Augmented Reality is Back Again
For those not yet aware, Apple recently released the Vision Pro, a mixed reality headset that appeared to reignite interest in AR/VR amongst investors. There are some that carry the opinion that this is a substantial breakthrough, lending to how Apple has set trends in the past and has reportedly surpassed existing limitations when it comes to the quality of eye tracking, motion detection and its passthrough capabilities. Those more critical of the release see this either as a passing fad akin to the Google Glass, or a middle-of-the-road offering when compared to the Microsoft HoloLens or the Magic Leap. The trajectory of the Vision Pro is up for grabs, with most of the attention from investors going towards where the finished product can foreseeably best apply in the consumer or business markets. But what about the underlying technology that appears within? Each headset requires a host of advanced technologies to fully operate, much of which is difficult to harness. If an investor chooses to examine augmented reality by focusing on who creates the picks and shovels, the volume of applicable startups goes up, as does the potential for a higher win-rate.
Picks and Shovels
The augmented reality headsets available today are complex, requiring many forms of advanced technology to properly operate. These help to power the following.
Displays
The ability to display high-resolution visuals that overlay seamlessly with the physical environment is made possible through the use of micro-OLED screens. These screens come in a small form factor, which allows them to be lightweight and therefore easy to wear for extended periods of time. To optimize visual performance, manufacturers often use custom optical inserts that magnetically attach to the main lens of the headset, which allows users to maintain visual acuity while using the device.
Interpretation
An augmented reality headset has to continually interpret all sorts of information. The first focus is on images, where the device captures real-world visuals through an assortment of cameras and sensors. The results provide the necessary environmental context for overlaying virtual objects and content. Next are other available data sources, be it depth sensing, eye and motion tracking or object recognition. The push towards innovative computer vision technology is there amongst leading enterprises, as each competes to achieve accurate processing techniques to identify surfaces, objects and gestures with little to no delay.
Processing
The underlying infrastructure that powers the ability for an augmented reality headset to interpret and display information is a set of high-performance semiconductor chips and processors. Each has a role in handling complex tasks, which include real-time rendering, spatial mapping, and image and sensor data processing. Most companies today use system-on-a-chip processing hardware, where processors, sensors, graphics and memory are designed to function on a single chip, to handle demanding computational tasks without sacrificing space, weight or power.
Investment Opportunities
The resurgence of interest in augmented reality is an excellent opportunity for versatile deep tech investors. As mentioned above, headsets use a variety of components that range from display hardware, interpretation software and infrastructure, which are always evolving. The nucleus of each device is undoubtedly the integrated circuits, which need to satisfy increasingly stringent performance expectations, meet standards for power-consumption and also conform to optimal design changes that lend to other components being integrated within the final chip itself. An opportunity worth exploring is the competitive advantage that unfolds when a company deploys leading processing hardware and augments its abilities with the use of artificial intelligence software. An example of this is through AI-powered sensor fusion, where data can be interpreted simultaneously between multiple motion tracking sensors to best interpret user movement. This goes for simultaneous localization and mapping technology, or SLAM, where a series of adaptive algorithms are employed to process sensor data, perform odometry and determine the user’s location.
For many, the consumer-facing direction of augmented reality is extremely compelling, accounting for its immediate applicability in gaming and social media among others. But where it can equally meet demand is when it removes longstanding workplace inefficiencies. An augmented reality setup provides immersive and interactive training, helping specialized employees practice complex procedures, machinery operation or hazardous practices in a safe and controlled environment. Additionally, it has a role in processes that require visualization. For example, an architect, engineer or designer can overlay a 3D model of a structure onto a physical space, enabling improvements to spatial comprehension and the transition between simulation to construction. These opportunities also come with the potential for vertical integration, which is hardly achievable when focused on satisfying the consumer markets.
The Path Forward
The augmented reality market has long been subject to the ebbs and flows of market interests, having always shown promise while simultaneously not truly expanding towards its potential. Apple releasing the Vision Pro might be the spark this technology needs to get lasting attention, both from end-users and from investors. We believe there is a lasting opportunity to identify startups capable of filling the supply of components necessary to enable the use of augmented reality devices. The exploration of innovative integrated circuit designs, AI applications and enterprise solutions each represent more resilient examples of the base technology that we see having a long shelf life for the years that follow.