Live Mesh, though it takes Ozzie five pages to describe it, is essentially a “software-plus-services” platform that uses the Web to synchronize and share data among devices, applications and people (you’ll find a walk-through here and a good overview here).

“Over the past ten years, the PC era has given way to an era in which the Web is at the center of our experiences–experiences delivered not just through the browser but also through many different devices including PCs, phones, media players, game consoles, set-top boxes and televisions, cars, and more,” Ozzie writes. “It is our mission in this new era to create compelling, seamless experiences that combine the power of the Internet, with the magic of software, across a world of devices. … the Web is the hub of our social mesh and our device mesh.”

“The Web is the hub of our social mesh and our device mesh.”

Wait.

Does Bill Gates know that? Because last year he told CNN’s “American Morning,” “We’re making the PC the place where it all comes together.” Clearly, in the ensuing year, Gates and Microsoft noticed that Google (GOOG) et al. are fast shifting computational relevancy to the Web, away from the desktop and, more importantly, away from Microsoft.

Live Mesh, if it’s successful, will change that. Because, as Joe Wilcox notes over at Microsoft Watch, “Live Mesh is Microsoft’s attempt to turn operating system and proprietary services platforms into hubs that replace the Web. Microsoft is building a services-based operating system that transcends and extends Windows and also the function of Web browsers.” Adds Wilcox, “It’s bold, brilliant and downright scary.”

But what is there for the software giant to talk about these days other than Yahoo, really? Why that old saw, software interoperability, of course. In a statement issued this morning, the software giant announced changes to its technology and business practices intended to “increase the openness of its products and drive greater interoperability, opportunity and choice for developers, partners, customers and competitors”–which translates roughly as “appease European antitrust officials.”

Among the key changes:

• Microsoft will make the protocols and APIs in its high-volume products openly available to the developer community.
• Microsoft will indicate which protocols are covered by Microsoft patents and will issue licenses to those patents on “reasonable and nondiscriminatory terms, at low royalty rates.”
• Microsoft will implement a covenant not to sue open-source developers for development or noncommercial distribution of implementations of those protocols.
• Microsoft will support open standards and work with developers and standards-setting bodies to enable the transfer of user data from Microsoft applications to apps designed by third-party developers.

“Customers need all their vendors, including and especially Microsoft, to deliver software and services that are flexible enough such that any developer can use their open interfaces and data to effectively integrate applications or to compose entirely new solutions,” Ray Ozzie, Microsoft’s chief software architect, said in a statement. “By increasing the openness of our products, we will provide developers additional opportunity to innovate and deliver value for customers.”

Quite a move for a company whose leadership once likened Linux to “cancer” and derided open-source licensing models as “Pacman-like.” Though it’s not like we haven’t seen this all before.

“They are not making the source codes open, but they are opening the gates that allow you into the compound,” said Matt Asay, a general manager at open-source management company Alfresco. “It’s a great first step. … It’s a bold move by Microsoft. It’s a good indication of Microsoft’s self-confidence that it feels it can open up what effectively are its crown jewels and not lobotomize its company at the same time.”

