If you think you’ve missed the boat on money-making opportunities in Silicon Valley… think again.
Let’s examine an emerging technology that’s transforming the world just as radically as the iPhone, the personal computer, and the search engine.
One of the surest ways to make money over the long haul is to invest in disruptive technological trends. Imagine if you had been able to invest in Apple (NASDAQ: AAPL) during its infancy in the early 1980s or Google, now Alphabet (NASDAQ: GOOG), when the Internet was taking off in the late 1990s. You’d be rich beyond your dreams.
When Apple went public in 1980, it generated more capital than any initial public offering since Ford Motor Co. in 1956 and immediately created about 300 millionaires, more than any company in history. Apple now has a market cap of $878.4 billion; Alphabet’s valuation is $722.2 billion.
But you don’t have to feel left behind. Innovation never stops; new breakthroughs (and new millionaires) are continually born. The trick is to pinpoint a nascent tech “megatrend” and act fast, before the rest of the herd catches on.
As explained below, we’ve done the homework for you and found just such a trend.
Science Fact, Not Fiction
Here’s a new technology that will outdo the iPhone in magnitude and it’s no dream: augmented reality (AR). The technology is a staple of science fiction but now it’s a moneymaking fact.
First, let’s clarify our definitions. Virtual reality (VR) refers to computer-simulated reality that’s an immersive experience. Video games are the most common examples.
Augmented reality is a real-time view of an actual physical environment whose elements are supplemented by computer-generated sensory input such as sound, video, or graphics. AR increasingly entails enterprise applications for practical commercial uses.
Analysts often confuse the two technologies — VR and AR — but they’re distinct. AR is different than VR in that it is meant to connect (not shut out) with reality.
Among all the mind-bending AR possibilities for the future offered by science fiction, the Star Trek franchise’s holodeck is perhaps the most exciting and best known. The holodeck is a room that projects anything you can imagine in life-like and interactive 3D, whether it’s a tropical island paradise, a raging battlefield, a ski slope, or a parachute jump.
But you don’t have to wait for the 25th century. AR is increasingly pervasive for a wide range of commercial and personal uses.
Get one thing straight: AR isn’t just about video games and entertainment. The capability is a multi-billion-dollar business that’s revolutionizing a host of industries. Facebook (NASDAQ: FB), Google, Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and other Silicon Valley stalwarts are all developing AR tools.
Several sectors are integrating AR for everyday use, with practical every-day applications that include engineering, auto manufacturing, drug development and testing, medical diagnostics, supply chain monitoring, field inspection, teaching, Hollywood movie-making, enterprise collaboration, architecture, telecommunications, building construction, cockpit simulation, field inspection, battlefield tactics… the list goes on.
Jamey Edwards, chief executive of telemedicine provider Cloudbreak Health, asserts:
“AR will have a significant impact on the health care industry. It is currently being used in innovative ways and has applications in areas such as pain management (showing people soothing scenes and immersing them in a more pleasing environment), medical education and telemedicine.”
The Three Cs
We’re living in what the legendary management guru Peter Drucker called the era of three C’s — accelerated change, overwhelming complexity, and tremendous competition.
The emergence of AR reflects this dynamic. Real-world applications of this technology are outrunning our most outlandish fantasies.
Bet on it: AR will sweep the world. The must-have hardware and killer software are coming down the pike of progress. As with our smartphones, we’ll all wonder how we ever got along without AR.
Goldman Sachs (NYSE: GS) estimates that the combined VR/AR market will reach $80 billion by 2025, with the potential for that figure to actually soar much higher, to more than $150 billion. For perspective, the global market for virtual and augmented reality was only $4.5 billion in 2014.
Your best bet isn’t to invest in the mega-cap tech titans that are exploring AR. These stocks are pricey and don’t afford the same opportunities for rapid growth as their smaller brethren. That’s why many investors are drawn to the entrepreneurial pure plays on the trend.
One mid-cap option might be Vuzix (NASDAQ: VUZI). With a market cap of $143 million, the firm is a U.S.-based pioneer in the use of AR for business functions. Vuzix recently announced that its M300 Smart Glasses are now supported by the Vuforia AR platform from software provider PTC (NASDAQ: PTC). Vuforia is the world’s most widely prevalent software platform for AR applications. In an auspicious sign, several insiders at Vuzix recently purchased shares in the open market. It’s always encouraging when top management has “skin in the game.”
That said, your investment decisions are getting tougher. Worsening political instability in the U.S and overseas as well as market volatility are only a few of the risks you face. That’s why you need to stick to “momentum trends” that will continue to unfold regardless of turmoil in the broader markets.
One such trend is burgeoning demand for AR. To get the most out of an AR investment, you should pinpoint relatively small, lesser-known companies with a lock on proprietary capabilities and invest on the ground floor, before the herd bids up their share prices. That’s where Vuzix might come in.
Vuzix builds customized smart glasses for Toshiba Client Solutions, a wholly owned subsidiary of Tokyo-based electronics firm Toshiba (OTC: TOSBF). Vuzix also makes Android-based wearable computers with several pre-installed aps, enhanced with an onboard processor, recording features and wireless connectivity, designed for a wide variety of business-related functions.
B2B’s Brave New World
AR solutions also are revolutionizing the way large and complex B2B products get marketed and sold.
In a report issued on November 13, market research firm Forrester had this to say about AR:
“After a brief infatuation with augmented reality (AR) following the Pokémon GO craze, B2C marketers have all but abandoned the technology. Expect that to change as market leader Apple infuses its devices and its developer kits with built-in AR potential. The result: AR will offer more opportunities than virtual reality (VR) for marketers in the next three years.”
Indeed, reports recently surfaced that Apple is working on AR cameras for the back of its next generation of phones. With AR on the iPhone platform, AR growth would skyrocket.
One major application of AR on smartphones and tablets is in retail, by allowing shoppers to add virtual objects they’re considering buying into their views.
Major retailers, such as Lowe’s (NYSE: LOW) and IKEA already use AR immersive experiences, for customers who want to envision a room such as a kitchen. Neiman Marcus is testing an AR app for apparel. E-commerce pioneer eBay (NASDAQ: EBAY) has partnered with Australian department store chain Myers to create a virtual store using AR technology.
AR is transforming business, but it’s also taking the entertainment world by storm.
A notable case in point occurred on Wednesday, when Google’s Niantic (creators of Pokemon Go) announced that a Harry Potter AR game was under development.
As Niantic stated:
“With Harry Potter: Wizards Unite, players that have been dreaming of becoming real life Wizards will finally get the chance to experience JK Rowling’s Wizarding World. Players will learn spells, explore their real world neighbourhoods and cities to discover and fight legendary beasts and team up with others to take down powerful enemies.”
Also hitting the market are AR-based toys for teaching children. The possibilities of AR are as boundless as Harry Potter’s imagination.