Discussing and demonstrating the next version of Windows while the current one is just one year and a half old is quite an unusual move for Microsoft. However, Bill Gates and Steve Ballmer took up the stage at the “D: All Things Digital” to offer a glimpse of what we could expect from the next Windows, for the moment referred to as Windows 7.

Over the past few months there have been various rumors about what one should expect from the next-generation Windows.

In October 2007, Microsoft's Distinguished Engineer Eric Traut demonstrated during a presentation at the University of Illinois, a version of the Windows kernel, called MinWin, which has just 100 files and 25MB. The small kernel will allegedly be a part of Windows 7, which seeks to componentized the Windows kernel and reduce the dependencies, with the purpose of reducing the disk footprint and memory usage.

But it seems like the demo introduced by Ballmer and Gates has nothing to do with MinWin. Instead, what is known so far is that Windows 7 will be largely based on Windows Vista, an operating system which is considered a real success by Microsoft.

And in order to stir up the interest of the media and analysts, Microsoft pulled out a new trick from its software hat: the touch interface.

Is the touch interface really the missing thing from Windows? It seems like Microsoft is convinced so.

In a post on the Windows Vista team blog, Chris Flores explained some of the features that could become reality thanks to a Windows with multi-touch “flavor.”

“Touch-enabled surfaces are popping up everywhere including laptop touch pads, cell phones, remote controls, GPS devices, and more. What becomes even more compelling is when this experience is delivered to the PC -on a wide variety of Windows notebooks, in all-in-one PC's, as well as in external monitors,” wrote Flores as an introduction to quite an interesting video. Also, during his speech, Gates touted the advantages of giving up the keyboard and mouse in favor of the multi-touch screens.

Of course, multi-touch is already an interesting feature and it could be a nice addition to any operating system, but Microsoft is taking quite a dangerous path.

Last month in a conference held in Las Vegas, two Gartner analysts presented a report titled "Windows Is Collapsing: How What Comes Next Will Improve.”

Citing reasons such as Microsoft’s failure to innovate and introduce new features in its operating system, the complexity of Windows and the increasing migration of users to the OS-independent applications, Michael Silver and Neil MacDonald concluded that, "for Microsoft, its ecosystem and its customers, the situation is untenable."

Another reason why Microsoft should change the concept behind its operating system is related to the emerging markets. The PC hardware market will continue to slowly increase based mainly on the sales in those markets, as the analysts noted, and they need an operating system that doesn’t require an expensive hardware to run, as is the case with Windows Vista. "Windows as we know it must be replaced," Silver and MacDonald concluded.

And after this report Microsoft came up with the multi touch trick which will surely require special hardware to run. Instead of innovating, Microsoft tries once more to reinvent some existing concepts.

Maybe they are right after all, but Microsoft should be more careful than ever. If the next Windows, which is due to be released in 2009, will fail, this could mean the end of Microsoft’s dominance.