One of the universal complaints about the Surface is its size — and competitors like the iTable, Displax, and FlatFrog are attempting to strike at that weak point before Microsoft comes out with the inevitable flat version. But if this nascent project being pursued by Microsoft Research bears fruit, the next version of the Surface might not have a screen at all.
The idea is that the interactive surface would be projected from above, while a stereo-sensitive camera or pair of cameras captures the position of hands, objects, and so on, allowing you to interact with the image. Sounds good to me, though of course top-down projection has its own share of drawbacks. As for the feasibility of the hardware, well, at the moment we are seeing a huge improvement generation-over-generation in pico projectors, but brightness is still an issue. And it’s worth noting that while it would have some similarities with the Surface, it really is a whole different animal, based on different principles of touch and interaction. The little visual tags Surface relies on, for instance, wouldn’t work the same; there’d be more in common (obviously) with the Playstation Eye.
Whatever actually comes of this, it’s good to know it’s being looked into. Between this, Surface, and Natal, Microsoft seems to be taking next-generation interfaces pretty seriously.