If any company knows how to do spectacle, it's Microsoft. Their huge E3 extravaganza was a star-studded media event of epic proportions. And yet, all of the stars and video games were outshone by one revolutionary new product with a very peculiar name; Project Natal.

Natal is Microsoft's long-awaited motion sensor, their response to the Wii's long-held domination of this generation of consoles. After seeing the demo videos, I can guarantee you that Nintendo is feeling a little less secure in its flagship product. To say Microsoft's demonstration of the Natal's abilities was impressive doesn't come close to describing it. What they have is a product with the potential to revolutionize not only every aspect of gaming, but of your daily life as well.

Microsoft claims that Natal will have individual facial and vocal recognition, to the extent that it can look at multiple gamers and sort out how each one of them is moving or recognize which one of them spoke first. Natal even has the ability to scan real-world objects and then create in-game representations of them.

Some of the demo's claims are obviously exaggerated. While I'm willing to believe it can scan in a hand drawn image or a skateboard, there's no way it can process them nearly as quickly as the demo shows. It's been confirmed that Microsoft used a few dirty tricks to make the Natal's abilities seem a little more impressive than they actually are. The ability to scan things in instantly from any angle is a desired goal, not the current reality.

Those issues aside, the Natal is still the single most impressive piece of lifestyle technology I think I've seen in the last decade. I say 'lifestyle' and not 'gaming' because the Natal does not strike me as a purely, or even primarily gaming device. It has the ability to run your media center wirelessly, which is the first step towards removing remote controls from the equation. When it first hits stores I doubt that the Natal will be able to fully replace your home entertainment system user interface, but it shouldn't take more than a year or so before we get to that point.

What's the logical extent of this technology? Expand the sensor range, and you expand the effect the Natal can have on our lives. Imagine; you walk into your house and it greets you. You adjust your thermostat, check your DVR, and start the oven pre-heating before you've even made it down the hallway.

Obviously we're not quite there yet, but the Natal is the first big step. Cheap vocal and motion recognition is the hard part of designing a "smart house", the rest is just linking your appliances together to a big computer and setting it up to respond to your commands. Commercial technology like that is probably five years off, but I bet we'll see some adventurous nerds create their own "smart houses" using modified Natals not too long after they hit the market.

Congratulations Microsoft, you're on the bleeding edge of the next big thing.