Our sources are telling us that Microsoft has again made a few more cost reduction changes to Kinect. Apparently, the latest change involves the camera sensors that are used in the device. Despite what we had originally been told, Microsoft has decided to go with a lesser model.

The decision to go with a lesser camera sensor affects resolution abilities of the Kinect unit itself. We had been originally told that the unit would offer two resolutions: a 640x480 model and a 320x240 mode. Now, we hear that the camera sensor that is to be used in production units will only support the 320x240 mode.

This isn’t the first time that Microsoft has dubbed down Kinect in the name of cost. Additional hardware chips that were reportedly responsible for offloading some of the work of the actual Kinect device were later dropped in favor of a software solution as a cost cutting move. Apparently, some whispers we hear indicate that once the hardware chips were dropped and the software solution was implemented, the lag increased.

Now, we hear that the move to the 320x240 resolution does address some of the lag issues that developers were apparently seeing at the 640x480 resolution, but it comes with a price. A rumor somehow started based on the suggestion that Kinect could understand sign language; and apparently it could have had the ability to do so if it had access to the high resolution and if it were programmed to do so. From the shadows we hear that the 320x240 resolution isn’t granular enough to see the hand movements to make tracking the hands for sign language possible.

Even at $150, people are still complaining about the price, despite the fact that Microsoft has elected to bundle a title with the package. The decision to dub down the camera means that Microsoft will likely be breaking even or at least losing less money on each unit. Microsoft has surely been following the backlash, and is being conservative with the release. We doubt there is more that can be stripped out of Kinect, and our sources tell us that they have done all they can do; but some whispers we hear are predicting disappointment in Kinect’s future.