Steve Ballmer kicked off the Streaming Media West event in San Francisco yesterday, outlining Microsoft's next generation of media software applications.

Ballmer, Microsoft’s president and CEO, touched on the important role he believes media will play in keeping the PC central to consumer and business computing.

"The digital media phenomenon is one of the engines that will fuel increased activity and excitement around the personal computer," he said, during the event's opening speech.

Microsoft's Windows Media Audio and Video 8 are key to Microsoft's entertainment and media services plan.

Ballmer showcased features in the Media Player 8 beta -due out with the operating system codenamed Whistler at the end of next year - such as file compression technology that allows users to store more compressed media files.

Ballmer claimed the new format allows users to store three times as much music as the current MP3 file format.

"Two years ago we were at version 4, and now we are at version 8," Ballmer said. "I guess this industry is moving pretty quickly."

While the finished version will wait for Whistler, users can start using the beta of Windows Media Audio and Video now. Content providers and large corporations are expected to use the latest version of the software.

For content providers, compression technology in version 8 could prove effective for delivering media even when bandwidth is sluggish. Ballmer claimed users will receive both higher quality sound and near-DVD (digital versatile disc) quality video at lower connection speeds.

Just as the current version of Windows Media automatically downloads artist and song information for a user's CDs, the new media software will download far more extensive information on performers, including album cover art, new album releases, artist biographies and links to related content.

The Media Audio and Video application is intended to serve as a starting point for Microsoft's entertainment products suite. Ballmer emphasised the importance of Microsoft products - the Xbox gaming console, WebTV, smart phones and wireless devices - working together.

Like other vendors in the streaming market, Microsoft also has its sights set on business users where such applications can be used for training, delivering information and educating employees.

With this in mind, Ballmer showed an enterprise edition of Movie Maker allowing users to pair video and audio with Power Point presentations. Using drag and drop technology, an executive can annotate a presentation and send it around to a number of colleagues.

Microsoft has added some security features to its media applications to avoid some of the controversy brought on by music swapping company Napster.
When making a media presentation, a user can govern the set of recipients and make sure they don't forward it throughout or outside of the company.

Microsoft has also forged deals with Compaq, Hewlett Packard and Casio making Windows Media Player 7 available for the vendors' PocketPC handhelds. Users can download video clips, Windows media and MP3s from the internet to their device.