11:01 a.m. PDT: Keynote is a wrap. We'll have other coverage soon, including a video interview I did with Mike Nash.
10:59 a.m. PDT: Ozzie's back onstage. Talking about why Microsoft has moved more deliberately in taking Office online. We wanted to do more than put "docs and spreadsheets" on the Web, he said, offering a clear dig at Google's free competitor to Office.
10:55 a.m. PDT: Takeshi Numoto, from the Office unit is moving through the other Office apps that will have browser-based. Right now he's showing how to post an Excel chart onto the Web, using Windows Live Spaces. When a chart gets updated, it also gets updated on the Web. They haven't said it onstage yet, but as we noted, Microsoft plans to have a developer preview of the Office Web applications later this year, with a beta next year.
10:48 a.m. PDT: Conversation shifts to Office Web Applications, Microsoft's names for the browser-based versions of Excel, Word, and PowerPoint. First up: Demo of OneNote 14, with one user accessing a OneNote notebook via a browser and the other using a desktop version of OneNote 14 to simultaneously access the same notebook.
10:47 a.m. PDT: Live Mesh will have a broader beta starting later this week, with new features and support for Macs and Windows Mobile 6 phones.
10:37 a.m. PDT: Ori Amiga has joined Treadwell onstage, showing a photo application that is automatically synching between two machines. Also in his mesh are a phone and an iMac. (Microsoft has been working on Mac and phone versions of Mesh, but general users trying to synch in Live Mesh have thus far largely been limited to sharing files among Windows PCs.
BBC now onstage demonstrating how it is enhancing its iPlayer with Mesh capabilities. It's a tool for watching BBC TV and radio programs. At peak times, the iPlayer accounts for 10 percent of the U.K.'s Internet usage. The Mesh demo is a concept app, not part of shipping iPlayer.
10:33 a.m. PDT: Talking about developer component to Live Mesh, dubbed Life Framework. "Live Framework is the way to get at Live Services," Treadwell said. It works on the Web, PC, and phone. (The counter on variations of that phrase now well into double digits.)
10:30 a.m. PDT: Some stats: Microsoft's Live services have 460 million users and account for 11 percent of all minutes spent on Internet. (Now I'm logged into Windows Live Messenger most of the day, but doing other things, so not sure how that gets counted.)
10:26 a.m. PDT: Treadwell repeats Microsoft's willingness to open up the identity piece of its Web services to allow Open ID and other log-in credentials in addition to Microsoft's Live ID. Microsoft talked about that yesterday, but hadn't gotten a chance to write about it.
10:22 a.m. PDT:Silverlight apps will soon be able to run both inside and outside the browser, Guthrie said, before yielding the stage to Live Services VP David Treadwell. He'll probably be talking about Live Mesh and other consumer-aimed services.
10:14 a.m. PDT: Tesco app is pretty cool. It can even scan a barcode using a PC's Webcam to add an item to one's shopping list. Will be in trials next year, Tesco said. My question--why aren't we seeing more of these Windows Presentation Foundation applications? They look super cool, but I only ever see them at Microsoft developer conferences.
10:08 a.m. PDT: British grocery store Tesco is showing its e-shopping application, which is built in .Net and Windows Presentation Foundation. It's got a gadget that brings up the app, when needed. The app has a virtual cork board that has things like photos alongside a calendar, meal planner and, of course, a way to buy groceries.
9:59 a.m. PDT: Guthrie's talking about .Net 4, which includes support for multi-touch and deep zooming abilities that were built into Silverlight.
Guthrie's still writing code--showing how to add multi-touch to applications.
9:45 a.m. PDT: Sinofsky's done talking Windows 7. Developer division executive Scott Guthrie is talking about developer tools and how things span between Web and desktop tools. It's getting geeky.
9:40 a.m. PDT: The road map for Windows 7. Pre-beta now for PDC and then WinHEC attendees. It's got all the APIs, but is not feature complete, particularly on the user interface front. Feature complete beta planned early next year.
9:35 a.m. PDT: Sinofsky's talking about the focus in Windows 7 (accidentally typed Windows 8 earlier, sorry) on improving the fundamentals of the operating system, things like improving performance, decreasing the time it takes to boot up, and boosting the amount of time a laptop can play DVDs before the battery runs out. Also, Windows 7 will support up to 256 processors. Improved multi-monitor support, too.
Sinofsky demos Windows 7 running on a 1GHz Netbook with 1GB of memory. As I noted last week, Microsoft is trying to bring Windows 7 into a segment that Vista largely missed. Many early Netbooks were Linux machines. More these days run Windows, but it's typically not Windows Vista, but Windows XP.