7:40 p.m. A few more moments of guitar wankery from Slash and … well, I guess that’s it. Bach, not Gates, ends the keynote. “I’ll see you again next year,” he says as Gates waves briefly and leaves the stage. Must be rushing off to that billion-dollar-a-hand poker game at Caesars … And the lights go up. That is it. Quite a disappointment. Take away the celebrity appearances and what’s left is a well-rehearsed series of anticlimaxes and rehashes of demos past. A pity, really.
7:38 p.m.: Gates: She’s pretty good. But I’ve got my own ringer here … (Pleeeeease let it be Wayne Newton)
Nope. It’s Carrot Top. Kidding … It’s Slash it’s from Guns n’ Roses playing “Welcome to the Jungle” for real. He doesn’t miss a note either. Dry ice smoke and flashing lights.
7:36 p.m.: Bach challenges Gates to a Guitar Hero 3 match. Bach invites Guitar Hero champion Kelly Clarkson to play against Gates. … She plays Guns n’ Roses’ “Welcome to the Jungle” and doesn’t miss a note.
7:35 p.m.: Gates using the device to navigate video archives of keynotes past. Microsoft’s version of iTunes’ ‘Cover Flow.’ Messy.
7:33 p.m.: Gates uses the device to scan a photo of the Vegas skyline behind him. Clicks on the Venetian. The screen displays information for his keynote address. Pops another note indicating Ballmer’s playing nickel slots at another casino. Laughter.
7:31 p.m.: Bach brings Gates back onstage to discuss the future. … Gates takes the stage again with a handheld video recognition device. He points it at Bach and clicks. It recognizes Bach, displays his name onscreen, along with a note saying he owes Gates money.
7:29 p.m.: Fellow presenter uses Tellme to search out a movie theater, browse movie listings, purchase tickets for a movie and then send them to a friend. Pretty slick, especially given the size of the mobile advertising market.
7:27 p.m.: On to Windows Mobile and Microsoft’s Tellme service.
7:26 p.m.: Bach and fellow presenter now demoing “Sync”–an in-car voice-command technology that enables Zune owners to sync their Zunes to their car stereos and then navigate their music libraries with voice commands.
7:24 p.m.: Bach talks about Zune Social as a service that drives music transactions from discovery to purchase. Find a song you like on a friend’s page, click on it and purchase from Zune Marketplace. Again, haven’t we heard all this before?
7:22 p.m.: Listening habits are tracked via “cards.” Bands can create their own Zune Social pages as well. Essentially, MySpace for music.
7:20 p.m.: Zune Social apparently tracks your listening habits in real-time. It’s all about “people-powered music discovery.”
7:18 p.m.: Bach talking up the Zune now. … Demoing Zune Social.
7:17 p.m.: British Telecom is to begin selling Xbox 360s as Media-Room based set-top boxes. Price of relocation to UK not included with activation fee …
7:15 p.m.: In addition to this, MGM will also be adding its film library to Xbox Live. End result: Twice as many hours of on-demand programming as any cable provider out there.
7:14 p.m.: ABC and Disney will be bringing their programming to Xbox Live.
7:13 p.m.: Gates brings Robbie Bach onstage to talk about Xbox 360.
7:11 p.m.: Using Microsoft Silverlight technology, NBC and MSN will put some 3,000 hours of high-definition footage of the Beijing Olympics online. Wow: 3,000 hours of video. What a massive effort. First of its kind.
7:10 p.m.: Gates commenting on broadcast television: “It simply isn’t as fulfilling an experience as online video.”
Here comes another video segment. … Bob Costas pitching.
7:09 p.m.: Moving on to Silverlight. Gates says NBC has chosen Microsoft as its exclusive online video partner for the 2008 Olympics.
7:08 p.m.: He finishes up the design, lays his phone down on the screen and it automatically emails his design to friends for review.
7:07 p.m.: Gates, thankfully, back onstage for another demo. Wait, what’s this. Another Surface demo?! Didn’t we see this last year? Yes, we did–but given by Steve Ballmer, not Gates. Gates using Microsoft’s Surface multitouch computer to demo a snowboard-design service.
7:05 p.m.: The big achievement being touted here seems to be the connection between these services and the single log-on. As Dan Aykroyd might say: Isn’t that AMAZING?
7:04 p.m.: Windows Live Photo Gallery … in browser photo editing, sharing (via email or Flickr) and exporting to blog. Bor-ing. They would have been better off playing the farewell video again. That ‘Bib Pimpin’ segment was comedy gold.
7:02 p.m.: First up: Windows Live Calendar now with … wait for it … multiple calendar overlays (YAY! sigh…)
But wait, there’s more … Windows Live Events, an invitation/event organizing service. They really should have called it Windows Live eVites …)
7 p.m.: Gates brings Mika Krammer, a director of product management for Windows, onstage to demo some new features of Windows Live.
6:59 p.m.: And here comes the product line-up overview: Windows Vista, Windows Live, Windows Mobile ….
6:58 p.m.: A key building block of the second digital decade, the centerpiece building block will be. … (drum roll, please) … Microsoft Windows!
6:56 p.m.: “Devices will know our context and location,” Gates continues. There will be new modes of interaction and natural interfaces. “We’re very interested in simpler ways of navigating our technology.” If he were going to announce Microsoft Bob 2.0, now would be the perfect time to do it. Nope. Ah, well. “The software industry will build these new modes of interaction–touch, voice, gesture–into the software.”
6:55 p.m.: And now for a few predictions. “In the future Microsoft products and services will run on the desktop and in the cloud,” he says. Would that be the cloud with all the Google AdWords all over it? “And 3-D environments will exist for Web experiences, high-quality video and audio in a pervasive way.” Make way for Third Life …
“Devices and services will be connected.” As an example, Gates talks about photos automatically being uploaded to digital-memory application.
6:54 p.m.: Gates back onstage discussing the coming transition in leadership at Microsoft when he will step down from his day-to-day role as the company’s chairman. He says Microsoft is aligned well for success with Steve Ballmer, Ray Ozzie and others.
Moving on … “The second digital decade heralds the following: high definition experience is everywhere.”
6:52 p.m.: Video ends to thunderous applause. UPDATE: Here’s the video:

