Because Windows Home Server is set up as a bolted down server, users will only be allowed to access data. The software furthermore is much more robust than the consumer version of Windows XP.

For the device to become a true success, however, it will have to offer movie downloads as well, Enderle suggested. But movie studios are notorious for opposing download services as they fear it will spark further piracy.

Richard Shim, a senior analyst at IDC, warned that setting up the device and network will be a daunting task.

"Folks hire people to organise their closets. This home media server is your central closet for all your digital media content. That kind of stuff just doesn't fall into place," Shim told vnunet.com. 

"This is not just a file server in the basement. It is a sophisticated piece of home technology."

Shim believes that the device will find limited appeal because of its complexity.

Gates also highlighted Sync, a technology developed with Ford that is based on Microsoft's automobile platform.

Sync offers hands-free calling and synchronises the vehicle's address book with a mobile phone. Content stored on mobile devices also can be played on the car's audio system.

Ford plans to make Sync available in 12 models by the second half of this year. It will have reached all cars by the end of 2009.

Although Gates did pay some attention to the forthcoming Windows Vista operating system in his keynote, entertainment took up the most time.

In another major unveiling, he said that the Xbox 360 will be expanded with support for internet television (IPTV).

Microsoft already markets special software to power set-top boxes dubbed Microsoft TV IPTV Edition which is used by providers including BT and AT&T.

The Xbox 360 application essentially turns the gaming device into a IPTV set-top box. It is expected to become available by the end of this year.