According to a CVG source, Nintendo turned down the device that became Microsoft's Project Natal. Israel company 3DV Systems reportedly showed the technology to Nintendo CEO Satoru Iwata and other execs toward the end of 2007, but Iwata wasn't convinced Nintendo could sell it at the right price-point. There was also concern about latency during gameplay. Microsoft later purchased the technology and its creator, eventually revealing Project Natal at E3 2009.
The unnamed insider said, "Honestly - I've heard Iwata describe the prototype he saw at length, and it's definitely Natal… What we witnessed at E3 was smaller and the facial [reading] stuff had improved, but it's the same technology. We remain unconvinced Natal will deliver on the more sophisticated elements of what Microsoft is promising at the price they're aiming for."
CVG notes that the cost issues fit with Microsoft's recent decision to remove a chip from Natal to save on research and development expenses. Neither Nintendo or Microsoft responded to the site's request for a comment.