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In page Computer mouse:

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Simple logic circuits interpret the relative timing to indicate which direction the wheel is rotating. This incremental rotary encoder scheme is sometimes called quadrature encoding of the wheel rotation, as the two optical sensors produce signals that are in approximately quadrature phase. The mouse sends these signals to the computer system via the mouse cable, directly as logic signals in very old mice such as the Xerox mice, and via a data-formatting IC in modern mice. The driver software in the system converts the signals into motion of the mouse cursor along X and Y axes on the computer screen.[citation needed]