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LIST  August 2018

LIST August 2018

Subject:

Re: SONY, Apple and the virtual reality market in 2018

From:

Lance Gatling <[log in to unmask]>

Reply-To:

NBR's Japan Forum <[log in to unmask]>

Date:

Thu, 9 Aug 2018 00:23:59 +0900

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (649 lines)

I'm following the AR / VR discussion with interest, learning points
from everyone.

I have some familiarity with the key obstacles to detailed, smoothly
flowing, non-nausea inducing AR/VR.

The longest poles in the Virtual Reality tent seem to be:
- content - waiting on capability
- computing and video processing power / storage / etc - money talks,
you pay, you get
- head / eye motion tracking - really really hard at any price
VR means that you see what is displayed in your googles, so the
developer has total control of what you see. Bounded, 100% artificial.

The premise of Augmented Reality AR is that it projects virtual
objects onto the real world. Essentially unbounded, a mix of reality
versus whatever you can project.  There are limited AR apps, but they
won't be the engine beyond a massive boom in that segment's revenue.

The requirements of notional AR are much more difficult than VR-
difficult to describe how much more - if performed to the hype of
certain companies, notably Magic Leap.
https://www.magicleap.com/
Magic Leap is a FL based start up that has gotten at best guesses
around $2.3B in funding, worked in deepest stealth for 7-8 years, and
only within hours started selling a $2300  'Developer Kit' with a set
of goggles. Without making a single dollar profit yet. If you're
interested dive into some videos of their 'sample work', which to date
is all computer generated hype (i.e., not real world AR). $2.3 B US
dollars.

A greatly underappreciated challenge of AR/VR is head / eye tracking.
Mismatches between the incredible precision of the human eye / inner
ear motion / orientation resolution and a computer's attempt to keep
up result in the nausea, even with what seem to be incredibly short
time lags and imprecision. Trying to solve those problems resulted in
a $300,000 custom fitted helmet for F35 pilots the US military paid
Rockwell Collins a year or so ago around $24m to reduce the weight by
less than a kilo, because the helmet's tracking units were so heavy
the fear was the pilots' necks would break during ejection - and still
required a network of outboard motion sensors to augment the tracking
units. And pilots are still getting nausea, and gamers can't stand
their headsets more than short periods.

There are indications that the head motion tracking problem will be
resolved in the not distant future by some hardware solutions just
being unveiled, and I think that will be the great break that
companies like Sony need.

