​There are lots of estimates for XR/VR/AR, and there have been for a number of years, however many of those estimates are prefaced with headlines like “Now VR is Here!” or “This is the VR Decade”, so we take such estimates lightly and focus more on what has occurred rather than what is expected.  This is contrary to our usual way of thinking but there have been so many false starts in the VR/AR world that extrapolating on small volumes, rapidly changing technology, and consumer surveys becomes a dart board exercise.
That said, the National Research Group (), an organization that provides focus groups, workshops, and ‘in-depth interviews’, along with meetings with influencers to brands to generate effective ad campaigns and product positioning, has done a survey entitled “Beyond Reality…Is the Long-awaited VR Revolution Finally On the Horizon?”, which was enough to draw our attention.  The study involved 2,500 respondents, aged 18 to 64 in the US and was conducted in March of this year, and focused on consumer attitudes toward VR systems and content.  Here is what we pulled out of the 13 page report:

• 37% of US consumers describe themselves as “excited” about spending time in virtual reality and an additional 43% say they are interested in the technology and willing to use it under the right circumstances, with 40% saying they have become more interested in VR as a result of the COVID-19 pandemic.
• Just under 40% of consumers say they have now had at least one VR experience, with 85% who have tried VR saying they would describe the experience as either ‘very’ or ‘somewhat’ positive, and 57% saying they ‘definitely’ plan to have more VR experiences in the future, while 28% say they will ‘probably’ do so again.
• 49% said they had the VR experience in their own home.  43% said it was in a friend or family member’s home.  33% said it was at a video game arcade.  21% said at a theme park, and 12% said it was at a museum or art gallery.

The survey went further to break down the ‘typical’ VR user.

• 71% describe themselves as people who are generally early adopters of new technologies
• 60% are male and 40% female.
• 47% were between the ages of 18 and 34, while 47% were between the ages of 35 and 54, while 6% were between 55 and 64 years old.
• 86% play video games on a regular basis
• 61% were white, 20% Hispanic, 11% Black, and 8% other.

In terms of US households that own VR headsets (13% according to the survey), which would equate to 16.59m households, of which 68% (11.27m) have one VR headset, 23% have two (7.64m) and 10% have three or more (5m).  Note: This totals 23.9m units of an estimated global installed base of 26m at the end of last year.

• 88% of consumers who have a VR headset say they use it multiple times each month while 60% say they use it more than once per week.
• 54% of those who own a VR headset say they use it for less than 2 hours/week, and 66% say they tend to use the device for a maximum of 45 minutes and 37% say they use it for less than 30 minute each time.
• 72% say they use the headset to play games, 42% say to watch TV or films, 35% they use it to workout, 29% use it to browse the internet, and 22% say to create music, videos, or art.
• 63% of consumers who own a VR headset say they bought it to play games, 32% said they wanted to see what all the hype was about, 32% said they wanted to keep up with new technology, 28% said a friend or family member recommended they buy it, and 27% received it as a gift.

Feature sets on VR headsets are an important part of the user experience, with the bulky and heavy VR headsets of past years giving way to more ‘stylish’ models with higher resolution displays, expanded field-of-view, and faster response times, along with more recent adds like eye-tracking and spatial audio, so we were interested in what the survey said consumers were looking for in a perfect VR system.  Here’s what they said the key features should be:

• 52% said good image resolution
• 44% said comfortable headset and controllers.
• 39% said high quality audio.
• 35% said easy and intuitive to set up.
• 34% said compatible with a wide range of video games
• 33% said it should not require a connection to a PC or game console.
• 29% said it must be compatible with my existing devices.
• 28% said it should have eye-tracking.

The biggest complaints VR device owners had concerning their headsets and controllers were:

• 17% said the headset gives me serious nausea or motion sickness.
• 17% said there is not a wide enough selection of VR games.
• 16% said the headset is uncomfortable.
• 14% said there is not enough of a selection of films or media to watch.

…and the most common reasons not to buy a VR headset were:

• 46% said VR devices are too expensive.
• 25% said they don’t use it enough to justify the purchase.
• 16% said they did not see the appeal of the VR experience.
• 15% said they don’t know where to get started buying one.
• 12% they were worried about motion sickness.
• 12% said they were waiting for VR quality to improve.
• 12% said they were worried about the effect it will have on their eyesight.

