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LAS VEGAS--If Microsoft and National Semiconductor have their way, keychains will soon alert commuters to traffic jams, wallets will link to live updates of the owners' bank balance, and missives will pop up on wristwatches.

That's the promise of a wireless low-bandwidth data network and receiver device technology being announced by Microsoft chairman Bill Gates at his Wednesday evening keynote address at the Consumer Electronics Show here.

Gates was also slated to show several other new consumer gadgets, including a prototype of a "personal video recorder" called Media2Go, developed with Intel. The portable device has a 4-inch screen and a 30GB disk drive that plays video and music either downloaded from the Internet or transmitted from a PC via a television tuner.

Samsung Electronics and Sanyo are among the hardware partners expected to offer products based on the design this year, says John O'Rourke, senior director of Microsoft's consumer strategy.

Also unveiled: the first shipping DVD player to play discs that use HighMAT, a technology Microsoft developed to store PC-created digital media on recordable discs such as CD-R and CD-RW. Polaroid has developed a prototype DVD that will be the first to play movies created using Windows Media Video 9.

Next: Radio Redmond

Microsoft's focus, however, is on its project with chip maker National Semiconductor to build a nationwide low-bandwidth data network and to develop a wireless chip technology that exploits FM radio technology. The network, called Microsoft DirectBand, is expected to go live this fall and could give rise to a host of new wireless Microsoft services beaming information to smart devices powered by Microsoft software and National Semiconductor chips, experts say.

The network technology is part of Microsoft's ambitious Smart Personal Object Technology (SPOT) initiative, previewed last year at the Comdex trade show. SPOT is designed to deliver continuous, real-time information across a low-bandwidth wireless network to myriad everyday consumer devices such as watches, refrigerator magnets, wallets, and alarm clocks. The one-way network will allow Microsoft and its partners to push data to devices containing the microchip custom receivers. National Semiconductor, in partnership with SCA Datasystems, has developed the low-cost, very-low-power integrated radio receivers.

Announced at CES are the first SPOT devices: wristwatches made by Fossil, Suunto, and Citizens. Watches will act as FM receivers that can turn DirectBand radio waves into data.

"These watches won't be geek gadget wear," says Donald Brewer, vice president of technology for Fossil. "These watches are going to be pretty damn fashionable."

Dawn of Smart Gadgets

Fossil's SPOT wristwatch will provide access to about a dozen personalized channels of information, such as sports, weather, news, and to-do lists, and will be able to receive text messages, Fossil's Brewer says. Wearers will navigate the watch's LCD display using only buttons.

Brewer expects the first Fossil watches to ship late this year at prices between $100 and $250, with a monthly data subscription fee of about $10. The watches must be recharged every two to three days.

"These products open an entirely new genre of digital devices," says Michael Gartenberg, research director with Jupiter Research. "Unlike your PDA, your wristwatch goes wherever you go." And the information is available with a quick peek, he notes.

"This is what we call 'glanceability'," says Roger Gulrajani, director of marketing for Microsoft's SPOT initiative.

Such custom feeds won't be limited to wristwatches. Other smart objects that may ship by early 2005 are pens, wallets, key chains, and "smart buttons" with LCD displays. Each may be programmed to display weather, traffic conditions, or one-way e-mail messages, according to Microsoft.

For example, a sports team could market a dollar coin-size button that displays real-time game statistics and scores. You might buy a disposable button to use a single time, or you might purchase a longer-lived one and pay a monthly or season fee for it.

The first smart devices will emphasize custom information that has high value and is relevant to the time, context, and location of the user, says Chris Schneider, Microsoft's program manager for SPOT.

Radio Surfing

Microsoft says that it will act as the service provider, working with device manufacturers who in turn create devices and market subscription data services.

To build the DirectBand network, Microsoft is subleasing spare radio FM spectrum from a number of broadcasters, including Entercom, Clear Channel, Rodgers Communications, and Greater Media.

Microsoft says that it has developed a new way to optimize data transfer over the so-called FM subcarrier spectrum. This FM spectrum can handle limited amounts of data transmitted by radio stations and is typically used to broadcast radio station call letters and sometimes song title information for display on car radio LCD and LED screens.

In August, DMarc Networks launched a similar "radio-text" service called RadioGreetings.com, which supports sending personalized text messages or dedications through the Internet for broadcast by three Los Angeles radio stations.

Microsoft claims to have improved on this technology and built an enhanced technology based on existing protocols to inject Internet data into the broadcast stream more efficiently.

More than 250 radio stations across the country will transmit Microsoft's data services, Schneider says. By fall, coverage will encompass 100 of the "largest population centers" in all 50 states and in portions of Canada, he adds.

Pushing Wireless Services

Schneider says that typically customers will subscribe to a DirectBand services tied to a corresponding device. For example, you might buy a "football button," and then log onto MSN.com to program your button to track your favorite team. Or you may program your "weather button" to deliver a maritime forecast rather than a standard weather forecast.

By 2005, Microsoft expects, a wide range of single-purpose information buttons will be available, according to Schneider. For example, a SPOT wallet will always be able to tell you how much money you have in the bank. "SPOT technology is about making objects smarter. It's not about slapping Internet onto any old device just because we can," Schneider says.

Microsoft partners will market the buttons. "The number of services and devices is only limited by our imagination," Schneider says.

The wireless network gives Microsoft the jump on competitors racing to create wireless service infrastructure, says Tim Bajarin, president of consulting company Creative Strategies.

"Microsoft is way ahead of the curve," Bajarin says. He suspects that Microsoft DirectBand will start out delivering one-way services pushed over FM data network, preceded by services delivered over cellular data and 802.11 networks.

Wireless services are considered the Holy Grail when it comes to making next-generation cellular networks profitable. Nearly all wireless carriers are struggling to find new wireless services (/reviews/article/0,aid,106703,00.asp) that a broad range of consumers would be willing to pay for. Meanwhile, a number of wireless companies are planning on rolling out 802.11 wireless services (/news/article/0,aid,107727,00.asp) this fall as well.

Making Novelty Common

Gartenberg says that Microsoft's success hinges on an appeal that extends beyond the CompUSA set to reach the Macy's and Nordstrom crowd. Consumer expectations differ among nontechies, he says. A "smart watch" sounds cool, but how many people want to recharge their wristwatch every other day?

Another hurdle may be the the cost of implementing the technology, says Michael King, a senior analyst with Gartner. Unaided by any real consumer need for smart buttons, SPOT devices will likely remain on the fringe for the next few years, King says. What's more, Linux might provide a more viable option to power such devices, because it's free.

James Niccolai of the IDG News Service contributed to this report.