Lance Gatling
Nexial Research, Inc.
Tokyo, Japan



On Wed, Aug 8, 2018 at 4:39 PM, Todd Kreider <[log in to unmask]> wrote:
> Scott Urista wrote:
>
>
> As an avid gamer, I would very much love for VR/AR to become mainstream, but
> we’re a long, long way from that.
>
> I don’t know where Mr. Kreider is getting his stats from, but what does ‘170
> million virtual reality users’ even mean?
>
> 170 million people at one point tried VR?
>
> The best-selling game console of all time – the PS2 - didn’t even reach 170
> million in lifetime units sold.
>
> ----------------------------------------
>
>
> TK: Users are those who use virtual reality - owners, family and friends. I
> didn't say that 170 million units have been sold and wrote that in 2017/
> 2018 around 8 million will have been sold. My point is that Richard Katz
> doesn't think Sony has innovated in years despite that it has 40 percent of
> the virtual reality market. Is a smartphone that has been around for a
> decade really the Next Big Thing? Apple is boring.. You wrote VR/AR is a
> "long, long way from becoming mainstream", but I'm curious when would you
> say this will happen? In the early 1990s, I thought 2025 and that it would
> begin ten years earlier -- 2015. I based that on a home computer moodel,
> where those were available in tiny numbers in 1977 with the Commodore and
> Apple but were common by 1987 - 10 years.
>
>
> SU: "VR and AR headset shipments were down over 30% YoY through the first
> quarter of 2018, with barely one million units shipped.
>
> The last year or so has not been a very good one for VR/AR (for example, see
> Facebook’s struggles with Oculus)."
>
> ---------------
>
>
> TK: 2018 will be a slower year but for several reasons, yet this is clearly
> temporary and the industry knows this.
>
>
> SU: Sales the last few years have been early adopters. They’ve been largely
> disappointed, because hype and advertising has gotten way, way ahead of the
> actual hardware and software.
>
> ---------------------------------------
>
>
> TK: Where is the source that users have been largely disappointed? I've read
> the oppoite. The actual hardware and software *is* here. Analysts have been
> saying that  VR is about to take off (again) in 2019. Do you have reason to
> believe that what I quoted is wrong and that VR/AR won't be a $200 billion
> industry in 2022?
>
>
>
>
> SU: s it a (potentially) promising market? Sure. The problem with VR/AR is -
> assuming the substantial hardware hurdle headaches can be overcome (it will
> be a while before a critical mass of people outside gamers have beefy-enough
> PCs to adequately handle VR/AR) and motion sickness issues can be solved, I
> think the VR/AR headset ultimately is going to be a commodity product; it’s
> going to be the content that matters.
>
>
>
> In other words, it makes more sense for Sony to try and get involved in
> VR/AR than it does Apple; innovation has nothing to do with it.
>
> In the consumer space, I suspect that the real growth driver will be AR, not
> VR.
>
> ------------------
>
>
> TK: There is little motion sickness and computers are still on the
> exponential power curve. VR/AR is oviuously going to replace the smartphone
> in the 2020s. Why would you want to carry around something so heavy? Apple
> is toast if it doesn't go VR/AR (these are really the same thing), but I
> have no idea when it should jump in with Sony and Facebook who have 40% and
> 20% of the market.
>
>
> Todd Kreider
>
>
>
>
> -S
>
>
>
> Scott Urista
>
> TBSJ
>
>
>
>
>
>
>
>
>
> From: Todd Kreider <[log in to unmask]>
> Sent: 8 August, 2018 03:51
> To: [log in to unmask]
> Subject: Re: [NBR's_Japan_Forum] SONY, Apple and the virtual reality market
> in 2018
>
>
>
>
>
> Richard Katz wrote:
>
>
>
> " SONY argued that, if its products contained the same parts that its
> competitors could procure, then what made it a SONY worthy of a premium
> price? It would be reduced to a commodity producer. By contrast, a firm like
> Apple or Amazon (Kindle) saw the value in being the firm that created a
> must-have product. It’s not the parts per se that create competitiveness;
> it’s the product in which they are embedded.  In the end, it’s been a
> long-time since SONY, the creators of so many innovative products in the
> past, has created a must-have product. Where is the SONY tablet, or
> smartphone, or e-reader, etc. in the global marketplace?"
>
>
>
> ------------------------
>
>
>
> I'd like to ask Richard Katz why Apple is no longer innovative enough to
> create a new  "must have product" - it just updates its iphone that was
> created over a decade ago - whereas SONY has over 40 percent of the
> burgeoning vitruality reality marke. Where is Apple's virtual reality
> device?  Microsoft entered the fray, why can't Apple? I don't see why it
> should right now, or ever, as technology changes, although as virtual
