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Goldman Sachs research revealed that augmented reality (AR) and virtual reality (VR) have the potential to become the next big computing platform and that AR/VR will become an $80 billion industry by 2025.
Forrester research estimates that enterprise customers will adopt 400,000 smart glasses in 2016 alone.
In 2015, the industry witnessed smart glass pilot programs across specific production lines, but over the second half of 2016, commercial rollouts could expand and encompass entire factories.
Google revolutionized the industry in 2014 with the introduction of Google Glass, but one company’s smart glasses have outperformed Google Glass time and time again in the enterprise field where it matters most.
Enterprise Augmented Reality Smart Glasses
The company making the biggest waves in the industry right now, outperforming Google Glass in the enterprise field with its first generation augmented reality smart glasses, is Vuzix Corporation (NASDAQ: VUZI).
VUZI has sold thousands of smart glasses to enterprise customers over the past few years, and the company is planning a commercial rollout of its next generation smart glasses this summer.
VUZI’s second generation smart glasses (M300) were developed based on the feedback from thousands of users.
The M300 smart glasses will continue to expand the performance gap between VUZI’s smart glasses and the competition within the enterprise marketplace.
Enterprise Adoption of Augmented Reality Smart Glasses Has Potential to Be Massive
“Over 14 million US workers will use smart glasses by 2025.”
Forrester“8% of all US workers will use smart glasses in their jobs by 2025.”
Forrester“Augmented reality is expected to generate $80 billion in revenue (excluding hardware) by 2020 and become the backbone of immersive journalism where readers can experience a story and be part of it.”
Manatt Digital Media“Enterprises will spend over $30 billion on smart glasses hardware through 2025.”
Forrester“You’ll start seeing them (smart glasses) used on a much larger scale than they were in 2015: Moving from one line to the whole factory, or from one factory to the whole bullpen of factories that support a process.”
APX Labs via Washington Post
Source: Forrester
Forrester estimates that enterprise customers will adopt 400,000 smart glasses in 2016,with the total adoption of smart glasses expected to reach 14.4 million by 2025.
The 2025 estimate assumes that 8% of US workers will wear smart glasses as part of their jobs.
New smart glass device unit sales are expected to make up a majority of unit sales through 2021 until sales of replacement units eclipse new units.
Forrester identified 264 jobs in the US that are most likely to benefit from smart glassesincluding jobs such as technician, repairer, operator and nurses.
Source: Forrester
Other jobs that are less common that made the list include museum curators and surgeons.
GE’s aviation engineers use APX Labs’ skylight software and smart glasses to power real-time, first person collaboration.
General maintenance and repair workers are expected to adopt a large number of smart glasses.
Forrester interviewed 13 vendor and user companies to compile its most recent report on enterprise smart glasses.
VUZI works closely with more than half of the companies referenced in Forrester’s industry report including Intel, Boeing, General Electric, APX Labs, Atheer, Kopin and Salesforce.
The Future Is Here: Vuzix Augmented Reality Technology
Augmented reality is often referred to as mixed reality, superimposed information or images on top of the real world through glass or a display of a device.
Virtual reality on the other hand provides a view of computer-generated scenes and is totally immersive.
Augmented reality allows users to see what’s going on around them, whereas virtual reality users are restricted to a small area.
This is one of the prime reasons why augmented reality will have a more immediate practical application for business according to a BBC News interview with industry leaders published earlier this year.
The Google Glass project brought an incredible amount of media attention to the smart glass industry and augmented reality.
However, Google learned quickly its smart glass design was ill-suited for consumers so the company decided to market the product to enterprise customers.
Unfortunately for Google, their experiment to serve enterprise customers with a consumer-designed product didn’t work out.
To fix the situation and keep their enterprise customers happy, Google reached out to Vuzix Corporation (NASDAQ: VUZI), a company founded in 1997 in Rochester, NY that had been producing leading edge optics and wearable displays for nearly 20 years.
Vuzix Enterprise Users Include Boeing, Airbus, General Electric And Many Others
Boeing, Airbus and General Electric were early users of smart glasses and have active smart glass pilot programs with VUZI.
VUZI partners with key software developers including APX Labs, Atheer and Salesforce, which are developing software to support the deployment of enterprise smart glasses.
These key relationships are yet another confirmation why VUZI is a leader amongst leaders in the augmented marketplace.
In addition to the companies named in the Forrester report, VUZI has partnerships with SAP,Lenovo, XOeye, Pristine Labs, AMA, NTT Data, HP, IBM, Augmate, Sony, AirWatch as well as several others around the globe.
VUZI is also working closely with key smart glass integration partners including Accenture, who specializes in effective implementation of large-scale mobile technology deployments for clients such as Airbus.
Vuzix Company Overview
Vuzix Corporation (NASDAQ: VUZI) is an award winning, leading developer and supplier of smart glasses and video eyewear products in the consumer, enterprise and industrial markets.
The company has won 20 Consumer Electronics Show Innovations awards and holds over 40 patents and 23 additional patents pending along with numerous IP licenses in the Video Eyewear field.
