The market for streaming video calling is exploding. An estimated 13.2 million people worldwide will make video calls this year, up 400% from last year. By 2015, it is estimated that 155.1 million calls will use streaming videos.

Skype is a leader in low-cost phone calls. Calls to other people who have Skype are usually free. Now Skype is offering video calling for as low as $8.99 per month, with up to 10 people on the same call. Skype accounts for 25% of international calling traffic, up from 13% in 2009.

For years Microsoft (MSFT) was the tech leader. Then, Google (GOOG) came along and Microsoft missed the entire search engine revolution. But Microsoft still dominated in software. Then came Apple (AAPL) with its iPod, iPhone, and iPad. Again, Microsoft missed the small device revolution.

The Wall Street Journal reports that now Microsoft is playing catch-up again. With its next operating system it will use low-powered chips similar to those Apple uses.

Microsoft (MSFT) puts up quite a bit of effort trying to convince the world that it is still cool, hip and relevant to the increasingly high-tech consumer. Although the company put on quite a show at the recent CES trade event in Las Vegas, does anyone care? Especially the companies that Microsoft counts as partners?

Microsoft, for the time being, has lost the cool factor to Apple (AAPL) and Google (GOOG). Both companies did not even show anything at the CES event, yet much of the tech hype in recent weeks has been Apple's impending tablet computer and Google's Nexus One wireless phone. Is Microsoft going to be seen as just a commodity provider of software by the consumer, not as a company that produces anything that is innovative or exciting? Although the launch of Windows 7 late last year garnered the company rave reviews, software is an intangible product in the mind of the consumer. You can't take Windows and stuff it into your pocket.

Today needed a strong jobs number to keep traders interested and to keep traders and investors from taking profits. A 10% unemployment reading and a loss of 85,000 non-farm payrolls for December was not enough. The drop in the dollar earlier today (based on the FOMC being able to keep a zero-rate) may have been the only thing that kept more profit taking by stock trading from coming. Here were today's unofficial closing bell levels:

Dow 10,617.06 +10.20 (0.10%)
S&P 500 1,144.93 +3.24 (0.28%)
Nasdaq 2,317.17 +17.12 (0.74%)

Top Analyst Upgrades/Downgrades

The annual Consumer Electronics Show (CES) in Las Vegas was last week. In past years, just the anticipation of the world's largest electronics trade show was enough move technology stocks higher.

That was not the case this year, though, as investors grapple with a weak economy, frozen credit, plunging home values and rising unemployment. Just paying the bills and keeping one's head above water seems to be the order of the day. The market sold off hard last week, and not even the CES could pull it out of its funk. Still, there were some bright spots.

Palm, Inc. (NASDAQ: PALM) gave its investors a taste of the old days as its shares soared 34% after its new touch-screen phone and mobile operating system garnered admiration from analysts and attendees at the CES.

Yahoo!, Inc. (NASDAQ: YHOO) CEO Jerry Yang gave a keynote address at the Consumer Electronics Show (CES) last week that highlighted some of the company's past while plowing into what it needs to do in the future. Yes, competitor Google, Inc. (NASDAQ: GOOG) has eaten its breakfast in internet search. Yahoo!, though, still draws more web visitors. Why can't it turn that traffic into consistently growing profit?

That is the question that's been around for more than a year now. Yang said last week that "I'm sorry to disappoint you. It's still the same old face. I've been around since the beginning." What Yang did show the audience besides quoting the obvious was a powerful new version of Yahoo!'s email service that was more like a communications hub than plain old email service. Yang also officially rolled out a commitment for Yahoo! to integrate more third-party sites to its network as well as let outsiders develop services that can be offered to Yahoo!'s market-leading audience.

Unfortunately, Yahoo!'s window of opportunity is limited to 2008. If it rolls out some truly unique services and is successful at getting its gargantuan web audience to use them -- and find a way to become more profitable with these services -- Yahoo! could be on track to a recovery in the wake of Google's runaway success. But, Google is not slowing down either and can be counted on to have just as much innovation as Yahoo! this year based on what has transpired in Mountain View in the last 18 months. Yahoo! has talked the talk. Now, let it walk the walk. If it fails, it will become the one of the single largest missed opportunities in the short history of the internet.

Although computer giant Hewlett-Packard Corp. (NYSE: HPQ) has had its neck in the home entertainment arena for quite some time, the world's largest tech company wants to throw its past in the bucket and really ramp up home products. This is based on what the company unveiled at this week's Consumer Electronics Show in Las Vegas. My only question is this: haven't we seen all this before?

