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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!

2 comments:

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!

BJ

 

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