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Microsoft showed demo of its next operating system Windows 7 at D6 conference (All Things Digital) in San Diego, which will come with multi-touch features as an alternative to the mouse.

In this video you can see some Multi Touch Demo Scenarios running in Windows 7 Milestone build (pre-alpha) with some Microsoft Surface Demo Apps.

Microsoft plans to release Windows 7 in 2010 with the new fingertip interface which lets users enlarge and shrink photos, trace routes on maps, paint pictures or play the piano.

According to Microsoft Chairman Bill Gates:

The way you interact with the system will change dramatically. Today almost all the interaction is keyboard-mouse. Over years to come, the role of speech, vision, ink – all of those things – will be huge. It is “a big step forward” for speech technology and handwriting recognition.

Windows 7 has reached the Milestone 1 (M1) stage and has been made available to key partners.

Microsoft is hoping that Windows 7 can change the way people interact with PCs in the future. Chief executive Steve Ballmer admitted that he wants to do better than Vista (even though Microsoft sold 140 million licenses) and described the demo of the multi-touch screen at the conference as “a small snippet” of the next version of Windows.