> reality viewers start to become lightweight glasses and even contact lenses,
> they will replace the smartphone in the 2020s.
>
>
>
> The major virtual reality/augmented companies by percentage of market share
> projected for 2018:
>
>
>
> Sony                        42%
>
> Others                    21%
>
> Oracle/Facebook  19%
>
> HTC                         13%
>
> Microsoft                3%
>
>
>
> The number of virtual reality users:
>
>
>
> 2014   0.2 million
>
> 2015      7  million
>
> 2016    43 million
>
> 2017    90 million
>
> 2018  170 million
>
> ---
>
> 2023   1 billion,  assuming growth slows to 50% per year
>
>             2 billion,  assuming growth slows to 60% per year
>
>
>
> The virtual and augmented reality market is currently worth $25 billion and
> is projected to reach $200 billion by 2022.
>
>
>
> Todd Kreider
>
>
>
>  -------------------------------------
>
>
>
>
>
>
>
>
>
> Thanks to Lance, Roger and Mike for their info.
>
>
>
> May I suggest that the developments at Honda reflect a broader change in
> corporate strategy around the world to something called “open innovation.”
> This is the opposite of the formerly dominant “Not Invented Here Syndrome,”
> in which companies wanted to originate all of their innovations by
> themselves and reject anything “not invented here.”
>
>
>
> That attitude has changed in many (but hardly all) firms due to two big
> changes in the sources of competitive advantage:
>
>
>
> 1) Modularity. In some industries, e.g., electronics, a product can be made
> better and more cheaply if its innards consist of parts sourced from other
> firms. But, for a long time, Japanese firms rejected this notion, and may
> still do. SONY argued that, if its products contained the same parts that
> its competitors could procure, then what made it a SONY worthy of a premium
> price? It would be reduced to a commodity producer. By contrast, a firm like
> Apple or Amazon (Kindle) saw the value in being the firm that created a
> must-have product. It’s not the parts per se that create competitiveness;
> it’s the product in which they are embedded.  In the end, it’s been a
> long-time since SONY, the creators of so many innovative products in the
> past, has created a must-have product. Where is the SONY tablet, or
> smartphone, or e-reader, etc. in the global marketplace?
>
> 2) Reduced economies of scale in R&D. It used to be the case that it took a
> giant firm to create fruitful R&D projects. Now, because of changes in the
> technologies underlying R&D, that is much less the case. Back in 1981, 71%
> of all R&D conducted by US firms was carried out in firms with at least
> 25,000 employees. Their share halved to just 36% by 2014. Conversely, in
> 1981, only 4% of R&D was carried out in firms with less than 1,000 staffers.
> By 2014, this had risen to 20%. By 2008, firms with less than two dozen
> employees were conducting 3% of all business R&D in the US, almost as much
> as all the firms with as many as 1,000 employees back in 1981. The same
> trend is true in Europe.
>
>
>
> As a result, giant firms are collaborating with partners, both big and
> small. Pharmaceuticals is the classic case, but the pattern can be seen in
> all sorts of product areas. For example. In 2000, Procter & Gamble
> (household cleaning and other products) finally faced the reality that its
> traditional, closed, in-house product development system was running out of
> steam. Only 35% of its new products were achieving their financial targets.
> And so, P&G created a new strategy called “Connect and Develop” with a
> radical goal: that a stunning half of its new innovations would come out of
> collaboration between P&G and external partners. It achieved that goal in a
> mere five years. It then set a new goal: that $30 billion of its revenue (an
> amount equal to 40% of its total revenue in 2015) stem from such
> collaborations. Firms ranging from Johnson & Johnson to IMB are following
> the same trend.
>
>
>
> Japan lags this trend, in part because of the attitudes expressed by former
> Honda execs in the WSJ piece that they wanted to do everything on their own;
> otherwise, they would “lose their soul.” In Japan, there has been no
> increase in the share of R&D being conducted by firms with fewer than 1,000
> employees in the past 15 years. It was around 16% in 2001 and the same in
> 2014 On the contrary, 37% of all business R&D is undertaken by the top 20
> firms, compared to 23% in the US. In fact, Japan’s top five firms alone do
> 18% of the nation’s R&D, compared to 10% in the US.
>
>
>
> Some sections of METI are pushing for Japan Inc. to adopt elements of “open
> innovation.” In fact, the guru of open innovation, Berkeley Professor Henry
> Chesbrough, was brought in by a METI affiliate (known as NEDO) to help run a
> series of seminars for the Japan Silicon Valley Innovation Forum (JSVIF).
> The latter was set up by a couple dozen Japanese multinationals that had set