The major shareholders of VUZI are the founding management team and Intel Corporation, which collectively own approximately 40% of Vuzix Corporation.
Intel Corporation invested $24.8 million in Vuzix in January 2015 and owns 24% of the company.
Founded in 1997, Vuzix is a NASDAQ listed company (NASDAQ: VUZI) with offices in Rochester, NY, Oxford, UK and Tokyo, Japan.
A Closer Look Into Vuzix’s Current Cutting Edge Products and Pipeline
M100 Smart Glasses
VUZI introduced the M100 Smart Glasses in 2013, which were dubbed as the “first true competitor to Google Glass” by the Examiner.
Enterprise customers learned just a few years later that Vuzix’s M100 smart glasses were not simply a competitor to Google Glass, but the augmented reality hardware device that Google itself would recommend to its customers.
VUZI has sold thousands of M100 smart glasses across a variety of industries including warehousing, logistics, biopharma, oil & gas as well as telemedicine industries since 2013.
VUZI has worked with hundreds of companies that have evaluated the company’s smart glasses and provided critical feedback and user experiences.
VUZI listened to the feedback provided by the company’s vast and diverse customer base, which led to the design of the M300 smart glasses.
M300 Smart Glasses
Vuzix’s M300 Smart Glasses will address critical and necessary feedback from customers that will increase the value proposition for enterprise customers.
The ergonomic design of the M300 results in a sturdier, tougher and lighter device versus the first generation M100 smart glasses.
The M300 will feature a hot swappable battery that allows users to swap out an existing battery with a fully charged battery without skipping a beat.
The M300 will be waterproof, which is critical for the HVAC and other industries that may encounter wet environments.
VUZI partnered with a leading US based Tier-1 contract manufacturer (Jabil Circuit) to produce the M300 smart glasses.
The M300 will list for $1,499 or an increase of $500 over its predecessor the M100.
The M300 is set for commercial launch over the summer and industry researchers are expecting enterprise smart glass demand to hit full stride over the second half of 2016.
Vuzix’s known customer list includes DHL, General Electric, Airbus, Boeing, Tesla, Daimler, Volkswagen, Bosch, Bechtle and many more.
In total, VUZI has well over 100 customers including over 40 of the Fortune 100 companies.
Vuzix M100 smart glasses for enterprise customers will soon be replaced by the M300, which is an all-around more impressive device in terms of design, functionality, features and component upgrades.
The “M” in front of Vuzix products stands for monocular and any product that begins with a “B” is a binocular based product.
The M300 could be the hit of the year for Vuzix beginning this summer, but the company’s current product offerings and pipeline does not end there.
iWear Video Headphones
VUZI currently generates limited revenue from sales of its iWear Video Headphones, which are immersive headphones best suited for gamers, drone owners, medical/dental facilities and other markets around the globe.
The iWear video headphones sell for $499 and the iWear’s direct competitor is the Avegant Glyph.
The company recently launched an initiative with market leading companies such as GoPro to enhance iWear sales opportunities.
The virtual reality market is hot right now, and the biggest proof is Facebook’s acquisition of Oculus VR for $2 billion in cash and stock.
VUZI is primed to capture some of this growing consumer market with its iWear Video Headphones.
Next Generation See-through Smart Glasses Coming Soon
M3000 Smart Glasses
VUZI is currently working on the company’s first waveguide-based product for enterprise customers called the M3000 Smart Glasses.
The M3000 features all of the advantages of the M300, but utilizes the latest optics to deliver a 1.4mm thin see-through display that will enable more advanced AR applications.
The M3000 is expected to begin shipping in the fall of 2016, shortly after the commercial launch of the M300.
VidWear B3000 Series Sunglasses
VUZI is working on augmented reality sunglasses that resemble fashion-based sunglasses for enterprise customers and prosumers.
The VidWear B3000 waveguide sunglasses blend fashion and technology and is expected to be one of the world’s first sunglasses with integrated video.
The B3000 allows for full see-through capabilities in fashion glasses.
The B3000 VidWear products are targeted for introduction into the marketplace sometime in 2017.
AR3000 Augmented Reality Smart Glasses
The AR3000 waveguide augmented reality sunglasses will be Vuzix’s first binocular augmented reality smart glasses viewer.
These sunglasses are expected to feature two HD cameras with one for gesture support.
The wearer will be able to reach out and manipulate 3-D objects overlaid in the real world.
The AR3000 is being developed to provided advanced operator support for enterprise, industrial and medical uses.
Waveguides and Display Engines
VUZI holds over 40 patents and 23 additional patents pending along with numerous IP licenses in the Video Eyewear field.
VUZI has developed waveguide displays that use complex displays engines to enable image and video viewing through a microscopic display.
VUZI is now producing display engines at the diameter of a large pencil with optical displays that are as thin as reading glasses.
During the FY 15 Q4 conference call VUZI indicated that the company is actively sharing the company’s new waveguides and display engines with the public.
The display engines are mini projectors built into the wearable displays that beam an image into the waveguide displays for users to view.
