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Force Ten



Force:

Etymology: Middle English, from Middle French, from (assumed) Vulgar Latin fortia, from Latin fortis strong

(1) : strength or energy exerted or brought to bear : cause of motion or change : active power
(2) : any of the natural influences (as electromagnetism, gravity, the strong force, and the weak force) that exist especially between particles and determine the structure of the universe

In my post A Force of Nature, I argued that the augmentation of our bodies and minds with technology is an inexorable force -- a law of nature and evolution. That's kind of a lot to think about when you're trying to make an investment decision, where every tick of the stock changes the picture on a minute by minute basis.

Evolutionary forces usually take eons to manifest themselves into visible changes. But now it is easy to see that the time scale for change to occur is rapidly compressing. Exponential increases in capabilities in diverse areas of science and technology are converging. This convergence will result in a Force Ten hurricane of change that will sweep over the landscape of personal technology, irrevocably alter human behavior and result in massive and unparalleled economic growth.

OK, OK, that's all fine and good. But when's the stock going to get moving? As George Gilder said in his Friday Letter from January 14, 2005: "Investing with a paradigm, you align yourself with a long-term trend of technological development. Aligned with a paradigm, a company will not have to chase the industry but will find the industry coming to it in a series of upside surprises."

So we have a number of forces in play here that are moving in lock-step towards a world of 'MVIS Inside' and an MVIS market cap measured in the tens of billions:

1. Mass proliferation of miniature mobile electronic devices, each with a display. As electronics shrink following Moore's Law, these devices can get smaller and smaller. Yet, they also have more functionality and more information to convey to their owner. The small screen size doesn't allow for a satisfactory mobile web experience. Using a physical screen becomes a bottleneck, limiting the usefulness and enjoyability of devices for hundreds of millions of consumers.

2. Wireless networks are becoming faster and more ubiquitous. Cellular data rates are rapidly increasing and plans are to continue massive investments in network infrastructure to enable ever faster data transmission rates over a broader and broader area. New types of applications like cell phone TV and movies are now available to take advantage of this bandwidth. The content providers, service providers, the handset makers and the network infrastructure companies all have a stake in the broad acceptance of these types of next-generation wireless data services. There is a known flaw in their plans, even as they prepare to spend billions of dollars to bring it to fruition: no one wants to spend a lot of time trying to watch TV on a 2" LCD screen. Again, the physical screen on hundreds of millions of handsets becomes a bottleneck, this time limiting profit potential for some of the biggest companies in the world.

3. On June 30, 2003, Microvision announced a breakthrough in their scanning platform, a design that would become the Gen3 'free air' scanner:

"This breakthrough should enable us to develop a scanning engine that can support a wide range of high volume consumer products, including electronic viewfinders for digital cameras and camcorders," said Rick Rutkowski, Microvision CEO. "The new scan engine is also a big step on the path toward integrating high-resolution electronic displays into something like conventional eyeglasses that could be used in a variety of applications including computer gaming, portable movie players and mobile devices, such as cell phones and PDAs. We believe that Microvision's displays are going to deliver a combination of performance, package size and price that is uniquely matched to the requirements of consumer electronics applications. This development is anticipated to ultimately benefit all of our product initiatives including our activities in automotive displays and next generation miniature cameras for medical and industrial applications."

This year we've already seen the licensing of Microvision's intellectual property by a Johnson & Johnson subsidiary for medical applications. Just as Gilder said, we see the industry coming to us. The question becomes, who will be the next company after JNJ to come to us? What will the next upside surprise be?

What it boils down to is this: the virtual display will supercede the physical display for hundreds of millions of mobile devices. It is the only solution that makes any sense. Physical displays will always be inherently limited by the fact that they take up space in the real world. They are 'things' with size and weight. They eat up battery power limiting time between charges. They need to be small so your phone can fit in your pocket. But they need to be big at the same time so your service provider can convince you to spring for a subscription to a TV channel or buy a pay-per-view movie. But physical displays can't be small and big at the same time. They're either small, and can fit in your pocket, or they're big, and you have to lug them around in a briefcase.

Microvision's scanned beam virtual displays can be small and big at the same time. The components of the display engine will fit into a handset form factor in the space where the LCD panel fits now. But the image will appear to the user as a widescreen, high resolution television, as big as life. No other technology can do that. Period. This is why I've got every dollar I own in this company. And why I don't sweat the small stuff. There are powerful forces at work that will come together to shock the short sellers and bring MVIS legions of new investors.

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