Apple has moved a step closer to acquiring the Israeli chip design company that provided the motion sensing technology used in Microsoft's first-generation Kinect video game controller, a business newspaper reported Sunday.
"There are very few other companies that have the depth in this technology that PrimeSense has," said Brian Blau, a Gartner analyst who covers, among other things, virtual reality and 3-D applications for his firm. "I'd call PrimeSense the premier one in the space. They've been doing this for quite some time, and have the design chops."
According to Calcalist, Apple has negotiated a $345 million purchase price for PrimeSense, although details remain to be worked out and a deal has not been signed.
PrimeSense declined to comment, but did not deny the report by Calcalist, which is also based in Israel. "We do not comment on what any of our partners, customers or potential customers are doing and we do not relate to rumors or re-cycled rumors," the company said in an emailed statement Monday.
"Recycled rumors" was a mocking reference to a report in mid-July, also by Calcalist, that the Apple and PrimeSense were in acquisition talks. Then, the publication said the deal would be worth approximately $280 million.
PrimeSense is best known for designing the SoC (system-on-a-chip) that processes 3-D motion sensing, a gestures-based technology it licensed to Microsoft for the latter's Kinect video game controller, an important part of Microsoft's Xbox 360 console.
Microsoft has since moved beyond PrimeSense, buying other firms in the space, and will rely on those technologies as well as its own in-house engineering, for Kinect on the Xbox One, the company's next-generation game system slated to go on sale Friday, Nov. 22.
Apple already has several development teams in Israel, where it employs an estimated 300 to 400 people, many of them engineers. And in late 2011, Apple purchased Anobit Technologies, an Israeli maker of solid state drives (SSDs), for between $300 million and $500 million. Apple has integrated Anobit's SSDs into its iMac desktop computers.
While much of the analysis aimed at an Apple-PrimeSense connection has focused on an Apple-made smart television set -- which research firm DisplaySearch said last week was on hold -- PrimeSense's next-generation SoC and supporting technology, dubbed "Capri," is small enough to pack into a tablet or smartphone, according to the company.
In May, PrimeSense demonstrated Capri's motion detection and scanning on a cobbled-together Google Nexus 10 tablet, for example.
Capri, which has not yet entered production, is about 10 times smaller than PrimeSense's current technology, and if packed into Apple's mobile devices, could be of more use in 3-D scanning applications, such as clothing or shoe measurements for a better shot at fitting online orders.
Blau, who was shown Capri earlier in the year at the Consumer Electronics Show (CES), said that meeting and demonstration left him impressed, even after 25 years of tracking technology.
He scoped out several possible applications of PrimeSense's technology for Apple, but said one of the most intriguing was aimed at businesses -- retail in particular. Sensors mounted in a store would help businesses better understand how customers shopped, he said, where they looked at products, whether they picked them off the shelf or rack, put them back or tossed them in a basket.
"This is an area where Apple could help businesses," said Blau. If tied to iBeacons, Apple's Bluetooth-based micro-locations system, it could radically change retail, he added.
To Blau, Apple's reported desire to acquire PrimeSense signaled that the Cupertino, Calif. company is more interested in buying technology, or perhaps patents, than in creating its own solely in-house. "There's always that 'buy or build' decision," said Blau. "If all kinds of Apple competitors came out with [similar sensing technologies], would Apple have the time to develop in-house? I see the PrimeSense deal as a response to that, a long-term investment that's part of their strategic plan for the next 5 or 10 years."
Apple has the cash -- its war chest is the biggest of any technology company -- and with much of it outside the U.S., using it to buy PrimeSense may be even more attractive.
Other firms, including Intel, Google and Microsoft, have acquired companies in the gesture and 3-D scanning space -- last July, Intel snapped up Israeli startup Omek Interactive for a reported $50 million -- perhaps putting pressure on Apple to buy while there's a company worth buying still around, Blau said. "There is a lot of effort under way to incorporate this technology in laptops, televisions, smartphones and tablets," Blau said, contending that all mobile devices will have gesture and 3-D scanning sensors in them at some point, just as most now have accelerometers.
And Apple wouldn't want to be left out in the cold.
"The question is what can Apple do with this technology," Blau said. [The answer is that] there's almost a world of apps and services that could incorporate it."
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is email@example.com.
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