Described as an Adaptive Keyboard, Microsoft's prototype featured an even larger touch area.
What’s an Adaptive Keyboard? It is a research prototype developed by Microsoft Hardware to explore how combining display and input capabilities in a keyboard can allow users to be more productive. The keyboard incorporates a large, touch-sensitive display strip at the top. In addition, the display continues underneath the keys, allowing the legends to be modified in real time. This lets you do things like change the character set to a different language or display command icons.
When asked why Microsoft didn't release the keyboard, Steven Bathiche, director of research in Microsoft's applied sciences group, said "We did not build computers back then. When we did start, we made computers with touch screens."
Check out Microsoft's Adaptive Keyboard in the video below...