9:25 a.m. PDT: Video of Autodesk taking advantage of Windows 7's touch abilities to edit a 3D image.
9:20 a.m. PDT: Vista also had application compatibility challenges, Sinofsky acknowledges. One of the big issues is the much-criticized User Account Control feature, which prompts the user to approve changes to their system. "We had all the best intentions," Sinofsky said. "We probably went--as far as you are concerned for developers--a little too far." On the other hand the PC is more secure now, he said.
9:16 a.m. PDT: With Windows Vista we changed a lot of things that required a lot of work from the ecosystem, Sinofsky said. "We really weren't ready at launch." Windows 7 won't require that same level of work, he promised.
9:15 a.m. PDT: Now Sinofsky is addressing the lessons learned from Windows Vista.
9:12 a.m. PDT: Sinofsky is discussing decision to pull out of Windows 7 the built-in mail and photo management programs. Instead, Microsoft will make them available as downloadable Windows Live applications. Those applications, though, will be able to connect not just to Microsoft services, but also to rivals like Flickr and Gmail.
9:11 a.m. PDT: Windows 7 updates things like paint, calculator, and WordPad. "Once every 15 years we are going to update the applets," Larson-Green quipped. "Whether they need it or not," Sinofsky chimed in. Of note, the new WordPad supports Open Document Format and Open XML (Office 2007) File formats
9:09 a.m. PDT: Internet Explorer 8 and Windows Explorer have been programmed for a range of touch gestures.
9:06 a.m. PDT: Now Larson-Green showing touch capabilities with Windows 7 running on an HP Touchsmart PC. Shows touch used for scrolling in Office 2007, a program not specifically programmed to be aware of touch.
9:05 a.m. PDT: No more sidebar. Gadgets can now be places on the desktop. Action Center is place to view all kinds of status and security messages
9:00 a.m. PDT: Windows Media Center and Windows Media Player also can take advantage of "libraries."
8:58 a.m. PDT: Also new in Windows 7, a notion of homegroup--an easy way to connect to all the available resources on a home network. (one caveat, on the PC side only works with other Windows 7 PCs--not Macs or older versions of Windows.)
8:57 a.m. PDT: Windows 7 introduces the notion of "libraries" which contain, say all the music or photos a user has access to. Larson-Green said that libraries offer the flexibility of folders, benefits of desktop search as well as the ability to unify many storage places, such as external drives, other computers on a network, or other users on the same machine.
8:55 a.m. PDT: When a window in Windows 7 is dragged to the side of a screen it automatically resizes itself. Things along the taskbar can be moved around; there are things called "jump lists" that provide quick access to most recent documents.
8:54 a.m. PDT: Larson-Green demos the new taskbar at the bottom of Windows 7 desktop, which pops up thumbnails of open windows as a user hovers over a particular application icon.
8:53 a.m. PDT: First demo from Julie Larson-Green, who helped design the ribbon interface for Office, before joining the Windows team with Sinofsky.
8:52 a.m. PDT: Cue Stephen Sinofsky. Comes onstage to the song "I can see clearly now, the rain is gone."
8:50 a.m. PDT: "We're proud of our Windows platform and where it's going," Ozzie said.
8:46 a.m. PDT: First mention of Windows 7.
8:44 a.m. PDT: Ozzie's talking about the unique attributes of each device--Web, phone, and PC. Phone offers benefits, such as location and time-stamp abilities and the fact it is always with the user.
8:42 a.m. PDT: The Internet has become our common meeting place. The Internet is every business' front door.
8:40 a.m. PDT: "To date we've barely scratched the surface" of how we can use the PC to enhance the value of the Web and vice versa," Ozzie says. We're almost all going to have PCs, a phone, and rich access to the Web. ("PC, Web and Phone" counter is already at 5.)
8:37 a.m. PDT: Ozzie: Today we'll be talking about personal computing in an era where it's about more than just the PC. It's PC, phone, and Web. Expect to hear that a fair bit.
8:35 a.m. PDT: Ozzie's back.
8:30 a.m. PDT: Annoying loud music means keynote must be starting now.
Chief Software Architect Ray Ozzie is expected to discuss Windows 7, the next version of the operating system, as well as a new release of Office, at Microsoft's PDC 2008 on Tuesday.
On Monday, Ozzie announced Windows Azure, the company's cloud computing entry and other Web-based services.
Stop back for live coverage from CNET News' Ina Fried beginning at 8:30 a.m. PDT.