Amid much pomp and fanfare in Vegas, Microsoft's chairman takes the wraps off the long-awaited game platform

Microsoft's entry into the video game business will no doubt inspire a number of marketing gimmicks, but it will be hard to top Saturday's -- Bill Gates sharing a stage with professional wrestler "The Rock".

The only-in-Vegas pairing happened as Gates took the wraps off the Xbox, Microsoft's highly anticipated bid to gain a chunk of the lucrative video game market and the software giant's biggest detour yet from the PC business.

"There's a revolution that's about to take place in game consoles," Gates promised before removing a black shroud covering an Xbox unit.

The Xbox debut was the finale of Gates' keynote address at the Consumer Electronics Show, during which the Microsoft chairman also previewed Whistler, the next consumer version of the Windows operating systems, and showed prototypes of a number of Pocket PC-powered gadgets. The technical details of the Xbox -- scheduled to go on sale this October backed by a $500m marketing campaign -- have been known since March. Gates, however, used the CES appearance to show off the actual box and its sophisticated graphics capabilities.

The main unit is a squarish black box that looks more like an expensive clock radio, and the controllers are not surprisingly similar to Microsoft's Sidewinder game controllers for the PC.

More important than the plastic, though, were the game demonstrations. Graphical software performance is one of the factors that will determine how well the Xbox will do against Sony's PlayStation2. If the demonstration is any indication, the companies are destined for tight competition.

Gates and Seamus Blackley, head of Microsoft's Xbox division, ran demos of several Xbox titles, which featured detailed graphics and smooth animation that looked more like a Disney movie than current video games.

"If there's an area where breakthroughs in hardware and software could really change the business, it's got to be video games," Gates said. "This is a breakthrough device. It's a new thing for Microsoft."

Blackley said Xbox titles will benefit from raw hardware horsepower -- a 733-MHz processor, a beefy hard drive, 250-MHz graphics processor -- but also clever configuration. Microsoft has spent extra effort in putting the system together in a way that makes it easy for software writers to exploit features and write programs.

Numerous game developers have complained that market leader Sony made its new PlayStation2 console so difficult to program that current games harness only a fraction of its power.

"One of the basic premises of the Xbox is to put the power in the hands of the artist," Blackley said, which is why Xbox developers "are achieving a level of visual detail you really get in 'Toy Story.' "

Among the Xbox titles in development is a World Wrestling Federation game, leading to the closing appearance by Dwayne "The Rock" Johnson, who noted a number of similarities with the software guru. "Both The Rock and Bill Gates are known worldwide for their vast array of catch phrases," the wrestler noted.

In addition to the Xbox shenanigans, Gates also echoed Intel chief executive Craig Barrett's keynote the night before by describing a future where PCs will control everything from digital picture frames to home theater systems in wirelessly networked homes. Naturally, Gates opined that Microsoft software will be the glue that binds it all together.

"The PC is going to be the place where you store the information and really the center of control," he said. "Software is the key to making sure we don't have islands of information."

The Whistler preview focused on the start-up screen, which allows for easy switching between user profiles without rebooting, a scanner and camera "wizard" that simplifies storing and distributing digital photos and enhanced networking capabilities for running all those devices throughout the home.

"We created a machine you'll be leaving on 24 hours a day," Gates said. "We're taking the PC and the wireless infrastructure to make it available throughout the home."

One of the new devices that may connect to that network is a high-tech alarm clock that runs on calendar information and plays music files beamed from the PC. The prototype looked like an Apple Computer iMac shrunken to mobile phone size.

"That alarm clock has the full power of your schedule, your user preferences... in a device that's very inexpensive because it runs off the power of the PC," Gates said.

Gates' vision of the networked home also includes a big role for for handheld computers running on Microsoft's Pocket PC software. The most impressive Pocket PC demonstration involved a voice recognition software package that will allow a person to speak information into the handheld and control basic functions by voice. Other Pocket PC software in the works will allow handhelds to be used as a remote control for shuttling digital music from a PC to a networked stereo system.

Additionally, television was a focus for Gates, demonstrating enhancements to Microsoft's interactive TV software that allow viewers to record multiple programs simultaneously.

"Music will not be the same now that it's digital," he said. "The same with television -- television will not be the same once it's fully in digital form."

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