Dave Winer reports on the Windows Live demo that took place yesterday while I was in meetings. I can't find a link to the specific strip, but there was a Dilbert comic years ago that this reminds me of - Dilbert and Wally are supposed to do a holographic demo, and all they have time for is Wally's head in a cut out monitor. It sounds like that's where Gates was yesterday.
Mini-Microsoft has comments on that here; I suspect that Gates left the stage pretty darn mad. I know what it's like to have a demo flame out in front of an audience (never one so large as that - my time as a sales engineer didn't include anything that big) - it's not enjoyable. At least in my case, the fault was usually mine, since I was the one putting the demos together. I really wouldn't want to be a member of the team that was managing that demo right now.