Google – Glasses mended.

Google has another go at AR.

• It looks like Google is in the final stages of agreeing the acquisition of North, one of the more interesting augmented reality (AR) companies, in an attempt to start again and put the whole glasshole incident behind it.
• North is a small player that span out of Waterloo University (somewhat like Blackberry) and as a result of its size, it has had to be very focused.
• The result of this was a product that was effectively not much more than a remote screen for a smartphone but crucially, actually looked and felt like a regular pair of glasses.
• The device uses a laser projector to create the image which is then reflected onto the retina of the user and is controlled with a ring that ships with the glasses.
• There is no real 3D effect and the functionality is very basic but the device can be comfortably used for long periods and when out and about.
• The device shipped in 2019 but it looks like total sales were tiny as sales were ended after a major sales push and a big price reduction.
• This looks to be partly because the functionality does not offer much over a regular smartwatch but also North’s small size and lack of marketing budget.
• There is version 2 in the pipeline which is supposed to be offering a much wider viewing angle as well as a 40% weight reduction and I suspect that it is this that Google is interested in.
• Once again, I suspect that it is a shortage of funds that has pushed North into Google’s clutches as the mooted price is somewhere around $180m which is only slightly greater than the $170m that the company has raised to date.
• Hence, if the deal closes (likely), investors will walk out with little more than the money that they put in.
• This is yet another sign of the consolidation that is sweeping the AR industry where hype several years ago resulted in huge investments but failed to live up to its promises.
• The end result is likely to be an offering from big companies like Microsoft, Google, Apple, Facebook etc but very few if any independent offerings.
• Magic Leap has just been rescued from the brink (see here) but I don’t think that it will survive long term.
• Hence the landscape is likely to end up with Microsoft dominating the market for enterprise AR along with a number of smaller but highly specialised offerings (like Varjo) and the large digital ecosystems winning in the consumer when it becomes a viable market.
• In China, nReal has the potential to be viable independent but I suspect that if it gains some traction Alibaba, Tencent or ByteDance will attempt to buy it.
• The consumer is going to take much longer to be mainstream because the technical challenges to produce an exciting, must-have device with great new functionality remain enormous.
• Hence, I don’t see any real volume or money being made in consumer for some time to come.
• This means that it will still be the enterprise where sales are made for the foreseeable future.
• For Google, this acquisition makes sense as it has no AR product and as it remains wedded to hardware (wrongly in my view) this is a piece of the portfolio that needed to be rounded out.
• I suspect that the consolidation will continue.