> up labs and other resources in Silicon Valley, but felt they were not
> getting the benefits for which they had hoped. This past September, METI
> provided support for the third annual Innovation Leaders Summit (ISL), a
> “fair” to bring together corporate giants and new startups in order to
> develop plans for collaboration. ISL acted as a “marriage broker” to arrange
> 2,100 negotiation meetings between 500 venture companies and 100 leading
> companies. Half of these meetings were said to lead to further discussion of
> forms of cooperation, ranging from M&A to capital cooperation to joint
> research.
>
>
>
> Richard Katz
>
>
>
>
>
>
>
> Further to Lance Gatling and Roger Schreffler.
>
>
>
> Companies do indeed license technology from one another, Chrysler from Ford
> and so on. (More generally, patent pools are common in many industries.) An
> NDA keeps me from providing an explicit example, an issue Lance mentions.
> Quite public is the joint development of an automatic transmission by Ford
> and GM – they are brutally expensive to develop, but the core design can be
> tweaked to provide a different feel. But then there’s also ZF, an
> independent transmission maker with a long customer list.
>
>
>
> That’s another way in which a car company can spread costs, by buying from a
> supplier who can offer the same thing (perhaps with packaging variations,
> bolt holes and the like). Indeed more and more technology is now developed
> by suppliers, or jointly by suppliers and their customers. The hardware and
> core software is likely to be the supplier’s, while the sometimes the
> packaging and much of the time the user the interface are handled primarily
> by the car company. Even that remains joint, as the supplier must ultimately
> manufacture the item, so needs to keep the car company engineers from
> creating a mission impossible scenario of a part that can’t be made and no
> time to tweak it.
>
>
>
> When things are co-developed, it’s not infrequent that there is a period of
> “exclusive use.” In my modest experience that tends to be one year from
> start of production, before which competitors can’t get their hands on a car
> to get a detailed look at what’s new. Suppliers are very careful not to
> start calling on other companies until that year ends, even when one of
> those firms has their hands on a sample part and wants to put it on a
> vehicle under development. I’ve met engineers frustrated because they missed
> the launch window by only a couple weeks, but once a car company has ordered
> tooling from another firm, well, the window is closed.
>
>
>
> I know of joint projects for things hidden from vehicle users, but it’s more
> or less expected that there will be jointness when it’s something the driver
> or a passenger sees or manipulates. Seat makers will offer a car company a
> design, knowing in general how a particular company approaches doing seats,
> but the stylists always want a tweak, including a new fabric for the cover
> that has just the right feel. There may be a couple millimeters less door
> clearance than normal. But when it comes to a piston, it’s very much a
> Federal Mogul (now part of Tenneco) or Mahle showing a design to their
> customers, and the team developing the engines must work with it - it can
> easily take 5 years of R&D with new thermal management and friction
> strategies to come up with a new design, and then (that missing the window
> thing) 8 years in the market before sales take off, as engine programs are
> infrequent.
>
>
>
> The engineering labor market is something I know less about, except that the
> firms I visit all worry endlessly about it. Global suppliers have R&D
> centers around the globe, not centralized. One reason is because that lets
> them draw upon different labor pools to staff their needs, and having a
> credible engineering presence helps with local government relations. It’s
> not just sales engineering, Cebu in the Philippines is the center for Lear’s
> wire harness engineering, much of Delphi’s are still in Warren OH with some
> functions now based in Shanghai, while Scania splits R&D projects between
> Sweden and Sao Paulo. The extreme is a Japanese supplier that I visited last
> year, whose Detroit-area engineering center handled all of the electrical
> components of the parent company, and hence is today a big operation. I met
> not a single Japanese the entire day I was there. (The finance guy on their
> organization chart had a Japanese name, but I didn’t meet him.) That was
> unusual - normally there are people from 3 or 4 continents in the room when
> I visit a supplier for an engineering presentation.
>
>
>
> On Aug 6, 2018, at 3:11 PM, Roger Schreffler <[log in to unmask]> wrote:
>
>
>
> <<So, much as more and more countries pool resources to advance the
> state of the art of fighter technology in the form of the F35, I'd
