BBC: Microsoft's Digits prototype is part of an effort to bring gesture-based control in a mobile device. A wrist-worn sensor uses IR laser, LEDs and camera to recognize the fingers movement, as shown in Microsoft's paper:
Digits: freehand 3D interactions anywhere using a wrist-worn gloveless sensor.
David Kim (Newcastle University, Newcastle upon Tyne & Microsoft Research, Cambridge, UK)
Otmar Hilliges (Microsoft Research, Cambridge, UK)
Shahram Izadi (Microsoft Research, Cambridge, UK)
Alex D. Butler (Microsoft Research, Cambridge, UK)
Jiawen Chen (Microsoft Research, Cambridge, UK)
Iason Oikonomidis (Microsoft Research, Cambridge, UK & University of Crete, Heraklion, Greece)
Patrick Olivier (Newcastle University, Newcastle upon Tyne, UK)
Presented at the 25th annual ACM symposium on User interface software and technology, Oct. 7-10, 2012 in Cambridge, MA, USA.
While the prototype is quite big, the company would like to shrink it a size of wrist watch that can be worn all the time. An Youtube video shows Digits sensor in action. A longer version of this video from Microsoft site also offers some insight into the algorithms used for fingers recognition, talks about functions of laser and LEDs and more:
Microsoft's team acknowledged the current device was still some way from being ready for market. It currently needs to be attached to a PC to carry out the necessary computations, making it impractical for real-world use. It also struggles if two fingers are crossed, the hand is flattened or if the user is holding something while making the gestures. However, the researchers suggested all these issues could be overcome with further work.