level. “It’s better than going back in time,” joked Justin.

After a brief Vista discussion, the topic changed to the Virtual Earth 3D technology that’s part of the Windows Live network. Using an Xbox 360 controller, Hutchinson was able to fly a camera around in a fully three dimensional recreation of Sin City. The concept felt a lot like Google Earth with SketchUp, but it’s always nice to see competition.

Back on the topic of Vista, Hutchinson described how the Ultimate version of Vista will include downloadable extras for those of us willing to shell out the extra money for this particular version. One of the more impressive downloadable programs is Groupshot, which allows users to select parts of different pictures and combine them into one for a better overall image. The aim of this program is to fix awkward facial expressions of an individual in a series of group shots, where the face of a person in one image can be transplanted over onto his or her face in another image.

Another Ultimate Extra is found in the form of Dream Scene, which allows users to use full motion video as a desktop background. This feature will probably only be recommendable for those who have enough graphics horsepower to spare after having turned on Aero Glass – not to mention the patience to deal with a distracting video playing in the background.

With that Justin Hutchinson ended his part of the presentation and handed to stage back over to Bill.

The next item of interest was the mention of a project that Microsoft has worked on together with HP, called Windows Home Server. As the name implies, this will be network attached device that will be available to multiple PCs, Xbox consoles, the Zune music players and any other compatible devices for: backups, additional storage and a lot more. Expect to see the HP Media Smart Server in stores later on in the second half of this year.

With Windows Vista, Microsoft will be introducing the concept of Live Anywhere, which basically amounts to being able to play a game, like Uno, on your Vista machine with someone else playing on their Xbox 360, and vice versa. In the future the service will also be expanded to other, more hardcore games.

The entertainment experience doesn’t stop with Live Anywhere. Microsoft also plans to provide its customers with a wide variety of TV content, which it will soon be offering in four different ways.

The first of the four ways to get high-definition movies on the Microsoft ecosystem is through the new HD-DVD add-on for the 360, which has been in “incredibly high” demand.

The second way to get into the HD experience is through the use of a Media Center PC connected to an Xbox 360 console.

The third way is through Xbox Live Video, which a recently launched service through which users can download HD and SD movies onto their consoles. The service already provides “a thousand hours of content. And it’s really simple, because the Xbox is already on the internet and, it’s connected to a big [screen].”

The fourth – and probably the most exciting – way to get TV is going to be through IPTV. Although the notion of offering IPTV is nothing new to Microsoft, they needed a stable and popular platform to put their front-end software on. The Xbox 360 fills that position beautifully. Together with third-party support from telephony companies such as AT&T, Deutsche Telekom, C-Com and SwissCom, Microsoft is planning to turn the 360 into a full featured Top Set Box (TSB).

The service should be able to handle both standard and high definition streaming for a variety of different channels with picture-in-picture support and a slew other neat features, such as TiVo style recording. Obvious this service is not going to be offered for free, but it will probably not be as expensive as regular cable.

This new IPTV service sounds a lot like what Apple doing with their iTV, which suggests that Microsoft is prepared to hand over yet another market sector to Apple without a fight – the music selling venture being the first.

The final major announcement to come forth from the CES keynote was that Microsoft has partnered up with the Ford Motor Company to offer a “fully integrated, voice activated, in-car communications and entertainment system for mobile phones and digital music players.” This Ford exclusive, called Synch, will support Bluetooth, phone book syncing, three way calling, and text-to-speech reading of text messages. Not only will it be compatible with the Zune and the iPod, there will also be a USB port for Flash and Zip drives.

Even though CES keynotes are meant to be really up-beat and forward looking, it really does seem like Microsoft is lining up for a great year. Whether they can pull it off successfully, however, is an entirely different matter…