> expect more and more car makers to pool resources.>>
>
>
>
> There are other factors including the need to be closer to the market. More
> than 80% of Japanese cars are
>
> now sold outside Japan. In Honda's case: more than 90%.
>
>
>
> Secondly, who wants to live in parts of Japan during summer? Lastly, I just
> attended an automotive conference
>
> last week in northern Michigan which featured some of the best and brightest
> in the industry. Rightly or wrongly,
>
> everybody spoke English.
>
>
>
> Of course, pooling resources is critical as the industry advances into the
> fields of autonomous driving and various
>
> forms of electrification, but there is also a huge pool of young wannabe
> engineers from around the world coming
>
> out of schools like the University of Michigan, MIT and others who can step
> right in to product and technological
>
> development jobs upon graduation.
>
>
>
> They were out in force networking.
>
>
>
> Roger Schreffler
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
> -----Original Message-----
> From: Lance Gatling <[log in to unmask]>
> To: LIST <[log in to unmask]>
> Sent: Mon, Aug 6, 2018 12:46 pm
> Subject: Re: [NBR's_Japan_Forum] Honda seeks outside help for Engineering
> talent
>
> RE: Mr. Curran's comment about 'going it alone'.
>
> My (very limited) understanding is that for perhaps decades some of
> the most advanced companies in automotive and internal combustion
> technology have quietly - and under strict NDAs - bought and sold
> technology across what would normally be considered competitive lines.
> One famous example is Porsche selling intake and combustion chamber
> design to Japanese car makers. Motorcycle giant Yamaha has done a lot
> of work with various makers, as car engine designs evolved to resemble
> more high revving motorcycle engines, with their inherent heat,
> friction, combustion, valve and ignition timing challenges, but that
> has been more public as Yamaha is not a direct automotive competitor
> to X.
>
> So, much as more and more countries pool resources to advance the
> state of the art of fighter technology in the form of the F35, I'd
> expect more and more car makers to pool resources.
>
> The obvious others areas include the sensors and smarts for assisted
> drive, etc. LIDAR, motion sensors, you name it, the costs of
> development versus the costs of getting it wrong are pretty stark.
>
> Lance Gatling
> Nexial Research, Inc.
> Tokyo, Japan
>
>
>
> On Mon, Aug 6, 2018 at 10:29 PM, Tim Curran <[log in to unmask]> wrote:
>> A very interesting article in the WSJ today about Honda’s struggle to keep
>> pace with the rapid evolution of technology. The article behind a paywall
>> is
>> copied below:
>>
>>
>> https://www.wsj.com/articles/honda-took-pride-in-doing-everything-itself-the-cost-of-technology-made-that-impossible-1533484840?mod=hp_lead_pos5
>>
>>
>>
>> “Honda’s decision to go shopping points to a radical culture change at one
>> of Japan’s proudest companies, where founder Soichiro Honda in the 1960’s
>> said, “We refuse to depend on anyone else.” The struggle at the
>> entrepreneurial success story cuts deep into Japan’s sense of itself as a
>> global leader in technology. Honda once used staff technicians to design
>> new
>> technologies ranging from engines to the shape of the suspension arms.
>> Today, Honda believes rapid shifts in technology mean it can no longer
>> afford to keep pace working solely on its own.”
>>
>>
>>
>>
>>
>> Tim Curran
>>
>> CEO
>>
>> Global Technology Distribution Council
>>
>> 727-823-4285
>>
>> 727-421-1033 (cell)
>>
>> [log in to unmask]
>>
>>
>>
>> From: Fred Uleman <[log in to unmask]>
>> Sent: Thursday, August 2, 2018 8:20 PM
>> To: [log in to unmask]
>> Subject: Re: [NBR's_Japan_Forum] Education and language: Paper publication
>>
>>
>>
>> Apologies if this is inappropriate, but
>>
>> With regard to the comment that using translators only works if the
>> original
>> Japanese is grammatically, syntactically and semantically correct, I was
>> talking about good translators. One of the marks of a good translator is
>> that s/he will have specialist knowledge in the field and will be able to
>> understand the material even if it is not grammatically, syntactically,
>> and
>> semantically perfect. Very few people write to perfection in any language.
>> Natural language assumes the other side can make the connections and fill
>> in
>> the blanks. A good translator can.
>>
>>
>>
>> At the same time, the author should be available to fill in blanks that
>> are
>> beyond the translator. That is part of the "cherish" part of my
>> suggestion.
>>
>>
>>
>> - -- --- ---- ----- ---- --- -- -
>> Fred Uleman
>>
>>
>>
>> To unsubscribe from the list, send an email to:
>> [log in to unmask]
>>
>>
>>
>> To unsubscribe from the list, send an email to:
>> [log in to unmask]
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