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But it updates many times a second.
Yes. However, most accelerations for hand movements are very brief, so exactly how often becomes a relevant issue - you need to update at least several hundred times per second just to avoid sampling errors from bandwidth restrictions. To compensate for sensitivity restrictions, you would need a lot more bandwidth.
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Remember that the mouse the Wii tech is licensed from doesn't use an IR marker bar and instead uses rotation by tracking multiple accellerometers.
One of the engineers in the Iwata interviews specifically said they couldn't get around the IR bar specifically because they couldn't get it accurate enough otherwise. There are, of course, accelerometers small enough, accurate enough, and with sufficiently high bandwidth to get around this restriction. Thus far, the ones I've seen that meet all three criteria range in thousands of dollars. I would be interested to see the link, since 1) I hadn't heard that the Wiimote was based on a 3d mouse, and 2) the only 3-d mice I've heard of that tracked displacement used external references. There are, of course, gyroscopic mice that can detect orientation with great accuracy. Different technology.