The bridge that connects the internet to the home theater environment is so far from being a mainstream process that one would think many manufacturers would have abandoned the idea already. Microsoft (NASDAQ: MSFT) has pitched this idea for nearly a decade, and even Apple (NASDAQ: AAPL), which released the AppleTV to bridge this divide, has seen middling success at best.

What can Hewlett-Packard do to re-ignite this field -- if it even exists in consumers' minds? Microsoft's Home Server, meant to shuttle content from anywhere in the house to anywhere, is not exactly burning up the sales charts.

The niche of home entertainment, so far, does not seem compatible with the PC industry's idea of extending PC functionality to the living room flat-screen. From viewing HP's lackluster plans that don't seem solidly planted in reality, I'd guess this incompatibility will sit on the horizon for many years to come.

Google, Inc. (NASDAQ: GOOG)'s Android was really set up to be displayed at the Consumer Electronics Show (CES) this week. After such a high-profile and hyped introduction this past fall, it would have been very Apple-esque (as in, releasing products right after announcing them at Macworld) of Google to facilitate some kind of hardware product introduction for this month's CES in Las Vegas. But Google's in the software business, not the hardware business.

What Android product did show up at CES this week, then? Asian electronics manufacturer Wistron NeWeb was the sole supplier of any Android pre-release hardware product. The GW4 model, which reminded some of the ubiquitous BlackBerry handset, was on display this week sporting some common features from today's wireless handset manufacturing universe.

News out of TASER International Inc. (NASDAQ: TASR) has been ... how shall I put it ... somewhat odd as of late.

First, a few days ago, we heard of Taser Parties. Indeed, like Tupperware Parties, Taser Parties have women gather in someone's home. They get a demo of the recent TASER C2 and even try it out for themselves (on targets, not each other). While this isn't exactly a TASER official marketing strategy, rather a saleswoman's vision, it may not be a stretch to see the stun gun maker endorsing this as one sales tactic out of many.

In fact, TASER has already adopted the concept for its booth at this year's Consumer Electronics Show, where Taser Parties were held. TASER didn't just throw "parties" at CES, but brought Playboy Playmates to ... ahem ... sign autographs.

But wait, that's not all in the odd tidbits realm. At CES, TASER also showcased designer colors for the TASER C2 in addition to the classic black model: fire-engine red, blue, silver or pink. Pink, by the way, in some sort of a "girl power" thing is actually the company's biggest seller. The company also unveiled a new Taser holster in leopard print with a built-in 1 GB MP3 player (preloaded with songs from AC/DC, Shock G, Lightning Bolt and S.T.U.N. ... not really). The reason for the MP3 player, you may ask? "You're more likely to carry it, and it will be there when you need it," VP of communications Steve Tuttle said. How's that for marketing?

Microsoft (NYSE: MSFT) -

Bill Gates will give the pre-show keynote address at International CES on January 6 in Las Vegas. CES features 2,700 exhibitors spanning 30 product categories.

MSFT is expected to report EPS on January 24th.

MSFT overall option implied volatility of 27 is near its 26-week average of 25 according to Track Data, suggesting non-directional risk.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Microsoft Corp. (NASDAQ: MSFT) -- Bill Gates will give the pre-show keynote address at CES on January 6th in Las Vegas. CES features 2,700 exhibitors spanning 30 product categories. MSFT overall option implied volatility of 29 is above its 26-week average of 24 according to Track Data, suggesting larger risk.

E-Trade (NASDAQ: ETFC) -- ETFC is recently down 65 cents to $4.04. On November 29, ETFC announced a $2.5 billion cash infusion deal from Citadel Investment Group. Bank of America says: "Downgrade to sell (PT goes to $2) as we no longer believe the value of the ETFC's retail brokerage business, a dwindling asset (which has lost 17% of assets already), can offset negative value at the bank." ETFC overall option implied volatility of 111 is above its 26-week average of 72, according to Track Data, suggesting larger price fluctuations.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

I'm not exactly on the forefront of gadget desire. Sure, those shiny pretty things are fun, but I'm not willing to lay out cash until I'm really sure I want something. I only got wireless for my laptop in November 2005. I can count the months I've owned a camera phone on my fingers. I've never, ever surfed the web or emailed from a "mobile communication device." I don't even have an iPod.

And yet. As soon as I laid my eyes on the shiny, sexy photos of Apple, Inc. (NASDAQ:AAPL)'s new iPhone -- a cell phone, iPod, movie player, camera, and "mobile communication device" in one, I called my husband. He's been threatening to buy me the biggest, fattest iPod for months, though I insist I don't need one.

