Apple – No Nirvana

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Vrvana unlikely to accelerate Apple’s AR.

  • Apple’s acquisition of Vrvana is the best sign yet that it is intending to get involved in hardware for augmented and virtual reality, but Vrvana is extremely unlikely to be able to accelerate its time to market.
  • Vrvana is a start-up based in Canada that launched a headset called the Totem which received good reviews but never shipped.
  • I suspect that the device never shipped because the company could get its headset to a high-enough level of quality and reliability to make it in the marketplace.
  • Its Kickstarter campaign was pulled as the company realised that its product would never meet the funding goals.
  • Furthermore, the Totem headset itself looks like a lot like a DIY project and is nothing that I would ever expect Apple to ship.
  • Hence, I suspect that Apple’s interest in Vrvana is more about the technology that Vrvana has used to create the Totem which includes:
    • First: the Vrvana Totem is capable of both AR and VR in the same unit.
    • It is able to do this by superimposing the real word onto the virtual which is the opposite of how almost everyone else does it.
    • Instead of having transparent lenses through which the real world can be viewed, it uses cameras to record the real world and superimpose them onto the virtual.
    • There is one camera for each eye such that depth perception of the real world can be maintained through standard stereopsis techniques.
    • Second: because the real-world images are being digitised before being mixed in with virtual images, the virtual images can be completely opaque.
    • In every other AR system I have seen, the virtual images are always somewhat translucent which reduces their ability to appear real as one can always see the real world behind them.
    • Consequently, using this set-up there is scope to mix the virtual and the real world more realistically.
  • This is what I think has interested Apple as the hardware itself is clunky, cumbersome and unattractive to look at.
  • The issue with implementing AR this way around, is that the user is still completely closing himself off from the real world and the head unit used is likely to be far more obstructive than a simple pair of glasses.
  • Consequently, I see this acquisition as highly speculative on Apple’s part with a high probability that this technique for AR ends up being discarded.
  • Given the difficulties being faced by everyone in the AR field (see here), I do not see Apple being ahead of the field nor do I think that this acquisition will accelerate its time to market.
  • The net result is that while Apple is right to explore the possibilities of AR, I suspect that there is no concrete intention to launch a unit.
  • I see this activity much like the vehicle or the television which were experiments that failed to stand up to the scrutiny of market reality.
  • Consumer AR is likely to remain a prisoner on the smartphone for the foreseeable future where no one looks capable of effecting a prison break any time soon.

Apple – Augmenting reality.

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Unit launch in 2019 is an augmentation of reality.

  • If Apple is working on an AR headset, I think that there is no way that the technology will be ready in 2019 and that the scale of the technical issues to be surmounted will keep ARKit firmly resident on the iPhone for the foreseeable future.
  • Bloomberg is reporting that Apple is building up a team to develop an AR headset which will be fully vertically integrated from custom silicon all the way up to the apps and the services that run on the unit.
  • I think it makes complete sense for Apple to explore this product area but whether or not this will ever materialise into a real product is very uncertain.
  • This is exactly what happened with project Titan (see here) which was disbanded once Apple realised how difficult and financially damaging it would be for it to make and sell a vehicle.
  • I think that there is an argument to be made that AR has some potential to replace smartphones for consumers, but the technical challenges that need to be overcome are still huge.
  • To make matters worse, there has not been that much progress made against these challenges since I first wrote about them in 2015 (see here).
  • These are:
    • First, size: to be adopted by consumers I think that the unit needs to be no more intrusive than a regular pair of spectacles.
    • I also think that having a light head unit with the computing being executed on a pack that the consumer lugs around with him will not work.
    • I think that everything needs to be in the glasses.
    • Second, field of view: One of the biggest technical challenges of AR is to project the virtual world on top of the real world with a full field of view.
    • This is proving to be a real challenge and almost every implementation to dated uses a huge bulky head unit that produces a letterboxed view of the virtual world.
    • This is a user experience that in my opinion will not be acceptable to the consumer.
    • This is the promise that Magic Leap has made but has yet to live up to.
    • Third, artificial intelligence: to be really useful and fun, the virtual world will need to be aware of where the user is in the real world and of what he can see.
    • This is essentially an AI problem which everyone is feverishly currently working on.
    • At the launch of the iPhone 8, Apple demonstrated image recognition through the phone camera and Facebook has made some progress in this area.
    • However, everyone including Google, is very far from where they need to be to give a computer the contextual awareness that it needs to really make augmented reality work well for the consumer.
    • Fourth, Ecosystem: This is where the smaller companies and Magic Leap are going to fall over (if they haven’t already done so).
    • Just like IoT, TVs, Wearables and Cars, AR is likely to be simply another medium by which to deliver Digital Life services to consumers.
    • Consequently, users are going to want the Digital Life services they enjoy elsewhere to be present on the AR unit necessitating a good cross device offering as well as a vibrant third-party app community.
    • Here, Apple probably has the best chance as its ecosystem on the iPhone remains the strongest currently available.
  • These criteria do not apply to AR in the enterprise (see here) as the nature and economics of the interaction of the user with the unit is completely different.
  • The net result is that while Apple is right to explore the possibilities of AR, I suspect that there is no concrete intention to launch a unit.
  • I see this activity much like the vehicle or the television which were experiments that failed to stand up to the scrutiny of market reality.
  • AR is likely to remain a prisoner on the smartphone for the foreseeable future and not even Magic Leap looks capable of effecting a prison break any time soon.

