Taiwan based Compal (2324.TT), a well-known OEM and assembler of CE products has announced a partnership with Nvidia (NVDA) to build a Metaverse “specifically designed for the enterprise segment.”  While Nvidia is just one of a number of Compal partners in its desire to join the Metaverse supply chain, the announcement is an add-on to the company’s announcement earlier this week about the release of its XR Cube Open Cloud Metaverse platform, which includes Compal’s 5G smart application solutions for IoT released last year.  The new Metaverse platform is described as a combination of Compal’s software and hardware and that of its partners that will “construct a virtual world that is fully integrated with the real world, and accelerates the realization of the ‘Meta-Universe’ in various industries and people’s life situations.”
Lots of statistics about XR (Extended Reality and its growth rate over the next few years and a mention of Compal’s own 5G ‘hybrid reality’ glasses (released last year) follow in the PR, but we were more interested in what the XR Cube Open Cloud Metaverse platform actual is.  Compal is trying to build what it calls a “Meta-cosmic ecosystem” (a new Meta every day keeps the doctor away) which is actually a service that is trying to consolidate all of the cloud or edge infrastructure needed by Metaverse developers.  In the case of new partner Nvidia, it would mean incorporating Nvidia’s Cloud XR platform which delivers streaming AR/VR across 5G and Wi-Fi from data center or edge networks to Android and Windows devices. 
Compal shows a graphic with a variety of names surrounding potential users and some of the structure needed to bring the world into the Metaverse, although some, such as Qualcomm (QCOM) were really part of the Compal 5G service, with the remainder being various VR/AR software developers and application providers.  Compal cites one of those partners, who will be able to create an interactive personal universe experience (aka UGC or user generated content) in real time using the XR Cube API, (we note the use of ‘will be’) and will not have to adapt the process to each VR platform, so what it comes down to is Compal is providing a development interface that would help to smooth the ability of Metaverse content developers to generate real-time Metaverse content.
Given that there are a multitude of Metaverse content creation tools like Unreal Engine (pvt), Sumerian (AMZN), Maya (ADSK), Blender (pvt), and Unity (U) and no basic platform for the Metaverse, like there are for search and social media, the field for helping developers do more than just create a game or virtual world is wide open.  That said, companies like Amazon and Google (GOOG) have such a significant amount of computing infrastructure that they will inevitably dominate the space.  In the interim, we expect the Compal’s of the world to provide as much connectivity help as possible to developers to help the Metaverse get real-time traction.  That said, most important would be improving VR hardware, as without high quality and physically usable VR displays, the Metaverse will be limited to a small subset of internet users.

With the Metaverse being the major technology topic of discussion across the blog-sphere, the inevitability of forecasts and predictions is a given.  Considering that the Metaverse remains undefined and essential a concept that is different for each person trying to describe it, predictions are going to vary widely and will likely be far from apples-to-apples comparisons.  The most recent is from Taiwan-based Trendforce, a keeper of semiconductor and similar pricing data, and usually one of the more aggressive forecasters.  
While Trendforce has narrowed down its ‘Metaverse’ to “Global Virtual Reality Content Revenue” between 2021 ($2.16b) and 2025 ($8.31b) and assigned a 40% CAGR for the period, the primary applications involved in the segment would be gaming, videos, and social interactions, although the caveat is that since the creation of true Metaverse content is a complex and time-consuming project, much of the revenue will come from UGC, or user generated content, with companies waiting to see if there is a path toward commercial Metaverse content that has some connection with profitability before entering the Metaverse wholeheartedly.
The problems with such predictions are that most of the user generated content would be based on VR, which is still in the hardware development stage.  VR equipment is bulky and relatively low resolution, making it unappealing or unavailable to many potential users, along with a high price tag.  VR market predictions themselves have been in the kindest terms, very wrong in most cases, with growth rates far less than VR gurus have expected.  All the talk of the Metaverse by social media companies will help to spur VR development but there have been other ‘stimuli’ that were predicted to put a VR headset in every pot before, while the number of VR units shipped annually remains below 10m and cumulatively below 17m. 
