Microsoft has announced that they will be closing the rumored deal to purchase 3DV Systems Ltd from Elron Electronics Industries. As we told you previously, this is the company that produces the Z-Cam, which sources tell us is the heart of the technology in the new motion sensing controller expected from Microsoft for the Xbox 360.

According to moles in the know, Microsoft is paying between $5 million to $7 million for the company and the transaction is expected to close next month, at which time you can expect an official announcement.

From what we understand so far, our insiders say that Microsoft is impressed with the technology and they want to bring the motion sensing technology to the 360. 3DV has apparently shown some demos of the technology working with the 360, but from our understanding it is not all the way ready yet. The main hang up seems to be the software support that is required to make a product like this successful. Without the right kind of software, this type of 3D gesture recognition technology would be useless on the 360.

While 3DV previously showed their technology at CES back in 2008, it is hard to say what the revision version connected to a Xbox 360 would do. The latest from our sources is that you can expect Microsoft to be talking about motion sensing technology that they are developing for the Xbox 360 behind closed doors and whispers in hallways, but don’t expect an official announcement just yet at E3.

Instead, look for a major launch of the product in time for the holiday season this fall. We do, however, continue to be told by our sources that it has been seeded to some developers already to start working with it, but after reaching out to our developer sources we have been unable to confirm that this is actually the case.xb