Microsofts Live Labs has demoed a second itineration of its ground-breaking Photosynth software which adds new features and smooths out the virtual environment’s user experience (see video below). The .Net-based program was first shown in mid-2006 and caused quite a stir online with its advanced photo analysis and 3D reconstruction of environments. But, as with many Microsoft research projects, news on development for the product went silent for years after an early sneak peak.

In the latest demo, it is still not clear what Microsoft plans to do with Photosynth, but as of now, it seems to serve as an interesting brand-building and conversation piece for .Net development. A hint to its possible future came last week when All Points Blog claimed that a removed post from the Live Labs blog announced that the project would be transferred to Virtual Earth team (a copy of the removed post can be seen here).

This latest build adds features like allowing a user to smoothly travel through the virtual environment, updating pictures in real time (the older versions required clicking on individual images). The demo also showed a significant improvement in image detection and placement, both color-correcting and modifying dimensions of images in order to make a smoother, more realistic virtual experience.

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