Microsoft has poured lots of money into basic research R&D over the years, which did not seem to pay off much in terms of popular products. Apple, Nintendo, Google, etc. seemed to come out with more innovative products, despite spending nowhere close to what Microsoft spends on R&D.

This looks like a big exception to that. Johnny Lee, as a recently minted PhD, certainly knows the state of the art in this field, so if he says it is way beyond what other researchers are doing I believe him.

If they can deliver the kind of sensing, voice and face recognition in the demo, along with higher end graphics than the Wii, they should easily own the next generation of consoles.