Back in February, Israeli business publication Haaretz reported that Microsoft had plans to buy 3DV Systems, the makers of Z-Cam, which is rumored to be Microsoft's answer to the Nintedo Wii and its motion sensing controller. Today, TeamXbox.com has learned from an insider source that Microsoft has agreed to acquire 3DV Systems Ltd. from Elron Electronic Industries.

The insider told us Microsoft is paying between five and seven million for all of 3DV Systems assets. The companies will close the transaction next month after they make an official announcement. The insider said Microsoft is also evaluating the acquisition of a 3D gesture recognition software company.

Z-Cam is a 3D depth sensing USB video camera that uses the time-of-flight (TOF) principle to measure the time taken by a short light pulse emitted by the camera to be reflected.

It works like a conventional radar system, but instead of radio frequencies it uses light impulses. Since the time it takes the light pulse to hit an object (reflection) is directly proportional to the distance of that object to the camera, the Z-Cam sees "pixels with depth." You could say the ZCam captures video in 3D and that's why it can be called a 3D Cam.