Look Out Microsoft (MSFT)… Competition is Coming in 2012

Published Tue, Dec 20th, 2011   Justin Fritz, Executive Editor

Yesterday, CNN released its shortlist of trends to watch in 2012. And I couldn’t agree more with its decision to add spatial gesture technology to the list.

Don’t be fooled by the fancy sounding term. Just look at the popularity of Microsoft’s (Nasdaq: MSFT) Kinect device.

Kinect is essentially a super-savvy webcam that can capture a person’s motion in 3D, recognize facial features, and respond to voice controls. Simply put, it allows people to use gestures and speech to play games and navigate the Xbox 360’s interface without a controller.

And the device has proven to be an absolute smash hit for video gamers. Between its launch in November 2010 and the beginning of January 2011, it shot ahead of Apple’s (Nasdaq: AAPL) iPhone and iPad as the fastest-selling consumer electronics device on record, with consumers scooping up 133,333 Kinects a day.

But the technology has a lot of potential beyond video games, too.

Goodbye to the Faithful Mouse

In June, Microsoft released its software development kit to app developers, so they could begin creating applications that bring gesture controls to Microsoft’s Windows operating system.

And last month, the company announced that a new version of the Kinect hardware is in development – one that “enables the depth camera to see objects as close as 50cm in front of the device without losing accuracy or precision.”

In other words, at some point early next year, we could ditch the computer mouse and use our hands to make selections on PCs, instead.

Microsoft better work fast, though. Because one small company’s rival technology not only adds gesture controls to PCs, but to smartphones, too.

Kinect’s Motion-Capturing Power… But Without the Hardware

Much like Microsoft does, Israeli startup, Extreme Reality (XTR3D), develops software that captures motion in 3D.

But there’s one major difference: XTR3D’s program doesn’t require specific hardware. The software can be formatted to work with any device that has a standard-issue camera attached.

Basically, XTR3D’s software can take every frame from a standard 2-D camera and then generate a 3-D model of the image in real time.

That way, you don’t need to cough up to buy for Microsoft’s upcoming Kinect sensor for PCs. The webcam you already have would work just fine.

Better yet, XTR3D’s founder and CTO, Dor Givon, told the BBC that its gesture controls work as close as “a few centimeters away.” So that means it would work in smartphones and tablets, as long as they’re equipped with a front-facing camera.

But that’s not all…

Three More Benefits and An $8 Million Cash Injection

In addition to the hardware-free, motion-capturing technology, XTR3D’s software is:

~ Platform-Friendly: XTR3D’s software is compatible with all operating systems. So whether you’re working with a Windows, Apple, or Android device, you’re in business.

~ Accurate: The company claims that its motion-capture engine “is highly accurate, with error margins as low as millimeters.”

~ Power Conscious: Since the software consumes little power, you don’t have to worry about it draining your smartphone battery.

We don’t have long to wait to see the technology in action, either.

XTR3D just received an $8 million cash infusion, part of which came from its partner, Texas Instruments (NYSE: TXN). And according to the BBC’s Katia Moskvitch, the company plans to use the funding to help “bring the first motion control smartphone into the market as early as next year.”

So while we don’t yet know how much of a threat XTR3D poses to Microsoft until then, it wouldn’t hurt for Microsoft to get cracking on a software-based gesture control platform of its own.

Good investing,

Justin Fritz