As with all surveys, most participants have at least some interest or connection with the general subject or they would likely not participate (unless compensated), so it is hard to establish the credibility of the respondent base, and question content can drive certain results unless carefully worded, so we are somewhat suspect that 80% of respondents said they were ‘excited’ or willing to use the technology under the right circumstances when paired with the responses about concerns that keep potential VR buyers from purchasing headsets.  However, if we look at the survey results more as coming from a less randomized sample, many of the responses make sense, particularly those on what the ideal VR system should contain.
The most telling response were those concerning usage, which would indicate that fatigue is a major factor for almost all users, and that the quantity and quality of available games and video content does little to push users to engage more often.  Would better and more games be enough to create a new VR paradigm or will hardware control the ball until fatigue issues are resolved?  We would guess both, with hardware a bit ahead of content, although they tend to be a bit closely tied.
While new and less expensive VR headsets will draw in additional users, the hype surrounding the Metaverse is more likely to be a tease followed by disappointment for both those consumers who expected to spend hours each day in wondrous lands tailored to their likes and dislikes, and retailers who expected to be deluged with orders for both real and virtual products.  Creating a true Metaverse requires VR to advance quickly and for the supporting industry to temper consumer and business expectations to a more realistic timeline, which is rarely done in the CE world.  Maybe ‘exciting’ is a better description than ‘VR is Here’, but headline writers are writing to sell product so most likely the hype will continue until the next cyclical ‘disappointment’ cycle begins and the process will begin again.  Such is the ‘Circle of Life’ in the CE space…
 

​The Apple (AAPL) world is once again abuzz with rumors that Apple is getting ready to announce a long awaited AR/VR headset device in the near future, with much of the stimulus coming from a report that Apple board members were treated to a preview of the device at a recent board meeting, which was taken to mean that such a device (codename N301[1]) is in an ‘advanced stage’ and that a second AR only device (codename N421) is under development, along with an XR operating system (codename rOS[2]) under which the platforms will run.  Some have liken the potential release of an Apple AR/VR product to the announcement and release of the Apple Watch back in September 2014 and released in April 2015, the last new product category released by the company, but we have a great deal of trouble equating a digital watch, a form of device that has been around for more than 150 years, and a device that has been around commercially since 2013 and is still under considerable development. 
The rumor mill has been churning out ‘details’ about Apple’s AR/VR development project team (codename TDG for ‘Technology Design Group’), which has been said to consist of up to 2,000 Apple employees operating out of one of Apple’s Sunnyvale R&D centers since 2015, especially after Apple stepped up bonuses for key employees at the end of last year to stem Facebook’s (FB) talent poaching to broaden Meta’s own XR project (codename ‘Project Cambria’).  However there have been many false starts concerning Apple's AR/V’ development, with a number of loose timelines for an announcement and release passing by years ago (First was 2019?), so leaked progress reports, renderings, a component ‘details’ continue as the project winds on.  Excitement usually builds as we approach the Apple Developers Conference which starts on June 6, during which bits of code that might reference such an operating system or application for AR/VR are revealed during sessions or leak out ‘accidentally’, and this year is no different given the ~92% expansion in AR/VR units seen in last year, but also putting that in perspective, it equates to ~11m units, while smartwatch shipments reached over 127m units last year of which Apple has a roughly 50% share. 
While we can cite all sorts of potential features and component specs that have been speculated on in reference to a potential Apple XR headset, we expect Apple to push both design and performance specifications when it finally makes such a device available, but even the mighty marketing machine at Apple likely recognizes that aside from a ‘cool/hip’ design, any commercial XR product needs a very compelling application to make it a ubiquitous product, and asking customers to fork over somewhere between $1,000 and $3,000 for a headset that tells them how much further they have to run before they meet their daily goal or how much that handbag in the window costs on Amazon (AMZN) might be a hard sell.  The Metaverse is an attractive incentive for hardware manufacturers but the Metaverse is still a conceptual idea rather than a practical one and has little intrinsic value other than as a publicity tool. 
We do note that Google (GOOG) does seem to understand that in the real world applications sell hardware (see or note 5/12/22), especially for relatively new product categories, and while we expect Apple to capture significant market share in the XR space when it finally enters and will add considerable legitimacy to the space leading to market expansion, there still needs to be a reason for consumers to want to wear even a sleek and hip looking headset for an extended period of time.  VR’s entertainment value is obvious, although far from mainstream and so we look toward AR as a more realistic approach to the extended reality space, but again passing curiosity does not sell millions of units but practical applications do.  Did you buy your first smartphone so you could watch chimpanzees in Uganda from a secret encampment or did you buy it so you could speak to colleagues, friends and family whenever you were away from a ‘landline[3]’?


[1] You know its real if it has a codename, right? 

[2] The ‘r’ in ‘rOS’ stands for ‘reality’, another codename adding additional ‘code name cred’ to the story…

[3] For the younger generation, a ‘landline’ is a telephone that is connected to a carrier through a wire and is traditionally mounted permanently in a home or office and cannot be carried with the user.

