Microsoft’s headline announcement at this year’s E3 gaming conference was a motion-detection system housed in a sensor bar that plugs into your Xbox 360’s ports. The pull-out-all-the stops unveiling included an on-stage appearance by Steven Spielberg who raved “I think what Microsoft is doing is not about reinventing the wheel. It’s about no wheel at all.”

I had my doubts.

First, we’ve all seen motion tracking before. Remember the Intel Play Me2Cam (1999)? How about Sony’s EyeToy (2003), which offered several motion sensing party games for the PlayStation 2, (including a burglar alarm)? There was also Hasbro’s ION (2006). Sony’s PS3 PlayStation Eye (2007) came with motion games like Eye of Judgment. All came with big claims but limited success.

Second, all previous motion-capture attempts had sloppy responsiveness. That’s why Nintendo has added more hardware to its existing controller with Wii MotionPlus. Nothing less than crisp, exact responses is required for fast-moving children — especially for golf, drawing or driving. Could Natal pass the hyperactive kid test?

I wanted to try it for myself. The following day, during a closed-door demo, I challenged one of the producers to let me try driving with Natal.

After a clumsy first five seconds, it was clear that this was indeed a powerful movement-sensing system at work. Using a steering wheel that existed only in my mind, I was able to weave through the heavy Manhattan traffic depicted in EA’s Burnout Paradise, speeding up or slowing down by moving my right foot. My virtual car was at least as responsive as a rental Hyundai.

How does it work? Here’s what I could safely deduce from both the press materials, my own test drive and from comments made during the demonstration by Kudo Tsunoda of Microsoft.

* “Project Natal” is only the working name for the technology, named after the city in Brazil, and the project is in the early stages. None of the third-party developers had even seen the technology, so we probably won’t see Natal on the shelves until next year. The cost was also not provided.

* “Skeletal mapping” is the real magic behind Natal. When you first enter view, a lot of computing takes place. According to Microsoft, your body is scanned by infrared projector that works with a monochrome CMOS sensor that can work in any lighting conditions. This creates a 3D image of your body, which is assigned to one of 20 or so body profiles. So if you’re an older, heavier female, or a small child, the software knows what to expect. From this point forward, the software can know where your foot is, even if it is blocked by a passing dog, with minimal computing. That’s why I could dodge the oncoming delivery truck on 11th Avenue with a flip of my invisible steering wheel.

* Natal will get confused if another person, or skeleton, walks within view of the camera. I also noticed a piece of tape about eight feet in front of the prototype I tried, seeming to indicate that there’s an ideal distance from the camera.

* Facial recognition is provided by a camera that works in concert with the motion sensor. So you will be able to assign players automatically, say, for a trivia game. This same camera will let you photograph your face for a Facebook profile, participate in remote chats, or overlay an image of your living room onto the billboard in one of your favorite video games.

* Voice recognition will let you change paint colors in a drawing program by saying “blue,” or turn off a Netflix movie by saying “goodnight.” You’ll be able to roar back at the monsters in role-playing games, or record a voicemail for your Gamertag profile. Clearly, the face and voice recognition, if done well, could have rich potential when combined with social experiences like Twitter, Facebook and Microsoft Live.

* Microsoft seems to have big plans, and high hopes, for Natal. The camera will work exclusively with any Xbox 360 and will be integrated into the 360 operating system. If it works, it could also be integrated with Windows.

After my short drive, I’m much less skeptical. At the very least, Project Natal is worth keeping an eye on, if for no other reason than it seems to be able to keep an eye on you.

What is your opinion, esp. about the setup?