VR / AR – State of the nation.

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VR & AR still miles from being properly ready.

  • Facebook has launched a wireless VR headset that appears to be very similar to Oculus Gear which addresses a gap in its portfolio but does nothing to alleviate the issues that keep VR a niche segment.
  • At the same time Apple has admitted that real AR is years away, explaining its (and almost everyone else’s) focus on offering AR using the camera and screen of a smartphone.

Virtual Reality

  • Facebook has launched the Oculus Go which is a self-contained VR unit that sports better resolution (2560×1440) than the original Rift and a “fast-switch” LCD display which I assume aims to increase the refresh rate to improve image quality.
  • Facebook did not announce which processor is being used but I am almost certain (see below) that it is a smartphone processor with some commentators speculating that it is the Snapdragon 821.
  • The price is right at $199 and the fact that the Go has binary compatibility with the Gear implies that this device probably has the guts of a smartphone.
  • This makes sense as the Android supply chain has huge volumes which would have been very useful in designing the device to have a reasonable specification and yet meet the price point of $199.
  • It also means that there is already a range of apps and services available which removes the problem of there being no content available for the device at launch.
  • While the Oculus Go plugs an important gap in its portfolio, it does not do much to solve the real issues that plague VR which remain:
    • Price: Many of the devices cost several hundreds of dollars and also require a PC to run, further increasing the cost.
    • To be fair, the Oculus Go does address this issue but it does so at the expense of raw performance.
    • Clunky: VR and AR units are still large, clunky and uncomfortable to wear.
    • In many cases they also make the user feel foolish when wearing one.
    • Comfort and security: VR cuts the user off from almost all sensory inputs from his immediate environment, severely limiting the situations in which the user would feel comfortable using one.
    • Many units also cause feelings of nausea due to an imperfect replication of the real world compared to what the brain is expecting.
    • Cable: Many units require an HDMI cable which prevents the user from moving and also increases the risk of a fall should the user trip over the cable.
    • Again, the Go addresses this issue but does so at the expense of performance.
  • To bring VR to the mainstream, I think that these issues need to be solved with no compromises being made with regard to the user experience.
  • Of this there is still little sign leaving me very cautious on the outlook for the immediate term.

