Microsoft has chosen what it sees as the next-generation in PC form factors - a computer the size and shape of a coffee table with a flat, touchscreen display - as the third major product it has designed and is branding for the consumer electronics market.

The company has revealed five-year old project 'Milan', a computer that uses wireless auto sync and touchscreen technology to allow users and devices to interact with files and applications using a flat, table-top screen. The company designed and is branding the computer, as it did with consumer electronics products like the Xbox console and Zune MP3 player.

To accompany Milan, Microsoft has renamed as Surface Computing a team within its Entertainment and Devices Division previously called New Consumer Products. General Manager Pete Thompson leads the group, which has worked quietly in new projects to give computers and other devices more human interfaces.

"The idea is how we start to blur the lines between the digital world and the physical world," Thompson said. The team's projects have been hush-hush, which is why Microsoft revealed the true name of the group now. Milan is the group's first commercial product.

As demonstrated by Thompson and his team, Milan needs no wires to sync with devices and users don't need a mouse to communicate with it. By placing hands on a 30in horizontal display, users can move around photos or videos, and even flip them over or display them from different angles. Bluetooth-enabled devices such as mobile phones, wireless cameras and Microsoft's Zune can also communicate directly with Milan by being placed on the screen. Applications will automatically launch and open the correct file library, such as music or photos, depending on the device.

The prototype the company showed has a black body with a 30in horizontal display. It is 22in in height, 21in in depth and 42in in length. The computer runs a version of Windows Vista with the Microsoft Surface custom infrastructure that allows for the touchscreen and auto sync capabilities, but the operating system is transparent to end users.

Before introducing Milan to a broad consumer market, Microsoft is targeting market segments such as leisure, hospitality and retail environments. The product won't be offered in full production until next year, but Milan's first customers - Harrah's Entertainment, Starwood Hotels and Resorts Worldwide and T-Mobile USA should deploy the first computers by the end of the year.

Harrah's is developing custom applications for about 50 Milan units it ordered, and expects to have as many of these in production as possible by the end of the year, said Tim Stanley, Harrah's chief information officer. The customers' initial approach for Milan is that “Microsoft provides the computer guts, including the operating system, some basic applications for photos, music and a software development kit (SDK), and customers build their own applications,” Stanley said.

Stanley, a former Microsoft employee, saw an early Milan version 18 months ago and was intrigued by it. Although Harrah's is not a Microsoft shop, he thought Milan would provide a "platform to do some new and innovative things for our customers."