It seems that Microsoft is dropping a chip from inside the Project Natal unit that handles the processing of the bone structures. The chip is being removed in favor of a software-based solution that will offload the heavy lifting onto the Xbox’s Xenon processors instead. To our dismay, the software-based solution will not help with the growing concern that is the 100ms input lag the motion controller currently has. However, the removal of the chip will allow for upgrades and is supposed to bring down the price of Natal, which appears to be the primary reasoning behind the decision.
By removing the chip, Microsoft is able to bring down hardware costs and shift the load to the Xbox itself with little to no performance loss both from the device and the Xbox. So while the shift to a software solution for the bone system doesn’t net any performance gains, at least the price of Natal won’t grow to astronomical proportions.