From the perspective of those in the display industry, micro-displays are an evolving product with resolutions nearing 4K levels, but progress is difficult as geometries get smaller and expectations for major breakthroughs in terms of actual commercial product will take time.  There are only a small number of display producers that can supply high brightness, full color, high resolution displays under 1.5”, with Sony (SNE) and BOE (200725.CH) being the ones with the most models, so the competition on the display side is still in the ‘chicken-and-egg’ mode, with R&D spending tied to the potential for higher volume production.
We certainly don’t criticize those making predictions for VR/AR or the Metaverse, in whatever form it might take, be we note that years of VR predictions have missed the mark consistently, and usually by a wide margin.  While the Metaverse is a virtual concept, VR and AR hardware and software are physical and while the ebb and flow of interest in the virtual world will continue to affect investor interest and valuations, the reality part of virtual reality is the most important.

According to local Korean media, Samsung Electronics and Microsoft (MSFT) have been working on a joint development AR (Augmented Reality) project since the summer that is expected to run for two years, resulting in a commercial product in 2024.  The development project is based on Microsoft’s HoloLens™, an AR headset that Microsoft released in 2016 to developers.  The headset uses Microsoft’s Kinect™ tracking technology, originally developed for the Xbox.   The HoloLens 2 is the current version.
Samsung is said to be using the resources of Samsung Display (pvt), Samsung SDI (006400.KS), and Samsung Electro-Mechanics for the project and is likely contributing its expertise in waveguides, which are used in AR to move the light from small projectors to the user’s eye.  Given that the projected image is small and quite close to the user’s eye, the waveguide can help to expand the FOV (Field of View) to a more natural 40®+, from what was just above 12® in early AR devices.  Samsung has made a number of investments in California based DigiLens (pvt), a producer of such waveguides, along with a number of other prominent strategic investors such as Sony (SNE), Universal Display (OLED), and Dolby (DLB).
While Samsung’s involvement in the project is likely related to hardware and the waveguide module, Samsung itself has not had success with its own VR device, Gear VR, which was released in 2015 in cooperation with Oculus (FB) and was paired with a number of Samsung Galaxy smartphones.  Unfortunately the device was not well received, despite about 5m being sold, and Samsung terminated user accounts and support in 2020 although Oculus continues to support the application.  Estimates are that Microsoft has sold ~200,000 Hololens 2 systems this year, which sell for between $3,500 and $5,200 depending on the configuration.
While talk of the Metaverse has resulted in a renewed interest in AR/VR, the HoloLens is not designed for what might be considered casual use.  The target market for such a device is oriented toward industrial use.  As a mixed reality device, it allows the user to see both the item being worked on and an overlay of almost any kind of detail possible, ranging from schematics to replacement parts that the user can manipulate as if it were part of the physical item being worked on.  The typical use would be similar to Fig. 2, where the maintenance person is able to look at and manipulate an image of the device being repaired to better understand how a part might be replaced.  For anyone who has watched a household appliance repairman call to get a page from a manual sent to his phone in order to figure out a problem, the ability to not have to stop a repair to page through books and lists is an absolute time-saver.

The Metaverse.  It’s a major topic of conversation across all sorts of social media, but even more so among companies that expect to be associated with the Metaverse in a direct or indirect way.  As we have noted previously, the Metaverse is something relatively new and as such means different things to different people, so along with the rest of the investment and scientific community, we have been trying to find a definition(s) that explains what the Metaverse actually is, in simple terms.  
One description that seems to make sense is a reference to websites, which, when viewed on a display, might look three dimensional, but are two dimensional, meaning they have no depth, other than what is created artificially.  The Metaverse is a 3 dimensional representation of a website, using AR/VR to add depth and extend the two dimensional edges of that image.  For example, if you have a website (commercial or otherwise) that looks like a living room, it is limited to the perspective that the developer has set.  You are able to click on an object and see that object details or from another angle, but everything is still 2 dimensional.  If the developer did not provide a view of the object from the back, you don’t get to see the back.
By adding AR/VR to your living room site, you are now in that living room and can turn 360®, walk next to or around an object, or see things that might have been out of view of your 2D perspective.  Items can be tagged, just as they might be in a 2D website, but those tags might be hidden until you look at the item, at which point the information appears in front of you.  You can move around the space in almost any way and not be restricted to any perspective, allowing you to fly, hover, or pretty much do anything the software has designed in. 
