Windows PC is at the center of this digital revolution. And the way it connects up to everything else is very, very important to us. I mean vista here is a major milestone. It lets, the hardware partners we have do break through things. For example, here you got a device, you got a touch-screen. So you can just, you know, pick the photos you wanna print. And very, you know, interactive device. Because we brought touch to the user interface.

And here we got kinda of a round PC. Ready for the living-room with this media center, capabilities from SONY. Err, here's a Toshiba device that you can get your status, your next appointment here, as if You can just even carry it everywhere around. And then, when you put it down it uses its a special capability. Even the video dose not require you to connect-up a cable. So here we've seen for the first time how for last two years are our hardware partners have been getting us to make sure vista has the right things, and they're doing the right things, so that the hardware-software combinations really are breakthrough.

What about some of the more mobile devices, though the vista-powered phones and the UN PC, that the things that you would take with you that would have as much power as a PC that is sitting on the desk at home?

There's been a big gap between a portable PC in your phone in terms of the screen size, the cost, what would you might wanna carry around and do really emerged things. And what we've done is we've filled up space in with our partners' work on this, we called them auto-mobile devices again. You know, nice ability to touch things. And navigate around really, you know, great packet chain, and now, really good battery-life that you want for something that you are gonna be out with for a long period of time. So extending the PC all the way up to that 60-inch high definition display down to this even 5 or 6-inch mobile device.

And all them can, say, I mean, I see a Zune there as well. And the big thing about Zune is being able to beam products to another Zune user. I mean that you talked about the Zune community. That's why you are going with some of these other things as well, being able to beam data and photo and music , and whatever.

That's right. I tell you it's a theme of the whole consumers electronic shows that as the world's going digital. It's gotta be connected together and, it's gotta be high fidelity. And here you know, that theme by building Wi-Fi in, there's some amazing set of things we'll be able to do. Of course, upgrade the software, and go a walk, even further than we have . But today people all have the idea of zapping music back and forth to each other.

Um...speaking of the Zune. And I'm hearing some good things about the screen size, the ability to... the sharing aspects of it. But, and I know you talked about the Digital Rights Management issues before, that there is still some work to be done on that. I know, that there maybe, I think there're 3 play restrictions on some of the content in there. What do you wanna see happen with DRM in 2007? Where do you think it needs to go?

Well, balancing the need to the creators to be paid with the need for some placet to move things around. That's a tough challenge that the industry is got to solve. The rights models require lots of people agree on those things. We are very pleased the music companies did let us take protected music. You can zap to somebody they don't have to pay. But we do put a limit on, they can only play it 3 times and then, that particular demo expires on their device. So, we are enabling simplier models, we're in dialogue about simplier models here. But connected really is making that a front and center issue.