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Ryan Seacrest tries to pocket a Nokia Lumia 900 on stage with Microsoft's Steve Ballmer at CES.

Posting from Las Vegas: Microsoft delivered its final Consumer Electronics Show keynote address tonight with some modest bits of news about the Xbox 360, and a surprise twist. Television personality Ryan Seacrest hosted the event — walking out on stage at the start and saying he would be  having a conversation with Steve Ballmer for the evening.

The Microsoft CEO bounded out to give Seacrest a big bear hug. The two had a good rapport, joking around and having fun from the outset. Ballmer talked about Microsoft’s Metro design, and how it would be showcased on stage, and Seacrest joked that he could be the company’s mascot.

The HTC Titan II

The demos started with Windows Phone, running through the features of the Microsoft mobile operating system.

On that front, two significant pieces of Microsoft news came earlier in the day. First, HTC announced plans for a new HTC Titan II, a Windows Phone running on AT&T’s 4G LTE network — boasting a 16 megapixel camera. Later in the afternoon, Nokia confirmed plans for the new Nokia Lumia 900 Windows Phone, with a 4.3-inch display.

Transitioning to a discussion of Windows PCs, Seacrest noted that Microsoft faces new competition — presumably alluding to the rise of the iPad and Android tablets.

“Nothing better than good competition,” Ballmer says. “It’s a great thing, and I’m glad we’ve got Windows.”

Next up was a discussion and demo of Windows 8, Microsoft’s upcoming revamp of the operating system, with an interface optimized for tablets but also meant to work on traditional PCs. Microsoft is walking a fine line here, because it needs to build anticipation for Windows 8 without stealing the steam from existing Windows 7 machines.

The demo of Windows 8 focused primarily on features that have been shown previously. Reller also showed new PCs including an HP Spectre Ultrabook.

“Windows 7 today, Windows 8 tomorrow,” said Microsoft Windows exec Tami Reller.

Then came another surprise: A “tweet choir” — gospel singers doing their interpretation of what people had been saying about the Microsoft keynote on Twitter tonight. It was novel and even entertaining.

Ballmer and CEA chief Gary Shapiro on stage.

Moving on to a discussion of Xbox Live and Xbox 360, Ballmer delivered what might have been the biggest actual news from the keynote, saying that Microsoft has now sold 66 million Xbox 360s, with nearly 40 million Xbox Live users, and 18 million Kinect sensors sold. (As of March 2011, the last time the company gave an update, the cumulative number of Kinect sensors sold was 10 million.)

Another bit of news: Xbox Live will be adding content from Fox broadcast shows, Fox News and other News Corp properties in 2012. That will add to a large library of live and recorded television launched by Xbox Live in the U.S. this fall. The company is trying to solidify the Xbox 360’s position as an entertainment console, offering more than video games.

Ballmer announced that Kinect will be coming to Windows on Feb. 1. The company has promised to release a new version of the sensor tuned for commercial and consumer applications on Windows PCs — making official what many hackers had been doing on their own.

The appearance by Ballmer was a swan song for the company, ending a Microsoft tradition that dates back some 14 years. In the heyday of Bill Gates’ reign in the technology business, his speeches at COMDEX and CES were akin to state-of-the-union addresses.

Ballmer took the reins at CES after Gates retired from day-to-day executive role a few years back.

Microsoft said in December that this would be the last CES where it delivers a keynote address and stage a massive booth. In announcing the decision, the company said its “product news milestones generally don’t align with the show’s January timing.” The Consumer Electronics Association, which runs the show, described it as more of a mutual decision.

Prior to Ballmer’s appearance on stage this evening, CEA chief Gary Shapiro said he wouldn’t be surprised to see a Microsoft executive back on the CES stage within a few years.

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