The IntendiX (by g.tec) is a BCI device that uses visual evoked potentials to "type" messages on a keyboard.
The system is based on visually evoked EEG potentials (VEP/P300) and enables the user to sequentially select characters from a keyboard-like matrix on the screen just by paying attention to the target for several seconds.
P300 refers to the event related averaged potential deflection that occurs between 300 to 600 ms after a stimuli. This is a BCI research platform that has been made into a commercial reality. The system includes useful real-life features:
Besides writing a text the patient can also use the system to trigger an alarm, let the computer speak the written text, print out or copy the text into an e-mail or to send commands to external devices.
I'm usually skeptical of "mind reading" device claims (e.g. here), but P300-based technology has many years of solid research behind it. It may be pricey ($12,250) and typing 5 to 10 characters per minute may not sound very exciting, but this device would be a huge leap for disabled patients that have the cognitive ability but no other way of communicating.
(hat tip: medGadget)
UPDATE (3/24/10): Mind Speller Lets Users Communicate with Thought
Neural Music Production and Performance
http://www.youtube.com/watch?v=j1NJJd8N4bE
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