Augmented Reality

  • The requirements I see for AR to really come of age remain far more challenging and include:
    • First: a head unit that is no more intrusive to wear than a regular pair of spectacles (also applies to VR).
    • Second: a full field view of the virtual world as it is superimposed upon the real world.
    • This is proving to be so difficult that all the solutions available today are letterboxed (limited field of view) with no real time-line as for when this problem will be solved.
    • I have doubts that Magic Leap will be able to solve it an time soon.
    • Third: there will need to a vibrant ecosystem of developers to ensure that the experience offered is both broad and deep.
    • Developers will also be needed to ensure that the experience is easy to use and fun and to push the boundaries of what the device can be used for.
  • AR is even further away from meeting these ideals in my opinion but it is finding an initial lease of life in the enterprise.
  • This is because when users are paid to have the experience, tolerance of clunky head units and a bad user experience is much higher.
  • When this is combined with a good improvement in productivity there is enough benefit to see some traction.
  • However in consumer, the challenges remain enormous which is why the consumer ecosystems are pushing AR on smartphones as a stop gap.
  • I think that the experience offered there is pretty weak meaning that investments here are really about being prepared for when the above issues can be fixed rather than driving uptake of a new use case for smartphones.

Take Home Message

  • The net result is that I see nothing on the horizon that is going to change the current situation in either VR or AR.
  • Hence, I think that they will remain ancillary to the propositions offered by the big ecosystems and incapable of influencing a user’s purchase decision on where to live his digital life.
  • The result will be relatively low volumes and disappointment compared to the hype that regularly surrounds product demonstrations.
  • I continue to believe that investors in this space need to have a very long-time horizon.

Virtual Reality – Endless funk

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Even Oculus doesn’t believe the hype.

  • Oculus has sent the surest signal yet that all is not well with virtual reality (VR) in a move that can only be interpreted as an admission that VR is far from being able to live up to the expectations that have been set for it.
  • Oculus has updated its policy for its app store that allows a user who is dissatisfied with something that he has purchased in the store to get a no questions asked refund.
  • This applies to both Oculus Rift and Gear VR content subject to the following:
    • First: The user can not have spent more than 2 hours using the content (30 mins Gear VR).
    • Second: The application for refund must be made within 14 days (2 days Gear VR).
    • Third: The refund does not cover movies or content that is bought as part of a bundle although the whole bundle appears to be covered.
  • This generous policy is an indication that the experience offered by VR is far from satisfactory which is hurting both hardware shipments and software revenues.
  • Hence, in order to keep interest in the platform and prevent disgruntled users from chucking the device in drawer, it has to offer a sale or return policy that is almost unheard of in software.
  • It is clear to me that the problems that have plagued VR since its inception are still far from being solved.
  • These are:
    • Price: Many of the devices cost several hundreds of dollars and also require a PC to run, further increasing the cost.
    • Sony is the one exception which is why I am pretty sure that it is currently the runaway leader albeit in a very small market.
    • Clunky: VR and AR units are still large, clunky and uncomfortable to wear.
    • In many cases they also make the user feel foolish when wearing one.
    • Comfort and security: VR cuts the user off from almost all sensory inputs from his immediate environment severely limiting the situations in which the user would feel comfortable using one.
    • Many units also cause feelings of nausea due to an imperfect replication of the real world compared to what the brain is expecting.
    • Cable: Many units require an HDMI cable which prevents the user from moving and also increases the risk of a fall should the user trip over the cable.
    • Content: Both games and content remain in short supply and of poor quality necessitating the Oculus shift in policy.
  • The net result is that VR is clearly still far from ready prime time and there remains a lot of work to do before volumes will really take off.
  • I do not see this happening in 2017 meaning that the outlook for next year remains pretty grim.
  • This is why I see the likes of Facebook and Apple pivoting their consumer offerings towards viewing and interacting with a virtual world through the camera of a smartphone rather than with a head unit.
  • Augmented Reality has more problems than VR but the case for it in the enterprise remains strong.
  • This is because there are immediate productivity benefits to be had from deploying a unit to parts of the work force and critically, in the enterprise one can get away with a poor user experience.
  • This is because users are paid to have the experience meaning that they are willing to endure the shortcomings listed above.
  • The net result is that I think VR will continue to disappoint with all the action in the short-term remaining squarely in AR.

AR – Productivity pays

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AR is alive and well in the enterprise.

