Interferometers based on laser Doppler effect are used as the vehicle to ex
amine the cross relationship and performance impact among sub-systems such
as optical layout, mechanical layout, signal processing algorithm, and sign
al processing circuitry. The classification of interferometers into the thr
ee main categories (e.g. homodyne, heterodyne and quadrature) and their inf
luence on signal processing algorithms and circuitry which impact interfero
meter performance is examined, A quadrature configuration, found to have so
me unique advantages, is detailed. Also presented is an experimental laser
encoder-set-up equipped with a real-time signal processing circuitry based
on a high performance field programmable gate array (FPGA) circuitry with a
PC interface for quadrature signal decoding that was constructed to verify
the quadrature configuration presented. The experimental data obtained tha
t verifies how this new system architecture can fulfill the stringent deman
ds of today's high performance, high accuracy metrology systems is also exa
mined.