6:50 p.m.: Footage of Gates cleaning out desk, taking box of office supplies to his Ford Focus. Ford Focus–now that’s funny.
Cut to Peter Jennings: “Let’s face it, all of us here at NBC News will miss reporting on this brilliant, powerful, sexy man who just doesn’t like to pay more than $7 on a haircut.”
6:49 p.m.: Gates calls Jon Stewart and asks about a co-anchor job. Stewart turns him down.
Gates calls Hillary Clinton. She turns him down as a running mate, so he calls Obama:
Gates: It’s Bill.
Obama: Bill Shatner?
Gates: No, Bill!
Obama: Bill Clinton?
6:48 p.m.: Steven Spielberg reviews Gates’s audition reel (”X-Men” and “Matrix” re-enactments; Gates in Wolverine get-up, Gates and Ballmer in Matrix-style black trench coats) and denies him a part in his next film.
6:47 p.m.: Footage of Gates calling Bono in the middle of a U2 concert. Gates plays guitar riff on “Guitar Hero” for Bono. Bono tells him there’s no place for him in U2. Which is OK, I’m sure, since there’s certainly no place for Bono at Microsoft.
6:46 p.m.: My God … Gates in recording studio with Jay-Z… Holy … Gates singing “Big Pimpin’.” Wild laughter and applause. “It was great,” Jay-Z tells Gates, before turning to the camera and muttering, “not so much.”
6:45 p.m.: Various Microsoft execs talking about Gates. Clip of Gates in office playing with action figures: “Never doubt the power of software.” Laughter.
Quickly followed by Gates in gym working out with Matthew McConaughey, who doesn’t really strike you as a Windows user.
6:44 p.m.: “This is my last keynote. Come July, it will be the first time I won’t be working at Microsoft since I was 17.” And here comes the inevitable farewell video ….
6:42 p.m.: He mentions the progression of digital entertainment–music, movies, photos. The trend is clear: all media and entertainment will be software driven in the second digital decade. And in the third, it will all be driven by Microsoft Windows! Muahahahahaha. Kidding … Moving on … “I’ll soon step down as chairman.”
6:40 p.m.: Gates finally takes the stage. He recalls his first keynote in 1994, a time when Windows ‘95 was first coming together. “It was the beginning of the first digital decade.” Ah yes, “The Digital Decade.”
6:39 p.m.: Here comes another silly video, this one set to “Believe in Magic,” featuring people from all walks of life extraordinarily happy to be using Microsoft products. They look like they’re all on Ecstasy. And it’s probably safe to say that nobody has ever looked like that while using a Microsoft product.
6:35 p.m.: Shapiro says Gates has given 10 CES keynotes, eight consecutively. He’s spoken at CES 11 times. Guess he must be the Guinness World Record holder. How ’bout that, huh?
6:33 p.m.: And here comes Gates. Wait–that’s not Gates. It’s Consumer Electronics Association President Gary Shapiro. OH RAPTURE! Disappointed applause. “In my opinion these are the best four days of the year,” says Shapiro. (Tell that to Steve Jobs next week.)
6:30 p.m.: Silly CES promo video… Correction: advertisement.
6:29 p.m.: Getting started right on time. Guess Jim Allchin and the Vista development team didn’t do Gates’s makeup this time around. Lights dim….
6:25 p.m.: In a few moments, Bill Gates, the Frank Sinatra of the Dat(a) Pack (Steve Jobs presumably in the Dean Martin role), will deliver his 11th Consumer Electronics Show keynote–and by many projections his last.
6:00 p.m.: The ballroom of the Venetian Resort Hotel Casino is pretty much packed, and like most things in Las Vegas it’s BIG. But it has to be the worst pre-keynote music EVER: from 1982 video game soundtrack to passed-out-after-the-rave techno to European disco to new wave. Really covering all the genres. At this rate, Bill Gates could take the stage to the theme from “The Dukes of Hazzard” or the “Annie” soundtrack.