Is Augmented Reality the Biggest Opportunity Ever?
There’s one secretive company you probably haven’t heard much about that is developing a technology that is so powerful and secretive that in February of this year, they took in the largest Series C funding round ever recorded of $827 million. Investors behind this company include Google, Qualcomm, Morgan Stanley, Fidelity, Alibaba, and many more notable names. In a recent article by Wired, it was speculated that this company may become one of the most valuable companies ever due to how extremely disruptive their technology is.
We first wrote about this company, Magic Leap, back in September of 2015 when we speculated that the initial Google Glass offering was an intended failure by Google and now they’ve taken what they’ve learned back to the laboratory and hedged their bets with an investment in Magic Leap. What Magic Leap is working on is called Mixed Reality (MR). While Virtual Reality is a completely digital environment that you are immersed in, Augmented Reality is where your view of reality is “augmented” with digital additions. In “Mixed Reality”, digital objects appear within the natural world. Here’s a better explanation of these three terms from Wired:
Now if you have a good 20 minutes or so, read the full article from Wired that came out last week on the potential of Augmented Reality. Perhaps the first applications that we’ll see are entertainment applications that combine real world objects and environments with digital overlay. If you want to see just how cool this might look, take a look at this demo of what a “virtual entertainment center” might look like from a company called The Void:
Now immersive video games are great and all but how could this possibly make Augmented Reality the most valuable technology ever invented? Well firstly, we need to stop thinking about VR hardware as bulky visors such as the one you saw in “The Void” demo. Those are VR hardware devices, not AR hardware devices. Go back to thinking about hardware such as Google Glass that enables you to see your environment but with a digital overlay. Now let’s postulate on just a few potential areas of disruption for augmented reality aside from entertainment:
- Computer Monitors: Why do you need a computer monitor when your augmented reality device can project any number of monitors in any fixed location at any given time?
- Television: Why should I need to own a television if I can customize a viewing screen to appear anywhere, at any size, and with any dimensions?
- Travel: Why am I going to stand in the street and thumb through my Lonely Planet guidebook when I can just turn on my AR device and have it describe things to me as I see them? And stop looking at Google Maps on your smartphone. It’s all in your AR device now.
- Smartphones: Speaking of smartphones, these are now obsolete. Carrying around a little screen in your pocket to look and poke at is so 2016.
- Fitness: Bored of your same old jogging routine? Maybe you need a virtual jogging buddy? Want a trainer in the gym to give you motivation? He or she will know how many reps you’re doing and your form because all those weights are enabled with IoT sensors.
- Education: There are so many possible applications here we don’t even know where to start.
The number of applications for augmented reality is vast, and only limited by your imagination. If you spend some time doing your own due diligence on who is working on AR/VR/MR (everyone), and who is investing in AR/VR/MR (everyone), it’s tough not to want to get in on some of this action. As is typical with early-stage disruptive technologies, retail investors have no options to invest as of yet. Of course if you Google “Investing in Virtual Reality” you’ll get the usual drivel about “10 Stocks to Buy Now” with a list that includes names like Google, Facebook, and Sony. There’s nothing wrong with any of these stocks, but don’t kid yourself that you’re getting any exposure at the moment to AR/VR/MR. These are about the farthest thing you’ll get from pure-plays on this theme, and the place to be at the moment is in startups. Here’s a look at just some of the AR/VR startups out there and who is investing in them:
If Magic Leap is so secretive and can raise more cash in a Series C round than any startup in history, what’s their incentive to go public? Obviously their investors want a payout, but it’s likely they’ll only look to IPO once they’ve unleashed their magic on the world and the media is dominated with articles hyping how AR/VR is the next big thing.
Here at Nanalyze, we hold the lion's share of our investing dollars in a portfolio of 30 dividend growth stocks. Find out which ones in the Quantigence report freely available to Nanalyze subscribers.