Basically we need some good competition from the very start. Good for any tech.

Well one alternative could be something like kinect, if you're willing to stay in one room. Although that might be harder to make really low latency?

Overlooking the optical limitations of the kinect, think of the potential uses for equipment like this.

Accurate motion capture anywhere (think of what we already achieve with GPS and limited device gyroscopic data alone), full body augmented reality (your body is the controller, lol) while walking down the street, the obvious VR and gaming implications, etc.

This is so much bigger than the ability to hit a ball around or wiggle your booty on a TV screen IMHO.

The Kinect and other optical systems have a number of drawbacks we considered when deciding on inertial sensors.

Like you say, range and latency are issues, as well as occlusion, resolution of limb rotations, difficulties with multiple actors in one space, and general inaccuracies due to the system having to make a guess as to the actor's pose and position.

While the Kinect can work fine for simple games, we wanted the user's motions in game to feel natural and fluid, and to be able to extract the whole body pose even if part of the user's body is occluding another part(e.g. hands behind the back, crouched down).