The Race To Zero

VR is going to be big. AR is going to be bigger.

I’ve been saying that for 30 years and eventually I’ll be right.

(minor edit, Magic Leap seems to have taken the lead in going to zero, in this race.)

More articles came out, talking about hundred billion dollar markets, reminding me how things are remaining the same faster than ever before, with better technology every year. And adding XR will make it even bigger than it already wasn't.

The key is no matter how big the market virtual or real, that doesn’t mean people will make money in VR, AR, XR, or even RR, the way they think will happen.

In the race to Zero, do you really want to win?

If the ? TRILLION dollar a year cell phone industry leaves companies the size of Ericson, Nokia and HTC in the dust, what chance do you have in a 1/2 Billion dollar a year market where only a million or two HMDs are sold every year. (Facebook is now the leader with the Quest 2 being a nice $299 unit with a $300 Bill of Materials!) If they are losing money on each one, how long does it take to earn a profit?

In the cell phone industry, state backed competitors are able to operate in the red for years, while companies that rely on profits to fund development erode their once commanding technical leads, with the march of Moore’s law. Good thing certain state organizations haven't identified VR and AR as target technologies in their 5 year plan! (Okay, that was a joke, you guys do know about the 5 year plans, right?)

More efficient, more powerful and more affordable is the real meaning of Moore’s law, and unless you can reinvent your product every 2 years, you eventually lose your lead.

Technology is the flow of information. No matter how far ahead you think you are, someone else can jump into the river of progress, go with the flow and pass you by without even trying, if you aren’t moving faster and taking advantage of your lead.

This is a conundrum, because there is no money in hardware.

(Yes I do hardware. Don’t rub it in.)

But without enabling hardware, you can’t deliver your software product.

I tell people, 'App is more important than IP these days', because patents have reached the point where other than defensive patents, you are spending money, to hand your competitors your recipe or road map, and even companies the size of Google and Oracle can’t defend their IP from each other. An App like Angry Birds, which was a direct clone of Crush the Castle, (with cuter art work,) but the exact game play, becomes worth Billions of dollars on a whim. Copying is a thing. It continues to be a thing because it works. Innovation is prone to failure. There is a reason nobody has done it before. Innovation is expensive, time consuming and hard work. It is cheaper to be second, and can be much safer and more rewarding by avoiding the costs and pitfalls of being the leader.

LCDs and OLEDs are about to declare war on each other. That’s interesting because they’ve been doing that for 20 years, but that time period is critical because the small molecule patents for OLEDs are expiring so the cost premium for OLEDs is shrinking.

Other technologies like quantum dots will improve the behavior and characteristics and we might finally get the features we thought we would have when we designed this junk 10 years ago.

The key is price. Displays are dropping down to $5 / diagonal inch, from the $10 / inch they’ve been steady at for 20 years. Further erosion as competition increases will allow your magic one inch displays for $10 per headset. Display week showed several companies with 4 megapixel displays at 1000 dpi. That was magic just a few years ago.

Now they want to know how many million devices do you need by what month?

That display will be driven by a Wifi6 Chip that doesn’t exist this week but should be ready by December, talking to your cell phone for another $10. Add a few cameras and a mic and you have a head mounted device for $100 that beats anything available 10 years ago in resolution, performance and other key characteristics.

So why don’t we just do it? Because someone else will sell something better for $90 in 6 months. Then that will become obsolete.

So why don’t we just write apps and sell those for $100? Because there aren’t any devices that can run them at 120 frames per second with 9 megapixel resolution.

So the chicken and the egg problem (spoiler, the egg came first, the chicken was a mutant) is we need someone to go out of business providing us the AR headset so we can be a trillion dollar software company.

Any Volunteers?

I will happily give up my head start and let you win this race. In fact, I'm betting on you!