Microsoft Chairman and Chief Software Architect Bill Gates unveiled Sunday night a new application that aims to replace the paper note pad, and demonstrated a slew of digital devices creeping into the home and office that are powered by versions of the company's Windows operating system.

Speaking before an estimated crowd of 12,000 during his opening keynote at the Comdex computer industry trade show, Gates used new products as diverse as wireless computer displays, entertainment driven PCs and Internet-enabled common home appliances such as an alarm clock, to drive home his vision of the so-called "digital decade."

He introduced a new application called OneNote, which will be the latest product to come from Microsoft's Information Worker group, which is responsible for its flagship Office suite of products, such as Word and Excel. Now 18 months in the making, OneNote mimics note-taking with a paper and pen, but improves it with the ability to save and search those notes in digital form.

"It hasn't been that easy in the past to ... really organize your thoughts in a free-form way," Gates said. "There's been no member in the Office family that aims in that direction."

With OneNote, Gates said Microsoft is solving the problem. User can jot down notes with a stylus pen or with a keyboard, as well as drag an image or data from a Web page onto a OneNote document. The application also can record audio while taking notes and have that audio linked to the notes as a user writes. By clicking on a typed or handwritten word in a OneNote file, a user would hear the portion of the audio that was uttered when that note was written.

Gates also trumpeted his company's efforts around building an deploying Web services based on its .Net platform and the industry standard format XML (Extensible Markup Language). He demonstrated a Web service that will be available in the middle of 2003 from Kinko's Inc. The service adds an option to a user's print menu from within a document that allows a file to be delivered over the Internet to Kinko's and printed at one of its facilities.

"They're moving along the path that they've talked a lot about (with Web services)," said Jean Bozman, an analyst with research company IDC, who attended Gates' keynote. "With the Kinko's example, they've provided a concrete example of what Web services can be."

One audience member who attended the keynote said he was cautious about the Kinko's example, though he didn't discard the technology. "It's the human side of Kinko's that I have a problem with. I've never had a print job there go right, and that's not something computers can fix," said Dave Bushnell, president of Digital Marketing Associates in New York.

The Windows server operating system that will be the foundation that powers new .Net Web services is Windows .Net Server 2003. Gates said the long-awaited server operating system will be released in April 2003. A second release candidate is expected to ship to testers by the end of the year. Microsoft's software development tool, Visual Studio .Net, will also be upgraded and released in final beta version in April, he said.

Aside from hardware and software for the corporate customers, Gates focused heavily on new products from the company aimed at the consumer market, particularly the living room.

"Today, the home environment is one where the PC is starting to play a bigger role," Gates said, citing industry research that claims 70 percent of U.S. homes have a PC, and one-third of U.S. homes have a PC in the living room. "There's a lot we've done ... to really advance computing in the home."

Aimed squarely at the living room, computers running the Windows XP Media Center Edition operating system are making their commercial debut later this month, initially with a product from Hewlett-Packard Co., Microsoft has said. PCs running the operating system can be controlled by remote and allow users to watch television, view digital images and organize digital media.

Gateway Inc. became the latest hardware makers to announce that it will ship a PC based on the entertainment-laden software, Gates announced in his keynote. Gateway is expected to begin selling its Media Center PCs as early as this week at its Gateway retail outlets. The company will sell one configuration with a 17-inch LCD, recordable CD drive and a DVD drive. Another configuration will bundle Gateway's new US$3,000, 42-inch plasma display. Pricing for both offerings was not immediately available.

Gaming PC maker Alienware Corp. also Sunday announced that it would sell Media Center PCs this month, Gates said. Devices from Samsung Electronics Co. Ltd. are due out shortly in Korea, Microsoft said. Fujitsu Ltd. and NEC Corp. will target shoppers in Japan with their own devices next year.

Devices based on the wireless display software known as Windows CE for Smart Displays will be released at the CES trade show on Jan. 8, Gates said in his keynote said Sunday, while demonstrating a 15-inch display from ViewSonic Corp.

The software is being adopted by device makers who are creating displays that connect to a PC over the wireless networking technology 802.11b. With it, users can stray from their desktop while still accessing data such as a Web browser or digital photos. Using a stylus pen, users can jot down notes or navigate windows on the wireless display.

Hoping to drum up interest in the wireless displays, ViewSonic Monday will begin taking preorders for its $999 V110 wireless 10-inch display and its $1,299 V150 15-inch display. Customers that order a device before December 31 will receive a free docking station, which enables the device to be connected to a keyboard or set up as a companion to a desktop display, Megan Kidd, a Microsoft product manager, said earlier this week in an interview..

Looking further into the future, Gates pulled the cloak off a technology under development at Microsoft Research that will add intelligence and Internet connectivity to everyday home appliances. The project is known internally as Smart Personal Object Technology, or SPOT.

The idea is to make "smarter everyday objects" and take them "beyond their core functions," Gates said.

An alarm clock demonstrated here, for example, uses a wireless Internet connection to automatically update the time it displays using an atomic clock. It also can deliver personalized information such as weather or commute advice based on a user's personal settings. Microsoft is working with National Semiconductor Corp. and devices based on SPOT are expected to become available in the coming year, Gates said.

(Tom Krazit, Nancy Weil and Paul Roberts contributed to this report.)