While none of this is much different from what you might see in a VR game, where you can travel over what are vast distances and objects, the heart of the upcoming Metaverse takes this concept out of the limited world of a game and into ‘shared’ worlds that are open to anyone who wishes to enter, essentially a 3 dimensional website that is open to the public.  Such metaverses are going to be created initially by those who have the tools and a reason for their creation, and those reasons are quite diverse. 
Take Google (GOOG) for example, a company that has considerable assets in geo-location.  In the Metaverse, meaning once you put on an AR/VR headset, and you ask for “restaurants near me”, the Google Metaverse built around their vast location data will allow you to fly to those locations, and walk up to the first restaurant on the list.  If the restaurant does not have its own Metaverse, you might just see a menu or hours of operation on the restaurant’s window, but if they have their own Metaverse site, you could walk in the door and wander through the restaurant to see if it looks interesting.  Depending on the restaurant’s site complexity, you might be able to see the kitchen and speak with the chef, or look at individual items being served, but just like current websites, it will depend on the individual company involved.
Building out such a geo-location Metaverse, even for a company the size of Google, is a massive task, but ‘near me’ searches carry significant intent and immediacy, which are extremely valuable assets for Google, and make the effort to further engage Google users by opening up Metaverse worlds, a no brainer.  Google Lens already allows for smartphone camera images to be used to locate or identify items or locations, so the step toward creating an AR/VR Metaverse with similar options makes sense for companies like Yelp (YELP), Foursquare (pvt), and TripAdvisor (TRIP).  But while smaller companies will create their own company specific metaverses, we expect Google has much bigger plans.
Google indexes websites.  Its index was estimated to hold 35 trillion web sites last year, which is a paltry 4% of the information that exists on the internet as its crawlers have access to only those links that are publicly available.  The “Dark Web”, which includes information that must be directly queried from a database, password protected information, and many subscription based content, is not part of Google’s index, but that does not mean Google’s index is not valuable, in fact it is likely Google’s most valuable asset. 
Google’s index and the website information it contains is a resource that Google has been collecting for years and is the basis for information it sells to others, but what if Google began to index the real world?  Google already has images of billions of locations that come up when searched, so why not build an index of the physical world, capturing 3D imagery of every spot on the globe?  Such an index would be the primary resource for the Metaverse, with a Metaverse search for a quiet spot in Bali not putting the picture below in front of you, but dropping you right on that beach, where you could wander until bedtime.
While indexing even a small portion of the physical world would require vast resources, the monetary benefits are also vast.  Not only would access to the Metaverse require hardware of some sort, but the connection to social media, potential for local commerce, and collectable data associated with an individual’s actions in the Metaverse, make the development of such free Metaverse universes a vast resource for the data collectors of the world, and the attractiveness of the created Metaverses would keep users on-line even longer than they are now.  You might be forced to be on-line using your smartphone during the day, and limited to typical websites, but when you get home, you can travel the world, explore a particular topic, and delve into a completely artificial world, and be right in the middle of the action, rather than looking through a 2 dimensional camera lens, and you can do it with friends, alone, or with a group of like-minded folk.  What could be more addicting?
Geo-location is just a part of what attracts companies to the Metaverse, and given that the definition of the Metaverse is so broad and undefined, it will be the tech buzz word most likely used to describe almost anything for the next few years.  You can certainly associated AR/VR to the Metaverse, but the data speeds needed for moving through the Metaverse will give those associated with 5G something to talk about.  AI will be used to anticipate a user’s likes and dislikes in a particular Metaverse, and display manufacturers are already being hounded by investors as to whether their products will be applicable to the Metaverse.  Data storage will certainly be a Metaverse topic as will Metaverse software development tools, so there will be few areas in the technology and consumer electronics world that would not have a reason to talk about the exciting prospects for the Metaverse.  Much will be hype as it will take years to develop the sort of global Metaverse that is envisioned by many, but underlying it all is still the need to keep you the user on-line as long as possible, and that does not always have the best possible results.  It’s a very difficult balancing act.

​NCT Marketing (pvt) is a marketing consulting company in South Korea, whose experts are given hip sounding English names like Rosie (aka Hyun-Jung Park), Ryan (aka Yun-Ho Maeng), and B.I.G (aka Challenger, the office pup) and cool quotes on the website (still under construction)  such as “Users leave clues”, “Talk is Cheap. Show me the data.”, and “When I smell it, I challenge myself endlessly, run endlessly” (B.I.G’s quote).  They list companies such as Heineken (HEIA.NA), Hyundai Card (005380.KS), and Save the Children (pvt) as clients, and map out a playbook complete with “AI”, Neural Network”, and what they call their “Get Shit Done” (Their words) attitude, with the company’s NCT moniker meaning “Notorious Challenge Tribe”.