  • Amongst a surprising re-launch of Google Glass and a major pivot by Meta, it is increasingly clear that while augmented reality (AR) makes sense in the enterprise, it is years away from the consumer market.
  • Google has quietly relaunched Google Glass as a smaller unit with upgraded electronics that can attach to a range of regular glasses frames as well as safety eye wear.
  • This time around the focus is 100% on productivity as it has been developed with input from companies and is called Glass Enterprise Edition.
  • The use case being targeted is employees that need to fulfil complicated manual tasks where the device provides instructions obviating the need for assembly instructions.
  • The device is being sold through partners that are offering software customisation on top of the base unit in order to provide the functionally needed by various industry verticals.
  • This is exactly what Atheer Labs moved into some years ago, although its unit also provides communication and is somewhat larger.
  • At the same time Meta, an AR start-up, has also pivoted into the enterprise after realising that it was going to struggle with selling devices to consumers.
  • Meta is now on a major publicity drive with a proposition about how its device can be used to replace office monitors.
  • Interestingly it seems to have abandoned collaboration and communication which is an important part of the workplace and was something it was demonstrating for consumers some years ago.
  • These moves echo how the message from other players like Microsoft and OTG has also changed over the last 12 months with silly living room-based shooting games being replaced with productivity applications.
  • All this is happening because in the enterprise, it is productivity that really matters with the user experience being less important.
  • I think that this happening as in consumer, the users pay money for an experience but in the enterprise users are paid to use the technology.
  • Hence, enterprise users’ willingness to put up with a substandard user experience is much greater.
  • The AR user experience is still miles from where it needs to be but critically it does offer productivity improvements that have led to many companies trialling it particularly for employees in the field.
  • These trials are now gradually moving into real world deployment.
  • Hence, I continue to believe that AR in the enterprise should see both unit shipment growth as well as good growth in revenues from software and services in 2017.
  • However, I think the consumer will continue to languish and the only one that is sticking to its consumer guns is Magic Leap.
  • Magic Leap has made incredibly bold promises around a consumer offering in AR, but it is questionable as to how close it really is in terms of having a working, commercial product (see here).
  • From an investment perspective, AR in the enterprise is the only place I would entertain putting money into this year unless it is something aimed at fixing the limitations that keep AR and VR uninteresting to the consumer.

Facebook F8 – Business as usual

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Progression, but little excitement.

  • While Facebook’s announcements at its developer conference were not exactly ground-breaking, it is clear that Facebook remains extremely commercial and is very focused on fixing its weaknesses.
  • Highlights from F8 include:
    • First augmented reality: Facebook has decided to re-focus on AR in what looks like a pre-emptive strike against Snapchat.
    • This includes the launch of a new camera platform that follows up on the roll-out of camera capability to all of its apps.
    • With the camera capability now everywhere, developers will now be able to create content that can overlay the real world as seen through a smartphone camera.
    • This includes Snapchat-like photo and video annotations as well as combining the ability to map a 3D environment and place virtual objects within it.
    • The aim here is to get users to spend more time within the Facebook ecosystem thereby increasing potential for monetisation.
    • Second: Artificial Intelligence. This remains a major weakness for Facebook but it does appear to have made some progress in image recognition.
    • This makes some sense as the core competencies of its biggest AI hires are in this area.
    • Facebook showed AI that was capable of advanced object recognition as well as the tracking of moving objects through video.
    • This was complimented by progress on making Facebook M (digital assistant) smarter as well as improving the quality of the bots that it offers to companies to communicate with their clients.
    • AI remains essential to Facebook’s long-term growth as it is sitting upon a mountain of data but still is not in a position to really make the most of the insights and automation that it can provide.
    • Third: Gaming. A lot of progress has been made in developing game play within Messenger.
    • Rich game play is now enabled with real time and turn by turn games making up the majority of the line-up.
    • There are now 45 games available for play within Messenger and with the gaming tab be enabled within the app imminently.
    • I think that this is a crucial step forward as gaming remains the largest segment of Digital Life and in developed markets, there is still no dominant player.
    • Fourth Chat extensions: This enables developers to bring their services directly into chat sessions.
    • Spotify is the best example where users can search Spotify for a track and then post that track as well as play a sample all within the chat.
    • Apple Music will also be coming to the platform later in 2017.
    • Fifth Monetisation: Behind all of the new announcements is a single-minded determination to drive more traffic onto the platform.
    • This can be seen everywhere from the desire to enrich mundane events to encourage sharing to enticing users to spend more time on the platform.
    • Data richness and time spent are two key elements when it comes to understanding user activity and being able to earn revenues from it.
    • This is not a subject that was directly addressed anywhere but one can see the hand of the cash register in everything that Facebook does.
  • Facebook revealed nothing that was really ground breaking but instead spent time addressing its weaknesses as well as ensuring that rivals are not able to steal its user engagement.
  • I am still quite cautious with regards to Facebook’s outlook for this year as I don’t think that either its video offering or its gaming offering are mature enough to bring the company back to high growth in 2017.
  • This combined with requirement to really improve its AI to compete on a level playing field with Google, Microsoft, Apple and Amazon leads me to still prefer Baidu, Tencnet and Microsoft.

