Microsoft has dropped a chip from its forthcoming Natal motion control system to save money, according to our sister site GamesIndustry.biz.

The chip, which was responsible for processing information for the Natal's 'bone system', has apparently been removed in favour of a software solution.

However, development sources have indicated that the change doesn't affect the existing system lag of about 100ms, while a software solution should enable Microsoft to update the system more quickly and regularly than a hardware one, and allow it to hit a speculated price point of less than £50.

The same development sources said that Natal should be able to operate at similar levels of latency to press demos at E3 and gamescom last year despite the change, suggesting it's less than ideal for games like Burnout but pretty good for less twitchy activities.

The load previously handled by the chip now falls on one of the main three Xenon processors, but while taking a "percentage" of performance away from the system, most games don't use up 100 per cent of the available processing power anyway.

"The full Natal hardware/sensor combo always looked like an expensive proposition in a market where Microsoft really needs to turn a profit," commented Eurogamer technology editor Richard Leadbetter, who helped research the story.

"The notion of offloading the processing to the Xbox 360 CPU in the name of lower costs and easier upgradability makes sense. Patching up older games to run with the new hardware now looks rather unlikely unless they have the CPU time to spare, but hopefully this will serve to focus developers on Natal-specific concepts as opposed to revisiting old classics."

The removal of the chip almost guarantees that non-Natal games won't be patched to include motion control support, a point previously outlined by Microsoft Game Studios' Kudo Tsunoda.

"I doubt we'll see any kind of watering down of the Natal concept with this news," Leadbetter continued, "but I'm not so sure about the comments on latency. My experience with Natal at gamescom suggests that the lag is considerably higher than that of a Guitar Hero peripheral. It'll be interesting to see if optimisation of the software layer improves this situation."

Microsoft recently hinted that there was no longer an on-chip solution for Natal in CES literature: "A proprietary software layer makes the magic of Project Natal possible," it said. "This layer differentiates Project Natal from any other technology on the market through its ability to enable human body recognition and extract other visual noise."

It has also emerged that Microsoft will support developers writing their own code to run the bone system processing in the future.

Motion control is likely to be the key battleground for Xbox and PlayStation platform holders in 2010, with both Natal and the Sony's new motion control system set for release. Project Natal is due out "holiday 2010".