But what really caught our attention is something they have created called “Second Seoul”, which is a virtual real estate transaction platform, where subscribers that are qualified can purchase Seoul real estate in the virtual world, aka the Meta-Verse.  The transactions are made using NFT’s (Non-Fungible Tokens) with the first 69,300 virtual tiles (see Fig. 4) selling out in 24 hours.  An addition 50,000 tiles were added, with the site having to limit the number of applications to 100 for each real estate tile, and we note that the site has not yet officially opened (expected in December), at which point the first 100 applicants will be granted virtual real estate equal to 18 pyeong (equal to ~648 ft2), with the next 900 subscribers having to go through a lottery for ownership.
NBT Marketing is actually a wholly-owned subsidiary of a company called NBT (236810.KS) that is known for its ‘Cash Slide’ app that provides cash back on purchases made through the application, in addition to those credit cards might provide, but marketing seems a bit less lucrative than selling real estate in a virtual world.  Of course, using NFTs ‘guarantees’ your ownership of your little chunk of Korean real estate, even though it exists only in the Metaverse, but “Second Seoul” is chump change when compared to Earth 2 (pvt), which divides the globe into 10m x 10m chunks and offers them for sale, virtually of course.  You can buy a tile (100 m2) down near Battery Park for $63,971 or in Greenland for $1.13 and you can trade those properties as values change.  That said, even if you own that spot in virtual Battery Park, we doubt the authorities would see fit to let you build a nice house or even sit for more than an few hours in the real world, but Earth2 does give anyone who refers the site a 5% commission, so bloggers love to promote it, even though they get paid in virtual (Earth2) currency, which is easy to put in but hard to get out, a technique championed by these fellows.

​So the entire objective here, and this is actually a preliminary stage to the real Metaverse, is to generate both fees and information, while you feel that you are now a real estate mogul, owning a portfolio of lucrative locations across the globe for the purpose of eventually building a virtual world that mimics those locations.  But we have questions about such ownership.  Does it mean that another person cannot build a virtual world that looks exactly like the location you own, or can a user add a little nuance that makes it different from your ‘wholly-owned’ chunk of the virtual world?  If I want to use or live-in your virtual chunk, do I have to pay rent?  When will users actually build out their ‘plots’?  Can they leave them undeveloped and if so can I build a virtual store on their property?
Before we go trying to find answers to these and the hundreds of other questions that the Metaverse brings up, we feel it is important to stay grounded in that the Metaverse is just a collection of AR/VR oriented websites.  Instead of being projected on a flat screen, such as a monitor or smartphone, the Metaverse world is seen through AR or VR displays.  The fun and fantastic worlds seen when Facebook (FB) CEO Mark Zuckerberg plays his Metaverse promotional video are being seen on a flat screen, so the only difference is that with AR/VR you are immersed in the image.  What you do in the virtual world would be similar to your search history, and the data that is collected in the Metaverse is similar to what is collected when you visit websites today, only it looks more realistic (or unrealistic), making it stickier than a flat screen image. 
Does it solve some of the problems created by social media? No, it actually will make them worse, keeping users on-line in an environment more closely tailored to their likes and dislikes.  Its good for companies that want to sell you stuff, especially if that stuff is particular to a type of user, it is definitely good for companies that make a living selling user data, and it will be good for those that like to speculate, as you no longer need a warehouse to hold the tons of virtual stuff you have acquired, but it is not good for those that are already metaphorically joined to their phones, checking for Tweets, likes, or hits on a minute by minute basis. 
