Vuzix Augmented Reality Smart Glasses
The first real public awareness around augmented reality (AR) glasses was the fleeting glimpse of Google Glass. Unlike a proper product launch, the introduction of Google Glass seemed more like a way to test the public’s appetite for walking around all day with funny looking glasses on your face while everyone around you wondered if you were recording them. Fast forward to today and it seems like some enterprise applications are gaining traction with startups like Augmedix using Google Glass for healthcare applications.
One of our readers brought to our attention a company called Vuzix (NASDAQ:VUZI) which is not only developing and selling augmented reality glasses and virtual reality headsets but is also a publicly traded stock. Does this mean that there is actually a pure-play AR/VR hardware company that we can buy stock in? The answer is yes, but the fact that both the products and company are not so well known could be both a blessing and a curse. Let’s take a closer look at Vuzix (NASDAQ:VUZI).
Founded in 1997, Vuzix has been developing virtual reality products ever since then and began trading their shares on NASDAQ after an IPO in 2010. In 2012, they sold off their “rugged mobile displays for defense markets” and now just focus on consumer entertainment and enterprise markets. Vuzix is predominantly focused on developing augmented reality glasses, and is doing a great job of innovating with their products winning Consumer Electronics Show (CES) awards left and right. In early 2014, they began selling the m100 ($999), which they say are the world’s first commercially available “Smart Glasses” used for augmented reality. The m100 targets both consumer and enterprise with a developer ecosystem that includes corporate partnerships with the likes of SAP, AT&T, HP and DHL. At the beginning of this year they announced the next generation m100 model called the m300 ($1499) with additional features like hot swappable batteries and an Intel Atom processor running Android 6.0:
The problem with demonstrating a next generation product is that it then cannibalizes sales of its predecessor which is exactly what happened to Vuzix. The first half of this year saw a 33% decrease in sales of the M100 Smart Glasses compared to the same period last year. Total sales for Vuzix in the first half of this year were $924,717 compared to $1,236,967 last year which wasn’t exactly a big number to begin with.
In addition to their mSeries augmented reality glasses or “smart glasses” as they call them, Vuzix is also developing a virtual reality headset called iWear which features dual HD Displays and revolutionary nano-optics that provide the equivalent experience of a 125″ home television from 10 feet away:
iWear is completely portable and battery-driven so that the user can watch 360°VR movies anywhere. As for other products, they are also developing 3 different types of new augmented reality glasses called the Series 3000 that actually look like something you’d want to wear as opposed to some of these other contraptions that make you look like a total muppet:
The problem with Vuzix is that they haven’t really had their “pokemon go moment” where suddenly everyone becomes aware of their really cool augmented reality products and they become must have Christmas gifts for 2016. A recent article from Wareable listed the Vuzix m100 glasses alongside some very impressive competiting solutions from big names like Sony and Epson who have R&D budgets that dwarf the $3.6 million that Vuzix spent on R&D in 2015. The Company notes that they are in a very competitive space and have yet to capture significant market share for any of their products:
There is competition in all classes of products manufactured by us, including from divisions of large companies and many small companies. Our sales do not represent a significant share of the market for any class of products.
Vuzix (NASDAQ:VUZI) is a $160 million company with a volatile but steadily increasing share price that hit new highs recently of $9.80 per share. Even in the face of a significant fall in revenues, investors believe that the new products slated to come online this year will help return sales growth going forward. Here are Vuzix’s projections of products coming online this year:
In Q2 of 2016 we expect growing revenues from our iWear Video Headphones, continuing sales of our M100s and possibly late in Q2, the first sales of our new M300s. We anticipate that by fall 2016 Vuzix should have as many as 4 new products in the market as compared to the same period in 2015. The iWear Video Headphones, the M300 and M3000 Smart Glasses and our first B3000 binocular in a sunglasses format in late Q4.
These new products were developed in part by $24 million in shares that Intel purchased as part of a private offering in January of 2015, funding that has helped Vuzix weather some pretty meaningful losses. Just in the first half of this year, Vuzix lost $7.88 million leaving them with just $4.58 million in cash on hand. In their latest 10-Q they site “production difficulties” as constraining Q2-2016 revenues which is a bit concerning.
Nonetheless, we like the fact that Intel believed in their story enough to invest in them just a few years ago and as a result they are now ready to release some new and exciting augmented reality glasses that are feature rich and stylish at the same time. What we don’t like is that they are up against some massive R&D budgets from large corporates and all kinds of well-funded startups that want a piece of the massive opportunity in augmented reality. Of course nothing says there can’t be more than one winner and Vuzix could certainly be one of them if these product releases go well this year.
Are you paying too much in transaction fees to your broker? Check out a brokerage firm called Zacks Trade that's offering $1 trades on U.S. stocks and options until 2020. After that, you'll pay just $3 a trade or a penny a share, whichever is greater. It's one of the cheapest brokers out there and you can also trade stocks on 91 foreign stock exchanges. Click here to trade US stocks and options for as low as $1 per order until 2020.