With the release of Windows 8 imminent, gesture technology — which gives users the ability to interact with computers by moving their hands around, instead of using a mouse or keyboard — has become a very hot item. Windows 8 will have extensive support for gestures, a result of its new interface based on Microsoft’s Metro design language (similar to the interface used in smartphones with touch screens and video cameras).

That’s good news for two Israeli companies – who happen to be the market leaders in gesture technology for PCs, with some 95% of the market between them. PointGrab and eyeSight have similar gesture technologies appropriate for Windows 8 and for a wide variety of devices — and both are coming out with new versions of their systems that will be built into laptops ship with Windows 8, due out this fall.

According to officials in both companies, the two are going head-to-head in pursuing a contract with a “very large manufacturer” (as both companies described it) to license their software-based gesture technology for devices.

For the manufacturer, picking one may be a tough choice as both have advantages and disadvantages. Interacting with webcams or other cameras on a device, both systems let users employ pre-programmed gestures, like waving a hand to move to the next photo in an online album, grabbing to select objects on a screen, or using a hand motion to switch to the next song in a playlist. Both technologies have a machine-learning capability that lets users add more complicated or unique gestures, and both can be installed by manufacturers using an SDK, or integrated onto a chipset. And, both now have new versions that take advantage of the new support for gestures in Windows 8, allowing the mapping of gestures to keyboard shortcuts, applications, web browsing, the music player, and many others.

Israel is the clear leader in the emerging area of 2D technologies, both companies agreed. Besides PointGrab and eyeSight, there are several small companies in the US that have developed 2D gesture technology, but they require hardware in order to work. Both of the Israeli solutions are software-based, which means they can be ported to a wide variety of devices, without requiring extra components that would cost manufacturers extra money and take up extra space.

PointGrab and eyeSight distribute versions of their technology for various platforms, from PCs and laptops to smart TVs and smartphone. PointGrab’s system is installed on many consumer devices, like TVs, while eyeSight has special versions for smartphones, the company said. For example, Liat Rostock, a spokesperson for eyeSight, said the company’s gesture technology is embedded in the new MM-3101 platform from CEVA.

Each company’s technology has its own unique advantage, they said. Rostock said her company’s advantage over the competition was in the simplicity of the gestures. “In other systems you have to pick up your hand or arm to get the gesture to register on the camera that will communicate with our software. We have a set of very simple gestures that are easier for people to use than other solutions. The more complicated the gestures, the less likely consumers are to use them.”

The biggest advantage for eyeSight, said Rostock, is the fact that the company has a standalone service that can be used by manufacturers (a downloadable version for use by consumers is being developed) to install gestures into devices like PCs, set-top boxes, mobile devices, and more. “Usually manufacturers need the SDK to install support for gestures, but with our ‘gestures service,’ they can get up and running with gestures in a matter of hours.”

But PointGrab has plenty to brag about as well. “We are the undisputed leader in the industry,” says CEO Yoav Hoshen, and he has the contracts to prove it. According to the company, 90% of two-dimensional hand gesture recognition software is made by PointGrab; its system is present in equipment from companies like Lenovo, Fujitsu, Acer, Toshiba, Asus, Haier, and more.

Established only in 2008 (eyeSight was established in 2005), the company has long been profitable. “We can sell our software for a very small amount per unit, yet make a lot of money,” said Hoshen. As a result of its technology’s price and performance, PointGrab is very close to signing the contract with the unnamed major manufacturer. “It’s very likely that there will be such a contract,” a company official said.

Not according to Rostock, though (who would not confirm that her company’s rival to the contract was PointGrab). “I believe one of our competitors has been sending out press releases that they have already made the deal,” he said. “I think we are going to surprise them, though; we are a lot closer to that deal than they are.”