"Will you buy me an iPhone?" I asked him. "You have six months to save up!" I'm already planning out how I'll use it to take and email photos of my sister-in-law's new baby, due in July, straight from the hospital. Melly Alazraki chimed in almost immediately -- she wants one, too.

I started emailing my friends, the urbanMamas (a.k.a. Yoga Mamas). We're like a ready-made focus group for professional women who blog but are otherwise far from the cutting edge of gadget-savviness. "Do you want one?" I asked.

The answer: yes, yes and more yes. (And one "no" because "I like the iPod and phone together, but I dislike having the Internet available anywhere anytime. I already waste too much time on it.") We've been waiting to enter this market, and Apple has given us the appetizer we needed.

What else at CES has my focus group opening up "budget.xls" on their computers to find some room for new goodies?

Although all eyes are on the Consumer Electronics Show going strong this week in Las Vegas, the consultation I've done in that industry still stands at a dark crossroads these days.

More and more products are pushed onto the consumer (most of whom did not ask for them) and every company from here to there wants to supply those consumers with either the content or the devices (or both) and take a cut based on volume subscriptions or device purchases.

I agree with Doug in that there is only so much time in the customer's day -- and *no* customer can be expected to consume so much using so many different mediums (YouTube, digital cable, digital satellite, Netflix, etc. etc.). I even like Mark Cuban's reference to YouTube's change into an advertisement platform since Google Inc. (NASDAQ:GOOG) bought it. Hmm.

Will Sony bomb and get rid of current CEO Howard Stringer if the Playstation 3 fails in 2007? Maybe. Will consumer electronics manufacturers continue to supply us devices they "want us to use" to prop up sagging margins in an effort to push content we never asked for in the first place? Of course. But I will say this -- I'm not sure I want the convergence of the PC and living room except for one aspect -- to watch video clips and downloaded movies from the PC on the living room PC, and perhaps to listen to my MP3 collection over the sound system in the living room.
OK. So maybe I do want a little convergence. But do *normal* consumers, though?

Motorola (NYSE:MOT) CEO Ed Zander stood up and gave a speech yesterday at the opening of the Consumer Electronics Show with a vision of all consumer electronics "going mobile". Um, Ok -- really? When I delved into the details of what he meant, some of what he said made sense while other pieces of the speech made little to no sense. Chalk it up to another executive "setting the future" for customers by possibly not understanding the customer in the first place.

Now, it's common knowledge that many companies create the marketplaces they sell and operate in and end up convincing customers to products and services where a pre-existing consumer need was either 1) not needed at all or 2) was untapped, but existed. Motorola wants to create that "everything mobile" future and then get customers into buying the vision it created.

As the saying goes, if the demand is lacking, create it. But customers are smarter than that, and can quickly weed out subpar offerings even with the almighty marketing glitz and spin that can occur when Harvard MBAs go crazy on the marketing train.

Zander is not that crazy -- some of his ideas about the potential for mobility in emerging countries (where wireless penetration is just starting to explode) are excellent sources of future revenue that should treat holders of MOT well if Motorola can execute. But, in established markets, I'm not sure "everything" will need to go mobile. If so, I'll be buying stock in battery companies -- as all these devices will need tons of portable power sources.

Does Wall Street care about all the glamour and glitz currently being touted at the Consumer Electronics Show in Las Vegas this week? Well, after a day of large announcements, both the NYSE and the 'DAQ held firm on either small losses or tiny gains form some of the largest names in the consumer electronics and computer industries -- Microsoft Corporation(NASDAQ:MSFT), Apple Computers, Inc.(NASDAQ:AAPL), Motorola(NYSE:MOT)and Qualcomm(NASDAQ:QCOM).

In other words, the street is waiting to see if all these 'grand visions' turn into revenue reality. Most of them will not -- for all the earth-shaking announcements and product unveilings at each year's CES, very few fruitful consumer consumables come out of the mix. Mostly, these ghosts are the grand visions that the keynoters talk about, like Microsoft's Bill Gates touting yet another "converged" living room universe and Motorola's Ed Zander saying that "everything will be going mobile" in regards to consumer electronics. I'm not sure I want that 50" plasma TV going anywhere, thank you very much.

So, is it any wonder that the CES even this week has failed to wake up Wall Street in a way that stock option-hungry executives would like it to? The results are in the pudding -- consumer sales and revenue gains along with growth -- and so far, the pudding bowl is quite empty.