While those on the profit motivation side will say it will be good for users, allowing them to scour the globe for stores they would be unable to visit or exploring virtual worlds that they would never see, the Metaverse is not being created to help humanity and bring us together, as social media was originally said to do, but to open a new path toward garnering the attention of users and keeping them on-line longer (generating user data) or spending more (generating sales).  When pressure on social media companies becomes the stuff of governmental inquiry, the smart folks at those companies understand that they need to move to another platform, and what could be better than a virtual world that is far too complicated and removed from reality for most to understand, giving those building the Metaverse years more of data to sell.  Today’s word of the day is obfuscation.  Don’t worry about that bad stuff, look at the shiny new stuff over here…

In our 9/20/21 note, we mentioned the Meta-Verse, a concept that has gained popularity in Asia and made recent headlines as Facebook (FB), in a classic corporate misdirection attempt, renamed itself “Meta” to indicate that the company is supposedly moving away from its core of selling ads and increasing engagement time and becoming a player in the new world of the Meta-verse.  While lawmakers struggle to understand even the most basic ways Facebook operates, the Meta-verse will force those young senatorial aides that wrote most of the Facebook questions to go back and get a better understanding of what Facebook is talking about, or at least what they seem to be talking about.
In our earlier note, we separated out the term Meta-verse from science fiction and astrophysics, where it implies a multitude of parallel universes that exist in space-time, to what is an outgrowth of AR (Augmented Reality) where you wear a pair of AR glasses from the moment you wake up until the moment you go to sleep.  Said glasses provide a visual overlay on top of whatever you happen to be looking at and being connected to the internet at all times, can provide information on whatever you happen to see.  The concept also includes the creation of global meta-universes that can be shared by the entire world, unlike game or application specific ‘worlds’ that are directly tied to the application itself.  These global Meta-universes can be dedicated to a particular theme or purpose, such as a Meta-verse for those that like trains, where one could ride the luxurious Maharaja Express across India or the Ghan across Australia without leaving home, or can be more general, but while the concept is both futuristic and opens up all sorts of wonders to those that might never get the chance to see them, there is a downside, and its not what you think.
While in the concept of global Meta-Universes there will be many new ways that the darker aspects of human behavior can be explored, the real downside is the same as it is for social media today.  The objective of those spending millions or billions to create these global or more specialized Meta-verses is to get compensated and walking down 5th Avenue in an NYC Meta-verse would likely trigger an ad or “More info?” banner as you happen to look into the window of Armani or Harry Winston.  Every glance or finger point in this Meta-world will be logged, analyzed, and categorized, and potentially sold to advertisers who will then will find ways to serve you ads that ‘will enhance your experience’ across other Meta-verses or any other potential platform that you happen to use, sort of what social media companies do now, but on what could be an even larger scale.
But there are some good points to the Meta-verse concept, and one that caught our eye comes from the government of Seoul, South Korea, who has decided to spend ~$3.3m to create a “Meta-verse Seoul” by the end of this year.  The government has come up with a “Metaverse Seoul Basic Plan” which outlines the city’s mid- to long-term direction and Meta-strategy through 2026.  This includes moving diverse administrative services, which are now on private platforms, to a single Metaverse ecosystem, where all services, such as the economy, tourism, culture, education, and civil complaints can be gathered, with avatars for everyone from the Mayor to the city’s historian available to those who enter that universe.
Such a world would provide visual and audio content, and would allow those in other locations to attend special events held in the city, and would free administrators from having to be in a specific location for much of the day while giving residents the ability to get information and solve problems without leaving home.   Much of the reasoning behind the plan is not only specific to the concept of the Meta-verse, but also a way to bring a multitude of disparate services to one unified platform.  In this case the objective is to provide services to city residents and other individuals and would likely be less tied to consumer interest pattern collection than more commercial sites, but we would still expect that an individual hitting the Seoul Meta-verse site and asking the administrative avatar about upcoming events will see virtual ads from car services, local restaurants, and external festival promotional services rather quickly.
All in, the Meta-verse concept will have the same basic pluses and minuses as much of social media, only on a more addictive scale.  While social media companies do everything possible, ethical or otherwise, to keep you on a site, we expect it will be even easier to capture consumer time on Meta-verse worlds as they involve even less effort than current social media platforms and can be infinitely more interesting and entertaining to a consumer who has a particular interest in that Meta-universe.  Its one thing for a classic car enthusiast to watch a YouTube (GOOG) clip of Jay Leno’s Garage, but another to walk through the Jay Leno Garage Meta-verse virtually and speak with one of the guys who takes care of those cars, while the stats appear in front of you for each as you pass by.  Don’t be fooled by those who say “New name, new (more ethical) philosophy”, its all based on the same concept of getting you to buy something.  Its just making the pig a bit prettier with glossy lipstick.