The Evangelists and Pragmatists in the race to augment the world
2017年6月9日 James Hayward
Last week, I attended Augmented World Expo (AWE) 2017. With over 4000 attendees, 200+ exhibitors and speakers and with all of the largest names present (in one way or another), this annual event provided an excellent way to meet and learn from companies spanning the industry, value chain and world that are active in Augmented (or Mixed/Merged or eXtended) Reality.
I had the opportunity both to attend the conference and to walk the exhibition floor. During the latter, I began to subconsciously position each company and individual that I spoke to on a scale between two extremes, as follows:
These are players that are betting big now in the anticipation of this market reaching its first billion / ten billion / hundred billion dollars in the coming years. This could be a large company that already has its own brand on the line. It also could be one of a prominent group of start-ups, backed by big industry players and VCs to the tune of billions of dollars. It also includes those that are known to be investing significantly without having public launches yet.
Without exception, companies at this end of the scale are currently burning through money to build the technology expertise, patent portfolios, partner ecosystems and infrastructure for the promise of a huge long term return. Where present-day revenue streams do exist, they are insignificant compared to the costs and investment on the other side of the balance sheet. These are inherently risky plays for anyone with deep pockets and a long-term outlook.
Typically speaking, these players are older and yet still often smaller (in terms of number of staff) than the Evangelists. They have been in the market for many years, often starting as R&D houses or specialist manufacturers. They usually started with military projects before progressing to early enterprise use cases. They have grown incrementally over many years and have revenues supporting the operation that even leaves some of them in the black.
Companies at this end of the scale present a much more moderate view of the market and its potential. Whilst they too have benefited from the influx of hype and investment, many of the staff we speak to remain privately reserved as huge forecasts and huge funding surrounds them. They believe in a hugely successful future for the industry, but tend to target narrower use cases that do not require huge economies of scale before the entire value chain can be profitable.
This is far from a perfect dichotomy; every company requires a combination of the two approaches in order to manage the practical realities of the present without losing sight of the future. The deception of linear vs exponential growth is discussed regularly, yet predicting the crossover point is exceptionally difficult. Start too early and the funding will run out before the industry is ready; start too late and you miss the party. This exists in every industry that we cover at IDTechEx, but is most prominent in the AR/VR/MR space.
Given our experience, resources and backgrounds, our approach as technology scouts/market researchers in this area has been to look hardware-first. Here we can recognise the issues between current devices and proposed market opportunities, and understand how and when evolving hardware capability will address them. In terms of forecasting, this already introduces many significant limitations and assumptions, but it also positions us from an outlook shared by many in the industry.
Targets for device performance are regularly discussed; for example, at the event, speakers from the likes of Qualcomm and Intel gave excellent walkthroughs of targets for brightness, resolution, refresh rate, motion-to-photon latency, FoV, battery life, weight, size, form factor, etc. Whilst each target may vary significantly by application and opinion, they still provide benchmarks which can be plotted on a timeline to visualise progress towards a target.
Above this sits the economics of the hardware value chain. The leading edge of the industry often pushes these performance targets closest, yet can often require bespoke production processes at significant cost. Compromises between performance, profit margins and scale are inevitable at this stage. The Evangelists can look beyond this towards a future vision - the Pragmatists less so.
This leads us to the competitive landscape today. Most AR device companies are built on a core of patents and expertise in at least one technology area (e.g. optics/displays, sensing depth/gesture/location, product design/engineering, etc.). The Pragmatists lead the way in terms of real sales and revenue from AR/MR/XR hardware. They have developed, partnered and compromised to produce working products for real markets. The Evangelists also develop and partner, but seek more optimistic compromises that put them ahead of those that have gone before, enabling them to unlock new markets, at new scales with corresponding revenues.
So as I subconsciously assigned companies to my scale, the instinctive question which follows is to ask which approach is "correct"? My natural affinity with the Pragmatists (is it obvious?) is largely cultural, but as I spend more time in San Francisco and Silicon Valley, it's impossible to ignore the pull of the Evangelists. Either way, there are distinct technology questions at the core of the industry, which are as interesting as they are challenging. I managed to have meaningful conversations with around 40 companies, large and small, at the event. For each, we capture these insights through company profiles which are available via our subscription service, and allow our customers to see the industry through a different set of eyes.
The rate at which the devices and content in this space is improving is remarkable (e.g. visible improvements in just the 6 months between CES and AWE). Everyone is preparing for a journey "across the chasm" in the increasingly near future. Many will fail, but we do believe that some will eventually make it. For more details as to who we think this will be, see IDTechEx's research on the topic and try out the content in our subscription service.