In addition to unveiling the new SPOT watch in his keynote address, Gates played an Xbox game with basketball star Shaquille O'Neal, who was broadcast live to the Las Vegas Hilton from Los Angeles. View Slideshow 
LAS VEGAS -- He shared the stage with a refrigerator equipped with wireless computer screens for "smart" magnets.
He carried a portable computer monitor that controlled the lighting in the room and flipped the channels on a flat-screen TV.
He played an Xbox game in real time with Shaquille O'Neal, who lounged in Los Angeles.
Then Microsoft chairman and chief software architect Bill Gates revealed the next-generation PC: a wristwatch.
In his keynote speech Wednesday night, Gates teased his audience at the Consumer Electronics Show with current and oft-touted Microsoft-powered products such as the Xbox game console, portable smart displays and combination PDA/cell phones. He saved what he apparently considered the best for last: a silver Fossil wristwatch.
Not your ordinary department-store watch, Gates' timepiece is part of a new line of products using a technology called SPOT (small personal objects technology), has a black-and-white screen and gives wearers the time plus real-time information such as news, weather, sports scores and instant text messages.
"It's sort of like a pager," Gates said.
The watch operates on FM radio frequencies and automatically resets itself when the user moves into a different time zone.
Wearers can customize the watch's look and features by visiting a website set up by Microsoft expressly for that purpose. Besides Fossil, Suunto and Citizen also plan to release their own SPOT products this fall.
"These partners have a vision that the watch goes beyond just telling time," Gates said.
Some members of the audience seemed to think that vision may have clouded Microsoft's better products and judgment.
Blake Krikorian, a technology adviser for id8 Group in San Mateo, California, said he was surprised Microsoft would heavily promote such a product in favor of its "exciting technology today, like the smart displays."
While Krikorian believes Microsoft has the connections to market the watches, he also foresees challenges.
People who would buy a watch like the one Bill Gates showed off in his keynote are business travelers who need to stay constantly connected, Krikorian said. These folks are more likely to go in for watches from Rolex or Cartier, not Fossil, he said.
"I would buy a watch that had that functionality but did not sacrifice on the quality of the design," Krikorian said tactfully.
Norman Weinstein, an analyst with Yeske and Company, said Microsoft has covered its bases by supporting so many different technologies. At the show, four electronics makers, including Sanyo and Samsung, are expected to release a Windows-powered personal digital video recorder by the holiday season. The 20-GB recorder would allow users to carry with them up to 175 hours of video or 8,000 songs.
But will new products, like the smart watch, sell?
"It doesn't matter," Weinstein said.
CES runs through Sunday.
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