VUZI generated over $200,000 of revenue from waveguide sales to Intel in Q3.
Other Tier-1 Customers
The Tier-1 customers that VUZI is working with are believed to be on par with the likes of Apple, Samsung and LG, which are all actively pursuing, augmented reality smart glasses for the consumer marketplace.
Other PC OEM manufacturers including HP and Dell are anticipated to enter the consumer augmented reality marketplace as well.
The augmented reality arms race occurring behind closed doors to introduce consumer centric smart glasses is in full swing.
The arrival of the first generation of smart glasses for consumers will hit the market within the next 6 to 18 months and VUZI is well positioned to be a key player within the consumer smart glass marketplace.
Intel Corporation Fuels Vuzi’s Growth With A $24.8m Investment
In January 2015, Intel Corporation invested $24.8m (30% stake that currently sits at 24%) in VUZI.
Intel’s investment provided VUZI with the financial resources to build a 30,000 square foot manufacturing facility to manufacture waveguides for the company’s next-generation wearable display products as well as the company’s strategic partners.
In December 2014, Intel partnered with Luxottica, the owner of Oakley fashion sunglasses on a collaborative research project to bring fashionable smart glasses to consumers.
The Wall Street Journal reported in March 2016 that Intel was developing an augmented reality wearable headset.
According to the Wall Street Journal, Intel’s augmented reality wearable headset is a reference design that will ultimately end up white-labeled and sold through a leading OEM.
According to a recent SEC filing, VUZI has supplied Intel (a related party) with over $200,000 worth of waveguides.
Vuzix’s waveguides are super thin (1.4mm thick), high quality, relatively inexpensive compared to competitive offerings and ideally positioned for fashion-based consumer smart glasses.
Intel has acquired a handful of augmented reality companies and technologies over the past two years.
Intel’s acquisitions and investments in augmented reality exceed $500m and are closing in on $1 billion.
Intel frequently collaborates with a company and acquires them or makes an initial investment and acquires the company within a 24-month period.
VUZI’s Seasoned Management Team
Paul J. Travers, CEO, President and Director (Holds 2.55 million shares or 12.1% of shares outstanding)
Paul J. Travers is the founder of VUZI and has served as President and Chief Executive Officer since 1997 and as a member of the board of directors since November 1997.
Prior to the formation of VUZI, Mr. Travers founded both e-Tek Labs, Inc. and Forte Technologies Inc.
He has been a driving force behind the development of our products for the consumer market.
With more than 25 years of experience in the consumer electronics field, and 15 years of experience in the virtual reality and virtual display fields, he is a nationally recognized industry expert.
He holds an Associate degree in engineering science from Canton, ATC and a Bachelor of Science degree in electrical and computer engineering from Clarkson University.
Grant Russell, CFO, Executive Vice President, Treasurer and Director (Holds 0.9 milion shares or 4.2% of shares outstanding)
Grant Russell has served as Chief Financial Officer since 2000 and as a member of the board of directors since April 2009.
From 1997 to 2004, Mr. Russell developed and subsequently sold a successful software firm and a new concept computer store and cyber café.
In 1984, he co-founded Advanced Gravis Computer (Gravis), which, under his leadership as President, grew to become the world’s largest PC and Macintosh joystick manufacturer with sales of $44,000,000 worldwide and 220 employees.
Gravis was listed on NASDAQ and the Toronto Stock Exchange.
In September 1996, Gravis was acquired by a US-based Fortune 100 company in a successful public tender offer.
Mr. Russell holds a Bachelor of Commerce degree in Finance from the University of British Columbia and is both a US Certified Public Accountant and a Canadian Chartered Accountant.
Key Company Stakeholders
Intel Corporation invested $24.8 million in January 2015 and currently owns 24% of VUZI.
Intel has an option to secure two VUZI corporate board seats and also has the right of first refusal to match any strategic investment made by another company in Vuzix.
Comprehensive Analyst Research on VUZI
VUZI is currently covered by two sell-side analysts Chardan and H.C. Wainright with an average rating of buy and a price target of $10.00.
Both sell-side analysts expect revenue FY17 revenue to double compared to FY16 due to new product rollouts commencing in FY16.
Chardan maintains a buy recommendation for VUZI and a $10.00 per share price target.
Chardan’s price target is based on 10-12 times Q4 2017 revenue run rate of $19 million.
H.C. Wainright maintains a buy recommendation for VUZI and a $10.00 per share price target.
H.C. Wainright’s price target was based on a DCF analysis to arrive at a $10.00 price target.
Why We’re Watching Vuzix Closely
VUZI is well positioned for a major uptick in business activity in the second half of 2016 driven by the commercial launch of the M300 smart glasses.
The company is working closely with Intel on consumer fashion-based smart glasses that could provide additional upside for investors.
Vuzix’s product pipeline is market leading and extensive, which positions the company for rapid market penetration and growth for years to come.
VUZI shares are trading at a nice discount from analyst price targets, and now might be a good time to take a closer look at Vuzix, a market leader that has all the markings of being The Next Big Thing in Augmented Reality.
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