Microsoft today was spotted developing a new concept for a portable multi-touch interface. Mobile Surface (link currently inactive) combines a camera and a projector to create a multi-touch interface from a much smaller device, such as a smartphone. Unlike the table-based Surface of today, it would respond in 3D and would allow interactions based on the distance from the surface and the camera.
It's unknown how close Microsoft might be to developing a production version of Mobile Surface, though the original Surface quickly went from a research project to a production technology in use at AT&T stores, hotels and other public locations.
A mobile version would be considerably less expensive to implement and could open the door to a distinguishing trait for Windows Phone 7 or Zune devices, which could use Project Natal-style interfaces for special games or for apps that would simply benefit from a higher resolution.