Forget slide shows in the sitting room. Projectors are popping up in all sorts of places - including digital cameras and mobile phones. Jack Riley sees the light

Either hopelessly immobile or too small to be viewed by more than one person at a time, for all its advantages the screen has become modern life's ball-and-chain. One technology, though, just might free us from our desks, liberate us from squinting at our mobiles, and change the way we consider everything from computing and gaming to watching films and television. Given a new lease of life thanks to developments in size, power and mobility, the projector is heading out of the cinema (and the front rooms of hardware geeks) and into every area of our lives. It's all down to a new collective of scientists and technology companies keen to herald a new era for the invention which began its life throwing out flickering images of French factory workers to the stunned audience of a Parisian salon in the late 19th century. Not many 124-year-olds are so lively.

At the forefront of this revolution is a tiny device known as the pico projector (pico, from the Spanish for "very small") – a device tiny enough to be incorporated into cameras and mobile phones, with the capability of projecting films, pictures or presentations at a decent size and quality. Since debuting in 2006, standalone projectors have got smaller and brighter, and for the last year they've retailed on their own at around the £200-£300 mark, aimed at business professionals looking to show off their Powerpoint projects with a snazzy gadget.

Out of the office, the push to revive projectors threatens to impact the way we view pictures and films in many ways, not least of which is to make these activities more sociable. The University of the West of England's Professor Martin Lister, author of Photography in the Age of Electronic Imaging, sees developments such as the recent release of the Nikon Sp1000j, a 12 megapixel digital camera with an in-built pico projector, as harking back to a time when viewing photos was a social event. "'Slide nights' were important cultural events in the Seventies – they encouraged people to gather," he says. "This new projection technology has the same potential to encourage a social ritual around sharing photos. But it isn't a step back: it has an important technological development in the way that it's now so mobile."

Although online picture-sharing has had the monopoly on photo-viewing for the last few years, it's easy to see how projectors could usurp the pseudo-social experience of photo-viewing on web sites. If projector-enabled devices were to become as ubiquitous as the mobile phone cameras on which the vast majority of people's pictures are now taken, the possibilities for photo-sharing would increase.

Nonetheless, the year it's taken for the first pico projector-enabled mobile phones to go from the prototype versions displayed at the Consumer Electronics Show in Las Vegas last January to the market has not been a kind one for the technology, and for many the shine has already come off.

"The pico manufacturers haven't answered the question 'Why do I need one?' well enough," believes Kieran Alger, online editor of the technology magazine T3. With a prohibitively high price tag (The Logic Bolt, one of the world's first projector-enabled mobile phones is $475 in the US, though its release has been highly limited), it's easy to see his point.

"The concept of being able to pull out a pico and project a video clip of your favourite film has an appeal for gadget lovers, but when you compare the experience with watching the same clip on an iPhone or Sony X-Series Walkman, picos don't compete," he adds. "OK, so more than one person can enjoy the projection but the quality of video playback is better on the devices consumers are more familiar with."

This concern about the micro-projector's appeal is also key to manufacturers' decisions not to offer the devices they have developed for the international market in the UK, as Samsung's Dominic Webb attests. Though Samsung has recently released its first mobile phone with an inbuilt pico projector, called the "Anycall Show", in South Korea, it's waiting for greater interest before offering anything similar for sale in the West. "If there is consumer demand for micro projector technology and it can be delivered affordably," he says, "we might see the introduction of handheld devices into the UK market." For now though, the market is relatively ambivalent and as he puts it, "consumer demand ultimately drives the successful adoption of technology by society. As each market is different, the introduction of micro projection technology into other territories is likely to be dictated by the various factors that influence each market."

So, with technology commentators and gadget lovers considerably more excited about the technology than the general public, are micro-projectors doomed to obscurity by their novelty value? Not if we can think of better contexts for their use, claims Dr Edward Buckley, Vice-President of Business Development and a co-founder of Light Blue Optics, a Cambridge-based company who are already looking past pico projectors and to the next wave of projection technology.

His company is pioneering a new holographic laser projection that not only projects down onto a flat surface, but also, crucially, integrates touch technology using infrared light, so users can interact with the image in front of them directly. By way of a demonstration of how it will work, he describes a future where units are embedded into cameras and phones much like we're only now seeing with conventional pico projectors. "People have iPhones now, and everyone expects to be able to interact with a display. Imagine taking your iPhone and standing it on a table – the image is formed next to it because the projection angle is so wide," he claims, "We think that this interactive touch capability will be the thing that actually drives sales of accessory pico projectors."

According to Buckley, the failure of pico projectors to become best-sellers lies in manufacturers' failure to consider the actual opportunities for their products to be employed in everyday life. "They're marketed as devices that you would use to watch a movie on for 90 minutes or so, on the move," he says. "The trouble is if you look at the ergonomics of it, you have hold it in your hand and shine it at a wall or something."

In contrast, the potential applications for a device which is mobile, user-friendly and produces touch-sensitive projections is vast; you could, for example, edit your photos on the go, using your hands to manipulate the images, as well as use operating systems like Windows 7, which is designed to incorporate touchscreen interaction and could be adapted for use with a touch interactive projector. Prototypes are already running a version of the arcade classic Pacman where you direct every gamer's favourite yellow dot by touching the projection of the maze.

These developments are part of a vision for mobile projection which the developers at Light Blue Optics think we could start seeing in 2011, when the company anticipates being able to shrink its holographic projection technology to 8cm3 – roughly half the size of a modern USB stick. That said, though the company is yet to fix a precise date, its first launch is imminent, with plans in the works to bring the first mobile cameras with inbuilt touch-sensitive projectors a step closer.

When it comes to the immediate future of the technology though, Professor Lister thinks we'll be building on what we've done in the past. "It won't only be in the home that we'll see the return of the slide show (as it was in the Seventies) but we'll see the slide show making an appearance in the pub, house party, wedding, christening or even," he muses, "the nightclub."