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is this really what kurzweil meant by "fully immersive virtual reality," though? only involves the senses of sight and hearing...

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Too true. He did write about suits or other methods that appeal to the other senses. That seems much farther off. Though, once environments have been created for this headset, I would imagine quite a few people spending a large portion of time "plugged in".

I also think a controller gives a bit of touch sense to the experience. Using your hands and feet for full controls of a plane stick and rudder or car wheel and pedals lacks only the feedback from acceleration and weather. Looking down to see the pedals and "feeling" your vehicle react to your foot pressing could be more psychosomatic than we really know yet.

A large part of our FPS experience revolves around manipulating the player camera. Since the Rift would essentially put the function of the mouse on our heads, we could free the right hand with just a trigger or two triggers (one for alt-fire). The left hand can now comfortably use a WiiMote like remote, or a nun-chuck like controller. This setup would NOT break the previous control-model that the player is used to, since you can always switch back to disabling head tracking and using the mouse/keyboard combo. I'm pretty sure that this would increase immersion.

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