CES Day 4 – Floor stories pt. II.

VR, AR & XR

• There is a big reduction in the number of offerings present at the show this year.
• Many commentators are of the opinion that HTC is not going to last much longer in the VR game and a large number of the almost unknown Chinese offerings are not here this year.
• The top dogs remain Sony, the best seller, for the PS4 and Oculus which has the financial clout of Facebook behind it.
• On a price-is-no-object scale, the $10,000 Varjo XR-1 developer edition VR device which is aimed at professionals provides by far the best experience I have seen to date.
• For its price point, so it should.
• The number of AR offerings has also fallen massively as a number of US offerings hit the wall in 2019 and there has also been a fall on the number of offerings from China.
• Magic Leap is getting a bad reputation as it has bought a portfolio of patents out of bankruptcy and is asserting the against its Chinese competitor n-real and I suspect others will follow.
• This makes sense because the offerings I have seen from China have improved hugely in the last 12 months and offer a similar visual experience to Magic leap but at 1/5^th of the price.
• This combined with Magic Leap’s problems around its core IP that came to light 4 years ago (see here) leads me to ask further questions about both the price of its product and the valuation of the company.
• Both segments continue to struggle outside of some very specific vertical applications and I can’t see this changing in 2020.

Smartphones

• The least talked about product of all at this show is the smartphone.
• It’s ubiquity and involvement in the use of almost all of the other products on display here is clear but the category itself has melted into the background.
• This is yet another sign that the smartphone segment is very mature and ripe for change.
• This could be very bad news for Apple as there are very few companies which have successfully disrupted themselves and maintained such dominance and profitability.
• The good news is that there are no credible candidates to replace the smartphone on the horizon, meaning that for now, Apple’s position remains secure.
• It may not be growing but it is generating a lot of cash which will provide considerable support to the valuation.
• However, this valuation is now looking a little stretched and I remain happy to continue taking profits.