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Speed and position sensing in servo drives is an issue that is still not completely understood. Expressions like ldquoaccuracyrdquo and ldquoresolutionrdquo still get mixed up when engineers talk about encoders. These words, however, do describe different characteristics and should not be confused. The introduction of digital control has made this issue much more important for servo drive applications than before. This paper presents some general explanations of speed and motion sensing as well as different encoder technologies available today and their characteristics, particularly with respect to digitally controlled servo drives.