 

MWC Day 2/3 – Show barometer.

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What’s hot and what’s not at MWC.

VR / AR

  • Along with the number of drones, the number of VR units on the stands has fallen substantially compared to last year.
  • I think that this is because last year, VR was a novelty that everyone wanted to try but interest has now waned as very little has changed in 12 months.
  • VR has hugely disappointed in terms of user adoption and there is very little that is new and exciting is being offered on the stands.
  • I think that this is symptomatic of the limitations that plague VR (see here) and until these limitations are properly addressed, VR will continue to disappoint.
  • AR has exactly the same problems with the exception that it has plenty of applications in the enterprise where the content, comfort and price limitations are less important.
  • Consequently, those AR companies that are focused on productivity applications are likely to fare better in the short term.
  • I would steer clear of any investment dependent on VR for now, and HTC in particular.

Jolla – Last man standing

  • Jolla has shown remarkable resilience to the difficult conditions that have caused its competitors to fall by the wayside.
  • I think Sailfish is now the only really viable alternative to Android.
  • Furthermore, the market environment has become far more favourable with both Russia and China far less willing to allow US controlled software into their networks than they were 3 or 4 years ago.
  • Russia has certified Sailfish as an approved OS for state owned enterprises which Jolla is now actively trying to leverage into China.
  • There, it has announced the creation of the Sailfish China Consortium which aims to take the core Sailfish OS, and adapt it for Chinese enterprises that wish to have software over which they have full control.
  • The consortium has three Chinese entities that have expressed an interest in joining.
  • It has also got some interest from Latin America but it is still quite early days.
  • This creates credibility for Jolla and raises the potential for Jolla to get some revenues in the door in order to keep the ship afloat.
  • It is still early days but the dark days of 2016, when the ship looked like it was holed below the waterline look to be behind it.

Artificial Intelligence

  • Artificial Intelligence has made a big appearance at the show this year but still most companies demonstrating it do not seem to have absorbed what AI really is.
  • There are many robots from Asia that are billed as AI but can only respond to a series of pre-programmed responses.
  • In a similar vein, many companies are touting their service or app as being driven by AI but when one looks under the hood one finds little more than advanced statistics.
  • AI is currently the realm of the big companies who can afford the very high salaries that AI engineers can now demand and have the balance sheet to continue investing for a long period of time.
  • The exception is tiny start-ups that have come out of universities but already these companies are very hot property.
  • I have no doubt that AI will be a major differentiator and driver of the digital mobile ecosystem over the next 10 years, but developing AI is still an incredibly difficult, time consuming and expensive task.
  • In AI, I continue to look for those that are developing:
    • Firstly: the ability to train AIs using much less data than today,
    • Secondly: the creation of an AI that can take what it has learned from one task and apply it to another and
    • Thirdly: the creation of AI that can build its own models rather than relying on humans to do it.
  • I consider fixing these problems as essential to fulfilling the dreams that so many companies effusively discuss but have no idea how they will fulfill. .

