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This paper discusses the user-centered design process of developing a gesture-based interaction technology aimed at interacting with three-dimensional displays at short working distances (e.g., at arm's length). First, we explored the range and variability of gestures that come natural for users when interacting with 3D displays. The next section describes the challenges encountered when implementing the preferred gestures into the gesture tracking technology. In the final section the gesture tracker is evaluated and compared against the currently dominant interaction paradigm - the computer mouse. Results of the evaluation are used for the design of future prototypes of the technology.