Encoders are so called because they "encode" the mechanical position of a tool or system into an electrical signal. Optical rotary encoders perform this encoding by means of a patterned disk. Put the system into motion and, in addition to position (with the support of the appropriate electronics), encoders can also determine speed, rate, velocity, distance, or direction of rotation. In a typical application, one or more encoders provide these parameters as feedback to the controller in a motion control system. EPC's rugged reliable encoders are particularly suited to the most challenging applications in process and machine control, motor feedback, factory automation, robotics, web tensioning, etc. In addition to these applications, rotary optical encoders can also provide electronic commutation in brushless servo systems.

There are two types of rotary optical encoders-incremental and absolute. Incremental encoders are the simpler and by far the most popular, having as an output a series of square wave pulses generated as the code disk, when its evenly spaced opaque radial lines, moves past a light source. The number of lines on the disk determines the encoder's resolution, expressed as cycles per revolution (CPR), or for some models pulses per revolution (PPR). The most basic incremental encoder, which is sometimes called a tachometer, has just one output and is most often used in unidirectional applications that just need position or speed information. As incremental encoders increase in complexity through bi-directional to quadrature to quadrature with index, more types of information can be provided.

Since incremental encoders provide only relative position, the position count can be lost in the event of a power failure. Therefore incrementals usually use the Channel Z index pulse to reestablish the home position. Another way is to use an absolute encoder. Absolute rotary encoders provide a unique output in the form of a binary word for every position. An absolute encoder retains the exact position information if power fails and eliminates the need to return to "home" position. This feature is particularly useful in applications where the equipment runs infrequently and/or has power turned off between uses.