Magic Leap – Creations great but not small

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Technology is there but size is miles off.

  • While I do believe that Magic Leap is capable of producing an augmented reality experience (AR) that far outstrips anything its peers are offering, I think it is years away from fitting that technology into anything that a consumer will tolerate.
  • The latest leak (see here) from Magic Leap shows a unit that is clearly a development board in a clear plastic box powered with an external battery pack and a fairly large head unit.
  • This has been reported to be the latest prototype called PEQ (product equivalent) that the company will be presenting to its board and investors this week.
  • This group are all looking for results from the $1.39bn raised so far.
  • Magic Leap CEO, Rony Abovitz, has been quick to identify the device as a R&D test rig used for data collection that helps with the creation of surfaces and textures in AR.
  • This follows a number of data points that RFM research has collected over the last month that include:
    • There appear to be problems with the core fibre optic technology that has led to the company having to redesign elements of its offering (see here) to make it smaller.
    • Suppliers have described conversations with Magic Leap engineers that strongly imply that some parts of the system are not even past the concept stage.
    • Silicon Valley chatter also highlights the possibility of infighting between the Silicon Valley operations and the mothership in Florida as well as some high-level departures and very short senior tenures.
  • I think that the key to understanding what is happening at Magic Leap comes from Rony Abovitz himself who describes his prototypes (see here) as being in “agile build cycles”.
  • To me this means that the hardware and software design and specification of the PEQ product, that Magic Leap intends to launch, are far from being locked down.
  • Consequently, there is no point whatsoever is spending a fortune in trying to miniaturise the hardware as all that investment would be wasted if something has to be changed.
  • I also suspect that Magic Leap has been forced by the pressure to start generating revenues into producing a compromised product.
  • RFM research indicates that the older, far bulkier prototype uses all of the Magic Leap technology and produces a great user experience but remains far too bulky to wear.
  • Consequently, it appears that to make it wearable, Magic Leap has been forced to make compromises in the user experience.
  • These would include features like field of view, resolution and refresh rate.
  • This would explain why the feedback generated by the few who have experienced the technology appears to have gone from “wow!” to “ho-hum”.
  • Hence, I think that Magic Leap is very far away from producing the kind of product with which it could take the AR market by storm.
  • I don’t think that this is a problem as almost all of its competitors are looking to sell their units to enterprises where the user experience is much less important (see here).
  • Magic Leap is aiming for the consumer and given how poor the general AR experience is today, I can’t see anyone producing a successful consumer device for 2-3 years at least.
  • This gives Magic Leap time in terms of the market it is aiming at but the real question is what time frame did it promise its investors and will they be willing to pour a lot more money into this company?
  • One thing I am pretty sure of is that Magic Leap is going to need it.

 

Virtual Reality – Virtual standstill.

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VR seems only to be popular at trade shows.

