We covered the launch of Microsoft’s Surface touch-screen computer last year.

This week at the Consumer Electronics Show, the company is demonstrating some new application prototypes for the product.

In his keynote speech, Bill Gates gave a demo of the kinds of interactive retail applications ideal for Surface multi-touch systems. Microsoft claims it “provides a clear solution to common consumer pain points,” including :

* Being overwhelmed by choices
* Not having enough information
* Can’t make it yours
* Want to share it with friends

An email sent to Mary Jo Foley by the product team said, “The application showcases the four key attributes of a surface computer including; multi-touch, object recognition, direct interaction and multi-user”.

In his keynote, Gates said, “Your desk won’t just have the computer on the desk, but in the desk, so a meeting room table as you’re collaborating, and the living room if you want to briefing up and play games with something like a Surface, or organize your photos. It will just be there, and easy to manipulate, easy to change and have multiple people connect up.”

Microsoft has announced changes to Windows Live software, which you can see at Get Live.

Windows Live makes it easy to store and manage your communications and information, and share what’s going on in your life with the people who mean the most to you. Many of you have already tried out new versions of our web services – Windows Live Hotmail, Windows Live Spaces, Windows Live SkyDrive beta, and the new Windows Live Home page beta. These have been designed to work together with a common navigation, so it is easy to switch between your e-mail, your space, your files, and your photos—from any browser.

The company is releasing beta versions of “a new generation of Windows Live software designed for your Windows PC that makes it easier than ever to get connected to Windows Live or other services”.

This suite includes Windows Live Mail (Hotmail); Windows Live Photo Gallery, for photo sharing; Windows Live Writer, which allows you to publish to a blog; Windows Live OneCare Family Safety, parental controls; and a new version of Windows Live Messenger (8.5).

The company says, you’ll be able to install the entire suite of these downloadable Windows Live services at one time, from one place, “instead of going through separate installations for each service. Of course, if you don’t want the entire suite, you can still get each application individually”.

Can’t wait.

Brian Caulfield, writing in Forbes magazine, asks who’s winning the battle between Microsoft and Google? The answer, according to him, is Apple.

Microsoft was originally condemned to be broken up after it was deemed to be a monopoly by a federal judge in November 1999. Bill Gates fought that off in November 2001 on appeal, agreeing to a settlement.

The deal blocked Microsoft from preventing rivals building applications to run on Windows. Steve Jobs has been using that ruling to make Apple a Windows software player ever since.

For starters, Apple can now do all sorts of things with its operating system that are off-limits for Microsoft. In January 2001, it introduced Apple iTunes, software for buying and managing multimedia content that is now baked into every Apple. In January 2003, it introduced a browser, dubbed Safari. In 2005, Apple released a version of its OS X operating system with a slick, built-in search feature dubbed Spotlight. “They’re the only company that actually forced Microsoft off of the operating system because of their integrated Safari browser,” says Rob Enderle, principal analyst at Enderle Group, referring to the latest version of Apple’s OS X software.

Better still, from Apple’s point of view, Microsoft has to keep its doors wide open to whatever Apple product Jobs cares to give away. That’s helped Apple’s iTunes software crush Microsoft’s alternative among users of the Windows operating system. “It’s like giving a glass of ice water to somebody in hell,” quipped Jobs at this month’s D: All Things Digital conference in Carlsbad, Calif.

For Apple, the trick is selling more hardware, not destroying Microsoft’s software monopoly. And Apple can give away its software because that’s not where it makes its money.

Microsoft seems to have jumped out of the frying pan into the fire.

In China, Bill Gates unveils Microsoft’s commitment to help close the digital divide by creating new products and programs that will help bring social and economic opportunity to the estimated 5 billion people who are not yet realizing the benefits of technology.

The press release states : “Company unveils affordable education suite for young people in developing nations and announces plans for 90 new Innovation Centers to promote local software ecosystems.”

“All human beings deserve a chance to achieve their full potential,” said Bill Gates, chairman of Microsoft. “Bringing the benefits of technology to the next 5 billion people will require new products that meet the needs of underserved communities; creative, new business approaches that make technology more relevant, accessible and affordable; and close collaboration between local governments, educational institutions and community organizations.”

The expansion of Unlimited Potential will focus on three areas, Gates said: education, innovation, and jobs and economic opportunity.