Tech provider for Microsoft's Project Natal revealed

PrimeSense developed the 3D motion technology for Microsoft's next-generation gaming interface

An Israeli startup stepped out from behind the curtain Wednesday and revealed itself as the technology provider for Microsoft's Project Natal, the upcoming motion-control system for its Xbox 360.

PrimeSense, a chip design company based in Tel Aviv, provided the 3D sensor technology for Project Natal, which will let players control an on-screen avatar using full-body gestures like a kick, punch or jump. Microsoft has said the technology will be available for the Xbox 360 by the holiday season.

Unlike the Nintendo Wii, Project Natal doesn't require players to hold a controller to play games. Instead it uses a small 3D camera and a technology similar to infrared to build a 3D image of the people and objects in a room, and then detect a player's movements within that scene.

"We are selling the chip for each Natal system, and we also license the reference design for the whole 3D sensor," said Inon Beracha, PrimeSense's CEO, in a telephone interview from Israel.

He wouldn't discuss the terms of his company's relationship with Microsoft, and a joint statement from the companies Wednesday provided few details.

It seems likely, however, that Microsoft will have demanded exclusive rights to use PrimeSense's technology in gaming systems, at least for a limited time, to give it a head start over other console makers.

Such deals can be exclusive for a few months to a few years, but "if there's any sweet spot, it's probably just shy of a year," said Richard Doherty, research director for The Envisioneering Group in Seaford, New York.

That doesn't mean PrimeSense's motion control technology can't be used in other, non-gaming products, however. Beracha said PrimeSense is working with makers of TVs, set-top boxes and "living room PCs," and that products from those vendors should appear late this year or early in 2011.

The technology could be used to let users scroll through cable TV channels or DVD menus by waving a hand in the air, instead of having to use a remote control, for example. That could end up being a bigger market for motion-sensing technologies than gaming systems, Doherty said.

"Very few people like remotes. They lose them, the batteries die -- that could be a dying market," he said.

PrimeSense showed its technology behind closed doors at the Consumer Electronics Show in Las Vegas in January. Some of the demonstrations were reminiscent of "Minority Report," allowing the user to stand in front of a large screen and shuffle documents in midair with their hands.

If the deal with Microsoft is exclusive, it doesn't mean Nintendo and Sony don't have other options. There are several vendors they could partner with that are developing similar technologies, including Canesta, of Sunnyvale, California, whose investors include laptop giant Quanta Computer.

The console makers are also developing their own technologies. Sony's Move controller, for example, uses the PlayStation's Eye camera to track its movements. "I wouldn't rule out the possibility that Sony will soon be able to do a lot, or all, of what Microsoft can do with Natal," Doherty said.

Questions remain about Project Natal, Doherty said, including how many players will be able to use it at one time, and when exactly it will ship. "They've said before the holidays, but does that mean Dec. 23 or November?" he said. Microsoft will certainly try to have it on shelves in time for holiday shopping.

A Microsoft spokesman reiterated Wednesday that Project Natal will be available for "the holidays," and declined to comment on the terms of its agreement with PrimeSense.

The deal is a big win for PrimeSense, which was founded in 2005 and has 92 employees, mostly engineers based in Israel. The company plans to expand to 120 employees by the end of the year. "We're a very R&D-focused company," Beracha said.

Nintendo's Wii motion controller helped pave the way for PrimeSense's technology, he acknowledged.

"The Wii did very good things for us," he said. "It showed that a natural user interface matters."

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