Microsoft unveils glimpses of its next touch screen-based OS Windows 7

Steve Jobs and his iPhone can take another bow. Just when it seemed that its influence was restricted to the gamut of touch screen mobile handsets being released with alarming regularity, Microsoft comes out with a sneak peek at its next operating system that depicts a definite iPhone hangover.

Of course, the two people who made the presentation at The Wall Street Journal's "D: All Things Digital" conference in California – chairman Bill Gates and CEO Steve Ballmer – will definitely disagree on being influenced by Apple.

The two top Microsoft executives showed off new Windows features based on software it calls "multi-touch" that will be part of Windows 7, the next version of Windows, which Ballmer said was due out in late 2009.

The ability to use touch to give users fingertip control of their screens could help revolutionize how computer desktops and mobile phones are controlled and would be an alternative to existing mice, keyboard and pen-based user controls, they claimed.

Microsoft Chairman Bill Gates framed the new feature as an evolution away from the mouse. "Today almost all the interaction is keyboard-mouse," he said. "Over years to come, the role of speech, vision, ink – all of those – will be huge."

He was referring to technologies that gives users the ability to control computers with voice commands, detect and sort different kinds of images and use electronic ink instead of typing for computer input.

Multi-touch software builds on existing capabilities Microsoft has introduced in recent years including Surface, for interacting with large tabletop computer displays, TouchWall for mounted screens and Tablet PCs for touch-screen notebooks.

In a demonstration of touch-screen capabilities to be offered in Windows 7, Microsoft showed a new application called "Touchable Paint" that lets a user paint with their fingers, as well as software to organize photos or navigate maps by touch. A Microsoft employee showed possible applications like enlarging and shrinking photos and navigating a map of San Diego by stroking the screen.

Microsoft has divulged little about its Windows 7 operating system, even after introducing the touch-screen feature Tuesday, quite in contrast to the much-hyped release of Vista.

Chris Flores, a director on Microsoft's Windows client communications team, said in a posting on a company blog Tuesday that the more circumspect tack was deliberate and intended to avoid announcing plans that may change.

"We know that when we talk about our plans for the next release of Windows, people take action. As a result, we can significantly impact our partners and our customers if we broadly share information that later changes" he wrote.

Speaking on the latest version of Windows, Vista, both Gates and Ballmer said that Microsoft is trying to learn from the initial negative reaction. Ballmer reported increased sales figures for the product – 150 million against the 140 million announced a month ago.

Gates even tried to put a positive spin to criticisms of his company coming up with one version of Windows after another saying he has never been 100 per cent satisfied with any Microsoft product, and that the company prides itself on fixing shortcomings in later versions.

"Vista has given more opportunity to exercise our culture than some products," he asserted.

Speaking on Apple, Ballmer acknowledged that Microsoft considered it a formidable competitor. However, he said the two companies' audiences were vastly different in scale, with Apple supplying around 10 million computers this year versus the roughly 290 million machines which PC makers will sell running Microsoft Windows.

"Whether Apple has a PC with touch in it to market first, we'll see," Ballmer said.

In their interview, the two colleagues and former Harvard college mates fielded a series of questions ranging from Microsoft's interest in Yahoo to Gates' future role in the company.

Ballmer said Microsoft remained in discussions to team up with Yahoo Inc. after Microsoft's $47.5 billion bid for the company was spurned earlier this month. He said Microsoft wasn't planning to buy Yahoo but offered only the barest details of what he has in mind.

"We are not rebidding for the company. We reserve the right to do so. That's not on the docket," he said. Microsoft said on 18 May that it revived talks with Yahoo, without providing specifics. (See: Microsoft returns with alternative offer for Yahoo!)

Gates let Ballmer take the questions about Yahoo. When asked for his thoughts, Gates said, "I've been supportive of everything Steve has done. ... Totally supportive."

Ballmer, responding to an audience question, denied that the bid tarnished Microsoft's reputation. "If anything, I think people know we're very serious about our online business," he replied.

They also spoke on Gates relinquishing daily responsibilities at Microsoft in favour of charitable activities, with both asserting the absence of any transition problems. Reminiscing about the early days of Microsoft, Ballmer said he had to plead to grow Microsoft's payroll from 30 employees and that he had to assume the duties of the company bookkeeper who had left on Ballmer's first day.

When Ballmer began to question why he left business school at Stanford, Gates laid out his vision of a computer at every desk. Ballmer continued, leading to a 28-year partnership at the company helm. "I was forced to be particularly articulate that night," Gates recalled.