Are waveguides applications for finding the ‘perfect wave’ at beaches across the globe, or are they those plastic things at the ends of sci-fi weaponry that help aliens shoot straight? No, they are neither of those but are a key component for XR products, especially AR devices.  While most folks are focused on the metrics of the display used in XR products, in AR the user must be able to clearly see what is in front of him, while in VR the display is the visual objective.  In order to get an image to AR glasses, the display image has to be combined with the actual visual image seen by the user, and that is done by optically combining the two sources.  The waveguide operates a bit light the optical fiber that brings entertainment to your home.  The display that carries the ‘overlay’ image into the waveguide which then reflects the image from side to side through the waveguide while moving it forward until it reaches the users eye.  While the waveguide is nearly 100% reflective on the interior, it is also transparent allowing the user to see both images at the same time.
In order to get the image to move through the waveguide it must be injected at an angle and the refractive index of the waveguide material must be high or the field of view will be relatively small, meaning you would be limited to a narrow left/right and up/down view.  That is where specialty glass producers such as Corning (GLW), who happens to be an investor in waveguide producer DigiLens (pvt) come in, creating such highly refractive glass that make waveguides viable.  There are a number of ways in which waveguides can be applied to AR products and other optical techniques can be used to create an AR system, such as mirrors and prisms, but waveguides are a hot topic in the AR world and  are considered one of the leading technologies for AR going forward, especially because they allow the display projection system to be small and less bulky that most optical combiners.
The problem with waveguides is they are more difficult to produce that typical display glass and must have uniformity and surface roughness metrics that are an order of magnitude better than those of display glass.  They are produced on wafers, which increases the cost of production but also allows for patterns to be etched in the glass that help to gather more light, and as such processes are more similar to semiconductor manufacturing, there is considerable room for advances to be made in production techniques.
DigiLens produces such waveguides and has just raised an additional $50m, bringing its capital from investors to $160m in 7 rounds.  Some of the investors in those rounds are Samsung Electronics (005930.KS), Universal Display (OLED), Dolby (DLB), and Corning, along with a number of US and foreign VCs, and will help push the company’s more specialized waveguide technology into volume production over the next year.  Given that their manufacturing process is scalable and cost effective while having better FOV and overall characteristics than competitive offerings, the company feels that they can dominate the waveguide space going forward.  We note that while there are other optical systems available to AR designers, waveguides are the most common in our AR database, especially among those AR devices that have been announced but not yet released.

​Facebook (FB), aka Meta, did a nice thing, they broke out the yearly revenue and operating income for Reality Labs, the division of Facebook that has been developing and selling the Quest line of VR headsets, along with content and associated software.  The Oculus brand, starting with the Oculus Rift DK1 in 2013 and continuing through the Oculus Quest 2 released in 2020, is known as the best-selling VR headset, primarily due to its low price and reasonable specifications.  There are much higher quality VR headsets that touch upon newer technology and more competitive specs, but for what comes down to ~$400 the Oculus headsets have been hard to beat.
Facebook has seen big increases in its Reality Lab sales over the last three years, with a 127.3% increase in 2020 and a 99.6% increase last year, but at the same time seeing a 47.1% increase in operating income in 2020 and a 53.9% increase in same last year.  So Facebook is losing lots of money to maintain marjet share in the headset game, or is there another reason why the company continues to sell headsets at what is below cost?  Given that Facebook is one if not the biggest proponent of the Metaverse, a system that will feed it tons more data about users than they already garner, they are encouraging the global population to adopt VR as the means to  what they would like to be the new social platform.  Rather than compete with other headset producers who must look closely at profitability, Facebook has the ability to continue to lose money while seeding the VR market and will likely continue to do so until they either find that the Metaverse is not developing at expected, or they can really sell high quality headsets at such prices, which, at best, will take a few more years.
While we expect that little will change in Facebook’s attitude toward VR headsets in the near term, given the current interest in the space, we continue to look at the VR space and the Metaverse as both fertile ground for the hyperbole that technology marketing thrives on, the ability to capitalize on that hyperbole, and a lack of overall consumer demand until the technology takes at least another leap forward.  All in it is fertile ground for examination, which we continue to do, but the little glimpse into Facebook’s VR losses gives us even more fodder for taking the VR space apart.  More to come.
 

