I think you've missed the point of what they are doing. Of course, I may be wrong as well since this is the first that I've seen of this instrument, but here is

I think you've missed the point of what they are doing. Of course, I may be wrong as well since this is the first that I've seen of this instrument, but here is my take of what they are doing. They are sampling the vibrations of the small guitar top in strategic places using piezo sensors. From this information, they are extrapolating the information using a digital computer to emulate the sound of a complete guitar. What you are hearing in the video is not just the sound of the small wooden inset. If you skip to ~1:55 in the video, you will see their animation of the vibration patterns on a full-sized guitar. My question would be whether they would really be able to determine and emulate the vibration patterns of any guitar top while only sampling 5 (?) locations relatively close to the bridge of the guitar. As far as the pickups go, even though they might look cheap, they are insignificant and operate completely different than electric guitar pickups. All they need to do is provide the frequency information which is processed by the digital computer. You aren't actually hearing the analog output from the pickups. I also don't see this guitar as a competitor to digital amps with effect processors.