Based on the Raman spectrometer, which gained for its inventor Sir C.V. Raman a Nobel Prize in 1930, the device is about the size of a cellphone and shoots a laser beam which vaporises a thin layer of the surface of a material then records the spectum of the vaporites. The recorded spectrum is then compared against a database of known spectrometry, and thus the signature composition of various materials enables rapid identification of such diverse materials as diamonds, cocaine, anthrax and botanical specimens.
At the moment, the unit going to Mars costs about US$130,000 to manufacture and will be looking mostly for minerals known to have an affinity with water in their formation. Downs and his co-leader M. Bonner Denton envisage a not too distant future where such handheld units will be much more affordable and commonly used by scientists in the field, safety investigators and even law enforcement wanting to quickly analyse samples.
UPDATE: apparently NASA has another type of “tricorder” as well, using neutron beams.