Site Network: Home |

An MVIS Blog reader asked me an interesting question the other day -- whether I had lost my ability to maintain my objectivity with regards to MVIS.

I've thought a lot about this over the last few days. I told him that my strategy as an investor was to 'work backwards' from my vision of what the world will be like at the end of the decade.

This necessarily means that there's not a lot of objectivity involved. My vision, and my perceptions, are my own. But there are certain things that can be considered objective truths that are critical to informing this vision: Kurzweil's Law of Accelerating Returns, which says there is an exponentially accelerating rate of progress -- and specifically that the we are approaching the 'knee in the curve' where progress starts to go vertical on the chart. He calls this 'The Singularity', and expects progress to go vertical around 2020.

There's Moore's Law for semiconductors which is universally accepted as true. More recently, there's Edholm's Law which states that increases in the rates of wireless data transmission are likewise predictable -- and accelerating exponentially.

And there are so many signposts along the way: Progress in data compression algorithims continues, enabling more and more information to be delivered more and more efficiently. H.264, the successor to MPEG-2 video compression, will be launched next year. This new standard allows for dramatically higher resolution and higher frame rate video to be transmitted using 1/2 to 1/3 as much bandwidth as the current MPEG-2 standard. So while the available bandwidth is increasing, the bandwidth needed to deliver information can be mitigated through advancing compression methods.

But one thing that we have learned is that there will always be new applications emerging that will require all the CPU power and bandwidth they can get. It's my belief that the application that will emerge as the key driver for continuing the buildout of ever-increasing wireless bandwidth is augmented reality, and eventually, full audio-visual-tactile virtual reality.

But in the near term, the wireless companies will have a field day with H.264 and the opportunity to provide widescreen HDTV content to mobile phones. For a reasonable monthly fee, you'll be able to watch most of the channels you enjoy at home on your mobile phone, with the same high quality.

The problem with this plan is that not very many people are going to sign up to pay an extra $30 a month on their mobile phone bill to squint at TV broadcast to a 2" LCD screen. The mobile phone then necessarily needs to keep the same form factor, or more likely, continue to shrink -- and at the same time it needs to be able to display an HDTV widescreen image that is at least as big as a laptop screen. And it's not just TV -- mobile video gaming, even with the primitive graphics capabilities of current mobile phones, will generate over $1B in revenue in 2004.

All of this sets the stage pretty nicely for Microvision. The company's Gen4 scanner, specifically designed for mobile phone applications should be ready to go in time for the HDTV cell phone. LCDs and literally every other display technology is not suited to meet this need -- for the reasons that their pixels are fixed in place and occupy physical space. Microvision's pixels are stored in computer memory and delivered as needed, discreetly, to what will be hundreds of millions of people in just 2 years. From the Texas Instruments press release (emphasis my own):

TI expects to provide samples of the "Hollywood" chip to customers in 2006. This is expected to enable manufacturers to launch products in conjunction with the first mobile digital TV infrastructure mass deployments in 2007. Field trials are currently underway in several regions, including the U.S., Europe and Japan.
This is my central thesis. This is why I've built my position -- and why I don't worry too much about getting the timing exactly right accumulating MVIS shares. There are powerful forces at work here. And every day that passes brings us one day closer.

They keep shrinking the size and cost of the scanned beam display. They keep improving the resolution and the field of view. The industry is rapidly recognizing the acute need for virtual displays. These forces will converge in the months ahead and MVIS will start to be valued as a hypergrowth company.

Objective analysis? I dunno. But this is my methodology for reverse engineering the future. Now, I'm going to get some sleep!


At November 20, 2004 at 9:55 AM Anonymous said...

Is it possible some other company might have a competitive product to Microvision's?

At November 20, 2004 at 3:46 PM Ben said...

Sure, it's possible. But Microvision has 100+ patents on the basic technology of virtual retinal displays. The thing is, MVIS doesn't need to get 100% market share. They just need to get into a few models in production.

The market is so large, there will definitely be competition. But in all seriousness, the competition that I'm looking towards is the direct retinal implant.

There's foldable displays coming from companies like PANL. It's interesting, and I think they'll do well.

All we need to do is carve out a few niches and longs who established positions at these levels are golden.

Thanks for writing!



Post a Comment

This website does not recommend the purchase or sale of any stocks, options, bonds or any investment of any kind. This website does not provide investment advice. Disclaimer and Notices: Disclaimer: This website may contain "forward-looking" information including statements concerning the company's outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. The forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. The information on this website includes forward looking statements, including statements regarding projections of future operations, product applications, development and production, future benefits of contractual arrangements, growth in demand, as well as statements containing words like believe, estimate, expect, anticipate, target, plan, will, could, would, and other similar expressions. These statements are not guarantees of future performance. Actual results could differ materially from the results implied or expressed in the forward looking statement. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements are included in MVIS most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission under the heading 'Risk factors related to the company's business,' and our other reports filed with the Comission from time to time. Except as expressly required by Federal securities laws, MVIS Blog undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, changes in circumstances, or other reasons. Legal Notice: Although considerable care has been taken in preparing and maintaining the information and material contained on this website, MVIS Blog makes no representation nor gives any warranty as to the currency, completeness, accuracy or correctness of any of the elements contained herein. Facts and information contained in the website are believed to be accurate at the time of posting. However, information may be superseded by subsequent disclosure, and changes may be made at any time without prior notice. MVIS Blog shall not be responsible for, or liable in respect of, any damage, direct or indirect, or of any nature whatsoever, resulting from the use of the information contained herein. While the information contained herein has been obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. MVIS Blog has not independently verified the facts, assumptions, and estimates contained on this website. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, or completeness of the information and opinions contained on this website. Consequently, MVIS Blog assumes no liability for the accompanying information, which is being provided to you solely for evaluation and general information. This website does not contain inside information, proprietary or confidential information learned or disclosed as part of employment relationships or under nondisclosure agreements or otherwise.