  • After a very disappointing 2016, Virtual Reality looks set to have another disappointing year in 2017 while its proponents work out how to fix the issues that keep it from being a success.
  • The latest blow is the removal of 200 out of 500 of Oculus Rift demonstration stations as a result of poor performance within stores.
  • The idea has been that to get a user to buy VR, he has to try it but in some stores entire days have gone by without a single demo being given.
  • Best Buy will continue to range the Oculus Rift but the real estate given up will be re-used for products that produce better sales per square foot.
  • It appears that the only place where people queue for a demo is at trade shows with the regular user not really seeing the point of the technology.
  • This is a further indication that the limitations of VR continue to hamper its appeal.
  • These remain:
    • Price: Many of the devices cost several hundreds of dollars and also require a PC to run, further increasing the cost.
    • Clunky: VR and AR units are still large, clunky and uncomfortable to wear.
    • In many cases they also make the user feel foolish when wearing one.
    • Comfort and security: VR in cuts the user off from almost all sensory inputs from his immediate environment severely limiting the situations in which the user would feel comfortable using one.
    • Many units also cause feelings of nausea due to an imperfect replication of the real world compared to what the brain is expecting.
    • Cable: Many units require an HDMI cable which prevents the user from moving and also increases the risk of a fall should the user trip over the cable.
    • Content: Both games and content remain in short supply limiting the reasons for users to immediately adopt the platform.
    • The adult entertainment industry is a good yardstick for the adoption of new media types and even this has been slower than expected to jump in.
  • The net result is that I think 2017 will be a disappointing year for VR.
  • The one bright spot remains augmented reality (AR) to enterprise customers.
  • For the enterprise, it is productivity that really matters with the user experience being less important.
  • This is because in consumer, the users pay money for an experience but in the enterprise users are paid to use the technology.
  • Hence, enterprise users’ willingness to put up with a substandard user experience is much greater.
  • The AR user experience is still miles from where it needs to be but critically it does offer productivity improvements that have led to many companies trialling it particularly for employees in the field.
  • Hence, I think that AR in the enterprise should see both unit shipment growth as well as good growth in revenues from software and services in 2017.
  • Consequently, the companies to watch this year are those in this field like ODG, Microsoft HoloLens, Meta, Atheer Labs and of course Magic Leap.
  • Magic Leap is an exception is it has made incredibly bold promises around a consumer offering in AR, but it is questionable as to how close it really is in terms of having a working, commercial product (see here).
  • From an investment perspective, AR in the enterprise is the only place I would entertain putting money into this year unless it is something aimed at fixing the limitations I have listed above.

Magic Leap – Backwards leap.

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Massive setback means more money likely to be needed 

  • It appears that Magic Leap has hit a major problem with the commercialisation of its technology and the question really is: are its investors patient enough to hang on while a new solution is found?
  • Magic Leap is an augmented reality company that has a very high profile because:
    • First: It has promised a user experience that other augmented reality companies can only dream of.
    • In most systems the virtual world can only be superimposed on a portion of the user’s field of vision.
    • Effectively there is a letter box in front of the user within which the virtual world exits and from which it cannot escape.
    • For productivity applications, this is not really a problem but for the consumer, there is no way this will fly.
    • This is the problem that I think Magic Leap has solved and if it can produce a good product, it could dominate the consumer market for AR (see here).
    • Second: It has very high profile investors (Google, Alibaba etc.) and a valuation of $4.5bn.
    • $4.5bn is a sky-high valuation for a company with no product, no prototype and no time frame within which a product will come to market.
  • Despite some rumblings around whether one of its latest demonstration videos is genuine, the older demonstrations show clearly that Magic Leap offers a full superimposition of the virtual world onto the real.
  • However, this is not where the problems that I can see are to be found.
  • The problem is that the device is huge, clunky and uncomfortable to wear making it completely unsuitable for the consumer.
  • I have long held the view (see here) that for AR to work, the entire unit needs to be no heavier or intrusive than a regular pair of glasses.
  • The original idea was that Magic Leap would use a laser shone through a vibrating fibre optic lens to create the light field (see here) but it seems that this solution does not work properly.
  • A recent demonstration (the information) of a head unit attached to a PC with multiple cables produced images that were of a lower quality than Microsoft’s HoloLens.
  • It looks like this has laid bare the weakness in the laser / fibre optic solution in enabling a move from being the size of a fridge into a head unit.
  • Furthermore, the press does not like being made to feel foolish and so the knives are now out following the possibility that the latest video is a concept rather than real footage.
  • Either way, it looks like it is back to the drawing board for Magic Leap in terms of figuring out how to ut full field of view AR into a pair of glasses.
  • This is a huge problem as I suspect it means a lot more time and a lot more money.
  • With no revenues and aggressive hiring over the last 12 months, Magic Leap’s burn rate must be tens of millions of dollars a month raising the likelihood of another funding round probably at a lower valuation.
  • The big question is whether its investors will continue to support the longer development time required and if so, what price will they pay?
  • The longer development time also gives rivals such as HoloLens, Meta and Atheer Labs time to fix their issues with the field of view.
  • With risks increasing and sentiment souring the valuation can only come down.