They have become the most empowering tool we've created - tools of communication, tools of creativity which can be shaped by their user.

Bill Gates yesterday took his vision for personal computers to a higher plane, where the mouse and keyboard are replaced by more natural interaction using voice, pen and touch.

The co-founder of Microsoft unveiled a coffee-table-shaped "surface computer" which has a 30-inch display under a hard-plastic tabletop, allowing 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.

The Surface computer also recognises and responds to special bar codes attached to everyday objects placed on its top, 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.

So-called "multi-touch" interfaces, which allow the user to gesture with several fingers at once to manipulate data, rather than relying on a mouse and menus, have been making waves in technological circles for some considerable time.

One of the most eagerly-awaited examples is Apple's iPhone, scheduled to be released next month. It combines a mobile phone, a widescreen iPod with touch controls and an internet communications device with e-mail, web browsing, maps and searching in a small handheld device. It lets the user control everything with their fingers.

Hewlett-Packard has also been looking at expanding multi-touch technology. So, too, have leading research scientists such as Jeff Han of New York University's Courant Institute of Mathematical Sciences.

Microsoft, the world's largest software maker, said it would manufacture the Surface com-puter 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, essentially a Windows Vista PC tucked inside a shiny black table base, for between £2500 and £5000 each but aims to bring prices down to consumer levels in three to five years.

Steve Ballmer, chief executive, said: "We see this as a multi-billion dollar category, and we envision a time when Surface computing technologies will be pervasive, from tabletops and counters to the hallway mirror."

Analysts said the first few applications only hinted at what was possible. Matt Rosoff, an analyst with Directions on Microsoft, an independent research firm, said: "The potential for the interface is huge. Once you open it up to applications, what you can think of is limitless."

Chris Webb, spokesman for the British Computer Society, described it as "an exciting and revolutionary time".

The society is celebrating its 50th anniversary and to give an idea of how far it had come, he said: "In 1957, one mainframe for a computer would be equivalent to one mobile phone today.

"The fast pace of change is so dramatic that what one forecast would happen in 10 years' time will take place in five."

Mr Webb predicted the mouse would be defunct in five years - which could mean two and a half.

Microsoft held demonstrations of the technology last week and Mr Ballmer officially introduced it yesterday at Wall Street Journal's D: All Things Digital conference.

Microsoft shunned its usual PC manufacturing partners and decided to take control of the Surface computer's hardware production using an undisclosed contract manufacturer.

The company has a mixed record with new technology. Its Zune music player has not yet become a major challenger to Apple's 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.

People really like it because it mimics what they do in the real world'
- Pete Thompson, Microsoft Surface general manager

In a demonstration, Microsoft placed a digital camera with a wireless chip on the tabletop. The Surface recognised 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 cell-phone operator T-Mobile USA, one of its launch partners, could deploy the computer in its stores.

A customer can take a phone off the shelf, place it on the tabletop where it will recognise 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 the launch it would deploy a virtual concierge for Harrah's Entertainment's casinos in Las Vegas and place the Surface computers in the lobbies of Starwood Hotel & Resorts Worldwide Sheraton hotels.

Guests sitting in some Starwood Hotel lobbies will be able to cluster around the Surface to play music, then buy songs using a credit card or rewards card tagged with a bar code. In some hotel restaurants, customers will be able to order food and drinks, then split the bill by setting down a card or a room key and dragging their menu items "on to" the card.

Michael Gartenberg, an analyst at Jupiter Research, said Surface was "important for Microsoft as a promising new business, as well as demonstrating very concretely to the market Microsoft still knows how to innovate, and innovate in a big way".


Tidal wave of technology began with simple charts

  • The first computers were people. "Computer" was originally a job title: it was used to describe those human beings (predominantly women) whose job it was to perform the repetitive calculations required to compute such things as navigational tables and tide charts.
  • One of the earliest attempts to build an all-electronic digital computer occurred in 1937 by JV Atanasoff, a professor of physics and mathematics at Iowa State University.
  • Another candidate for granddaddy of the modern computer was Colossus, built during the Second World War by Britain to try to break the cryptographic codes used by Germany.
  • Computers had been around for 20 years before the first microprocessor was developed at Intel in 1971.
  • Bill Gates dropped out of college so he could concentrate on writing programs. In 1975 Paul Allen and Bill Gates developed BASIC for the Altair 8800 and Microsoft was born.
  • Microcomputers first appeared in the 1970s. Steve Wozniak, co-founder of Apple Computer, is credited with developing the first mass-market home computers.
  • The Apple Macintosh made its debut in 1984. It featured a simple, graphical interface, used the 8-MHz, 32-bit Motorola 68000 CPU, and had a built-in 9in black-and-white screen.
  • Microsoft's Windows 1.0 shipped in November 1985. By 1989, the company's sales had reached $1bn.