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This paper proposes a simple position observer based on the instantaneous power and a tuning procedure for the proposed observer in driving the surface-mounted permanent magnet synchronous motor. In the instantaneous power of a three-phase system, the imaginary and real powers have the information related to the position and velocity. Using the instantaneous power, the difference between real rotor position and estimated rotor position is calculated. For easy design, gain parameters are described as a bandwidth of position observer. The proper bandwidth is expressed in terms of the desired load transient response, system inertia, and permitted acceleration range. Also, the sensitivity of phase resistance and inductance is analyzed. The described mathematical results show the necessity of accurate parameter information. Simulation and experimental results show the validity of the proposed design method and analysis.