"We are at an interesting juncture where almost all of the interaction is with the computer and mouse, today, and, over the years to come, the role of speech, vision, ink, all of those will become huge," Gates said.
He was referring to technologies that gives users the ability to control computers with voice commands, detect and sort different kinds of images and use electronic ink instead of typing for computer input.
Multi-touch software builds on existing capabilities Microsoft has introduced in recent years including Surface, for interacting with large tabletop computer displays, TouchWall for mounted screens and Tablet PCs for touch-screen notebooks.
In a demonstration of touch-screen capabilities to be offered in Windows 7, Microsoft showed a new application called "Touchable Paint" that lets a user paint with their fingers, as well as software to organize photos or navigate maps by touch.
"It is not about complete replacement of the mouse," Julie Larson-Green, Microsoft's corporate vice president in charge of Windows Experience Program Management, said in a first-time demonstration of multi-touch features to run inside Windows 7.
Ballmer said Microsoft is trying to learn from the reaction to Windows Vista, the latest version of its operating system, which was introduced in January 2007 but faced initial criticism for being incompatible with many older applications.
He said Microsoft has sold 150 million copies of Vista, up from 140 million the company reported it had sold a month ago.
"When you read the customer research, the No. 1 people found jarring is that we changed the user interface," Ballmer said.
"People take a while to get used to it." He said Microsoft had learned lessons about making dramatic changes in the way users interact with new versions of Windows.
Conference co-host Walter Mossberg asked Ballmer whether Microsoft was done changing the user interface.
"We will polish it," Ballmer replied.
"We will change it, but there are ways to change it and there are times to do it." Vista followed five years after the previous Windows upgrade and was beset by delays due to the complexity of updating a piece of software with some 50 million lines of code that runs on more than 90 percent of the world's computers.
After the problems of releasing Vista in a timely manner, Ballmer pledged to never again wait so long between releases of its Windows operating system.
Microsoft has said it expected to release the new operating system code-named Windows 7 around three years after the early 2007 release of Windows Vista.
Ballmer acknowledged that Microsoft considered Apple a formidable competitor.
But he said the two companies' audiences were vastly different in scale, with Apple supplying around 10 million computers this year versus the roughly 290 million machines which PC makers will sell running Microsoft Windows.
"Whether Apple has a PC with touch in it to market first, we'll see," Ballmer said.