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This is what wikipedia has to say about capicitive screens.
A capacitive touchscreen panel is coated with a material, typically
indium tin oxide, that conducts a continuous electrical current across
the sensor.[2][3]
The sensor therefore exhibits a precisely controlled field of stored
electrons in both the horizontal and vertical axes - it achieves capacitance.
The human body is also an electrical device which has stored electrons
and therefore also exhibits capacitance. Capacitive sensors work based
on proximity, and do not have to be directly touched to be triggered.
It is a durable technology that is used in a wide range of applications
including point-of-sale systems, industrial controls, and public
information kiosks. It has a higher clarity than Resistive technology,
but it only responds to finger contact and will not work with a gloved
hand or pen stylus. Capacitive touch screens can also support Multitouch. A good example of this is Apple Inc.'s iPhone and iPod touch.
This is its take on resistive screens.
A resistive touchscreen panel is composed of several layers. The most important are two thin metallic electrically conductive and resistive layers separated by thin space. When some object touches this kind of touch panel, the layers are connected at a certain point; the panel then electrically acts similar to two voltage dividers with connected outputs. This causes a change in the electrical current which is registered as a touch event and sent to the controller for processing.
Resistive touchscreen panels are generally the most affordable technology but offer only 75% clarity (premium films and glass finishes allow transmissivity to approach 85%)
and the layer can be damaged by sharp objects. Resistive touchscreen
panels are not affected by outside elements such as dust or water and
are the type most commonly used today. The Nintendo DS is an example of a product that uses resistive touchscreen technology.
The articles on web had some interesting take on usage of these screens. Resistive screens are far less expensive than capacitive screens. But the most important single factor supporting the continued use of resistive screens is the huge opportunity in the Asian market and its need for screens that support handwriting recognition input with a stylus. A capacitive screen or QWERTY keyboard just won't suffice in markets like China, given the nature of its alphabet.
Thus, capacitive will find itself into high end phones, whereas resistive will be people's choice for phone screen.
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