Microsoft to unveil coffee-table-shaped computer

SEATTLE Wed May 30, 2007 5:04am BST

1 of 2. Microsoft Corp. unveiled a coffee-table-shaped ''surface computer'' in a major step towards co-founder Bill Gates's view of a future where the mouse and keyboard are replaced by more natural interaction using voice, pen and touch.

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SEATTLE (Reuters) - Microsoft Corp. (MSFT.O) will unveil a coffee-table-shaped "surface computer" on Wednesday in a major step towards co-founder Bill Gates's view of a future where the mouse and keyboard are replaced by more natural interaction using voice, pen and touch.

Microsoft Surface, which has a 30-inch display under a hard-plastic tabletop, allows people to touch and move objects on screen for everything from digital finger painting and jigsaw puzzles to ordering off a virtual menu in a restaurant.

It also recognizes and interacts with devices placed on its surface, so cell phone users can easily buy ringtones or change payment plans by placing their handsets on in-store displays, or a group of people gathered round the table can check out the photos on a digital camera placed on top.

The world's largest software maker said it will manufacture the machine itself and sell it initially to corporate customers, deploying the first units in November in Sheraton hotels, Harrah's casinos, T-Mobile stores, and restaurants.

The company is selling the Surface for between $5,000 and $10,000 each, but aims to bring prices down to consumer levels in three to five years and introduce various shapes and forms.

"We see this as a multibillion dollar category, and we envision a time when surface computing technologies will be pervasive, from tabletops and counters to the hallway mirror," Chief Executive Steve Ballmer said in a statement.

Analysts say the first few applications only hint at what is possible.

"The potential for the interface is huge," said Matt Rosoff, an analyst with Directions on Microsoft, an independent research firm. "Once you open it up to applications, what you can think of is limitless."

Microsoft held demonstrations of the technology last week and Ballmer will officially introduce it at the Wall Street Journal's "D: All Things Digital" conference on Wednesday.

Microsoft shunned its usual PC manufacturing partners and decided to take control of the surface computer's hardware production using an undisclosed contract manufacturer. It will run the Windows Vista operating system.

BETTER THAN A TABLET?

Microsoft has a mixed record with new technology. Its Zune music player has not yet become a major challenger to Apple Inc.'s (AAPL.O) iPod, but its Xbox 360 game console has enjoyed early success in the battle of next-generation game machines.

For years Gates has championed touch-screen technology such as the tablet PC with little success, but the Surface is a totally different shape and allows for multiple users at once.

In a demonstration, Microsoft placed a digital camera with a wireless chip on the tabletop. The Surface recognized the camera and sent its pictures to the display, allowing people around the table to sift through them, grabbing and turning pictures or making them bigger or smaller by spreading or narrowing their fingers.

Microsoft showed in another demonstration how Deutsche Telekom (DTEGn.DE) cell phone operator T-Mobile USA, one of its launch partners, could deploy the computer in its stores.

A customer can grab a phone off the shelf, place it on the tabletop where it will recognize the device and pop up the handset's specifications and information to the screen. For a side-by-side comparison with another phone, the customer can put down a second handset next to the first phone.

"It's drop-dead simple and people really like it, because it mimics what they do in the real world," said Pete Thompson, general manager of Microsoft's surface computing business.

Microsoft said at launch it will deploy a virtual concierge for Harrah's Entertainment Inc.'s casinos in Las Vegas and place the surface computers in the lobbies of Starwood Hotel & Resorts Worldwide Inc.'s (HOT.N) Sheraton hotels.

It also signed a distribution and development agreement with slot-machine maker International Game Technology (IGT.N).

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