Project Natal hitting Xbox 360 this year

The Xbox news was the highlight of Steve Ballmer's keynote at the start of CES

Microsoft's full-body game control system Project Natal will be launched in time for the holidays this year, in what promises to be a big year for Xbox 360 users.

The Xbox news was the highlight of CEO Steve Ballmer's keynote opening the Consumer Electronics Show in Las Vegas Wednesday, which was delayed by a brief power outage and included a lengthy pitch for Microsoft's recently launched Windows 7 operating system.

Ballmer also showed three new tablet PCs that will ship later this year, including a slender device from Hewlett-Packard that was running a PC version of Amazon's Kindle software. The device even looked a little like an e-reader, although it was apparently running Windows 7.

It wasn't the Courier tablet that Microsoft is reportedly working on and that some had expected to see at the keynote, however. Courier, as reported by the tech blog Gizmodo last September, is a novel device with two multi-touch screens that open like a book, and some nifty features like the ability to "flick" items from one screen to another.

Ballmer didn't mention Courier, however, and the news for gamers was the most compelling part of the evening.

"2010 is going to be a landmark year for all Xbox customers," thanks to Project Natal, lots of new games and an online retro arcade service, said Robbie Bach, president of Microsoft's Entertainment & Devices Division, who followed Ballmer on stage.

Project Natal was first previewed at the E3 show last year. It's a gaming control system that lets players use full-body gestures, like a kick or a punch, to interact with the action on screen. It employs a 3D camera to track body movements and then translates them into actions on the screen. Bach called it "the culmination of years of research."

He didn't give pricing or say how Project Natal will be sold, but he did say it will work with existing Xbox 360 consoles.

Also new for gamers, in the spring, will be Game Room. It's an online arcade where Xbox Live users can purchase classic video games from the 70s and 80s, from names like Atari and Activision, then invite the avatars of other Xbox Live users into their virtual arcade to play.

2010 will also be a big year for new Xbox games. Microsoft will release the next installment of its successful Halo franchise, called "Halo Reach," a prequel that will "tell the story of the epic battle before Halo 1," Bach said.

It will also introduce a new genre of games, "the psychological action thriller," with a game called "Alan Wake" that tells the story of a mystery writer who gets trapped in his own novels. "Think 'Lost,' written by Stephen King and directed by David Lynch," Bach said.

The evening began half an hour late after a power failure blackened out part of the stage at the Hilton center, along with a few of the computer screens on it.

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