Saturday, August 13, 2016

Himax on AR/VR Market Opportunity

Himax Q2 2016 earnings call and an official press release have few unusually long statements on AR/VR business potential, unusual for such kind of documents, that is:

"The recent staggering success of Pokémon Go has provided a looking glass into the future trajectory of the AR technology and given one early answer for why and how you’d want it to. Since its launch just over a month ago, the AR game has taken the digital world by storm with already more than 100 million app downloads and 20 million active users. Thanks to the viral popularity of Pokémon Go, AR is now getting the attention and consumer validation that we, at Himax, have always known to be possible. While we must give credit where it is due, the AR technology used by Pokémon Go today is still quite primitive.

Compared to the AR/MR technologies being developed by our customers and partners, Pokémon Go pales in comparison in terms of how AR can bring alive the consumer experience to interact directly with the physical environment with more sophisticated holographic imagery, 3D sensing and real-time surroundings detection. If you have not seen demonstration of AR devices already, its holographic imagery will actually appear on your desk, your chair or walking next to you on the street. Moreover, the world of AR is much more than just gaming. It represents a next generation computing platform. Future versions of the technology will cover both commercial and consumer uses and will be much more sophisticated and produce an endless stream of uses. These could include daily computing in a virtual office, social networking, teleconferencing, etc.

Due to the eye-opening effect of Pokémon Go, those who thought AR required several more years to gain traction are changing their models as the game, almost overnight, elevated AR to mass-market and added 10's of billions of dollars to its market potential in the next few years. A new and lucrative marketing tool on top of AR software and applications are being created that will catapult AR device development and intensify further investment in the sector. We believe the path Pokémon Go started will prompt an AR industry that most didn’t think possible before.

"Last but not least, we continue to make good progress in two new smart sensor areas which we announced earlier by collaborating with certain heavyweight partners, including leading consumer electronics brands and a leading international smartphone chipset maker. By pairing a DOE integrated WLO laser diode collimator with a near infrared (NIR) CIS, we are offering the most effective total solution for 3D sensing and detection in the smallest form factor which can be easily integrated into next generation smartphones, AR/VR devices and consumer electronics. Similarly, the ultra-low-power QVGA CMOS image sensor can also be bundled with our WLO module to support super low power computer vision to enable new applications across mobile devices, consumer electronics, surveillance, drones, IoT and artificial intelligence. We will report the business developments in these new territories in due course. Regarding other CIS products, we maintain a leading position in laptop application and will increase shipments for multimedia applications."

On the earnings side, a decline has been reported in the company's image sensor sales.

Talking about AR/VR investments, in a somewhat unrelated news, a VR sports broadcasting startup NextVR closed an Asian-centric Series B round of around $80M, valuing the company at $800M. The round included CITIC Group, Softbank Corp and China Assets Holdings, Time Warner Ventures and The Madison Square Garden Company. (source: MIDIA Research, Techcrunch)

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