This contrast has appeared sharper in recent years, as Microsoft’s Windows Vista operating system received a tepid critical response compared with Apple’s Leopard platform and as the company’s Live Web search service has slipped further behind Google’s. In addition, Microsoft’s cellphone software, Windows Mobile, looks old and creaky compared with Apple’s sleek iPhone and Google’s forthcoming Android mobile operating system.

But innovation does exist at Microsoft’s sprawling Redmond, Wash., campus. For instance, last year’s daring and radical redesign of Microsoft Office has been a critical and commercial success.

Now, there’s a sort of guerrilla team inside Microsoft designed to churn out innovative products more often and more rapidly. Called Live Labs, the unit is a small operation that aims to turn technology theories into real, Web-based products relatively quickly. It has only about 125 employees, and even that modest number is broken up into smaller teams tackling specific projects.

This week, Microsoft Live Labs is releasing its first broad consumer Web service, called Photosynth. This service turns multiple photos of a scene or site — say, an art gallery or a building — into a 3-D scene you can virtually “walk” through on the Web.

Unlike a simple 2-D panorama, which many photo programs can create from several pictures, a Photosynth creation, called a “synth,” is a virtual 3-D environment. It gives you the feeling you are in the middle of a room looking around, or circumnavigating a building or object. You can travel through a scene both laterally and vertically, and zoom in to see detailed, higher-resolution views of objects inside the synth, such as paintings on a wall.

For instance, you don’t just see a long, flat picture of Stonehenge or the Grand Canal in Venice. You are made to feel you are there, moving through these places, looking up at the sky or down at the ground, and pausing to examine more closely a particular stone, boat or building.

Such 3-D walk-through images have been around for awhile; they are used on some real-estate Web sites, for example, to show houses virtually. But Photosynth allows anyone to create them using any standard digital camera, and even using pictures you already possess that weren’t created with Photosynth in mind. You could even use photos of the same site taken by several people. The software will analyze the pictures, figure out which ones overlap and in what order, and then turn those shots that match up into a 3-D synth.

Photosynth, based on technology Microsoft acquired in 2006, is entirely free, and it’s entirely based on the Web, at photosynth.net (where it will be launched at midnight EST Thursday). At that site you can view not only your own synths, but the synths created by every other Photosynth user.

I’ve been testing this service for about a week, and while it has its flaws, I believe that Photosynth offers a dramatic new way to use your photos and to share them with others.

Photosynth works within a Web browser, using a small plug-in you install. Currently, it works only in Windows, using Microsoft’s own Internet Explorer browser or its rival, Firefox. A Macintosh version is in the works, but for now, you can’t even view others’ synths in the Mac operating system.

When Photosynth works right, the results are wonderfully satisfying. But it takes some skill to get a set of photos the service can match up well, a quality Microsoft calls being “synthy.” Ideally, portions of each slice of a 3-D scene should show up in at least three photos, with 50% overlap between them. After you upload your pictures and Photosynth does its best to make them into a 3-D scene, the service assigns them a percentage number that indicates how synthy they were.

In my tests, I tried both collections of photos I already possessed and some I snapped with Photosynth in mind. My pictures of a piazza in Verona, Italy, were only 38% synthy, while ones I took of a hotel room specifically for Photosynth use were 73% synthy.

One gripe I had was that Photosynth doesn’t tell you how synthy your pictures are until after you have uploaded them and waited until the system merges them, a process that can take a long time over a slow Internet connection. It would be much better if the service could tell you in advance how synthy the pictures are. Another objection is that Photosynth has no privacy settings. All your synths are open to viewing by everyone who uses the service.

But, overall, Photosynth is an impressive new way to view and share photos, and an encouraging sign that innovation and creativity still live in Redmond.

Find all of Walt Mossberg’s columns and videos online, free, at the All Things Digital Web site, walt.allthingsd.com. Email him at mossberg@wsj.com.