Tobias Jordans pointed to a new astonishing video of a 8-by-3 inch two-panel multi-touch sensitive wall mounted screen:

The video makes evident, that the interaction feels continuous and natural. And since Apple has shown with the iPhone that multi-touch can improve small interfaces as well, I think this technology could replace the mouse one day.

There as an article at Fastcompany.com stating that Jefferson Han was already approached by media companies and intelligence agencies to partner.

Update: There is also a short presentation in February 2006 by Jeff Han on The TED 2006 conference.

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