Product announcements are a big thing in the VR world, as they are with most CE products, but moving from an announcement to an actual product release seems to be an even bigger issue that the initial product announcement.  Our A/VR database contains 15 announced VR products that have yet to be released, some that have been announced quite some time ago, but one that seems to have been even more caught up in the enthusiasm surrounding the Metaverse and VR is the HalfDive VR headset being developed by Diver-X (pvt) in Tokyo.  The company’s stated mission is to “maximize human output/experience through enabling human activity in its lowest energetic state”, which sounds like it might be on a low electron mobility display technology or a low refresh rate system, it’s not.
The company. Which is funded through a Kickstarter campaign, has come up with the idea of designing a VR headset that is not used sitting or standing, as are others, but is used lying down, a VR headset for your bed.  Yes, the headset is designed to be used while you are laying in your bed, either on your back or on your side, with the video extoling the virtues of VR in bed.  The device is specially designed to be comfortable in a reclining position, exerting little pressure from a head pillow (is Mike Lindell involved? – Just kidding…) and has both hand controllers and foot controllers.  The high-end model has a feedback system that simulates wind using two internally mounted fans and a vibration generator similar to those in accessories that can be purchased for VR systems designed to be used while standing.  The four speakers inside the helmet allow for immersive 3D sound and since the sound is processed in the headset itself, users can listen to audio or music from their smartphone, without the discomfort of ear buds.
The system operates under Steam VR (pvt), however there are questions as to whether other games would operate correctly given the unusual controllers and limited movement ability (the foot controller uses ankle twists to simulate movement), but more serious is the fact that despite the Kickstarter campaign generating $222,000 against a target of $174,000, the company has just issued the following statement, so it looks as if the project might not see the light of day or even the dark of night.  While the enthusiasm of youth certainly has driven technology to greater heights over the centuries, it doesn’t always pan out.
“Diver-X has withdrawn (cancelled) HalfDive's Kickstarter (crowdfunding) that had been implemented for some time on 1/30. First of all, I would like to apologize for the sudden withdrawal and the delay in explaining the details of the withdrawal to the supporters. (* Since the project has been withdrawn, supporters will not be billed.).
Half Dive's Kickstarter has been canceled for the following three reasons. (Arranged in descending order of impact on cancellation).
Reason 1: Significant change in product direction.  The current Half Dive specifications are to achieve our goals such as "to complete life while sleeping" and "to realize an experience close to a full dive by combining existing technologies". I came up with the idea that it was not the optimal form, and repeated hypothesis testing. (Implementation of Kickstarter is also part of the hypothesis verification.) HalfDive initially set up two use cases: "(1) VR game while sleeping" and "(2) Working while sleeping" VR.   The number of HMDs and games sold is increasing year by year, and it is said to be a so-called growth market. We are confident that VR will become the standard for VR experiences while sleeping for the reasons described below, but due to content and interface (operation system) issues, it is currently only a niche experience method. Therefore, it was expected from the beginning of the project that even if only playing VR games was launched as a use case for Half Dive, it would not be possible to obtain sufficient sales volume and profits. Therefore, I was trying to break away from niche devices by setting up use cases that can be applied not only to VR users who want to "work while sleeping" but also to all humankind. 
However, as I proceeded with development and hearing, I realized that the use case itself was actually a niche, and that sufficient function development was not possible to realize that use case. Especially when working while sleeping, it takes a lot of time and money to reach the fundamental fact that it is not the video display system (HMD) but the interface system such as mouse pointing and character input. I have. As a result, HalfDive use cases were later narrowed down to one for gaming. However, I realized that the interface system is more important than the video display system in order to realize and standardize the "VR experience while sleeping" as well as the work application, even though the development is proceeding with only one game application. I did. No matter how optimized and versatile it is for sleeping, it's the interface that, after all, is just a replacement for existing VR devices and provides an innovative experience. (To realize an interface that allows the same physical movement as before even under the physical movement restriction of sleeping) Here, we should focus on the development of the interface and combine it with the existing VR device. The feasibility of our goals is high, and we have come to think that we will have a better experience.

Reason 2 : Immaturity of the organizational structure For financial reasons, the design of the main components that determine the character of Half Dive, such as optics and display, was outsourced. As a result, it was not possible to manufacture the right components for the devices on the current market and the concept of Half Dive at the right cost when assuming general sale. In particular, the manufacturing cost of the optical system accounts for about half of the cost of Half Dive, which has been a bottleneck in mass production. The lack of in-house knowledge about the main components affected the specification review, and the organizational situation was such that the cost price increased significantly in the end.
Reason 3 : Cash flow problem Although it is related to the above organizational problem, we have not obtained such a technically optimal solution.  We did not have sufficient financial power to cover the soaring costs. And even if it considers the support from everyone on Kickstarter and additional procurement, it is not in a state where it can be sufficiently improved, and going to mass production as it is will lead to the worst case of bankruptcy and not being able to deliver the product to everyone. I decided it was likely. And although it is not enough for mass production, it was a financial condition that I could pull it once and start over, so although it is really selfish, I decided to restart in the direction with a high possibility of success.
For the above three reasons, even if you aim for Kicistarter as it is and receive your precious money, there is a possibility that you will not be able to fully provide the experience that HalfDive sings. It was canceled because it was judged that there was a high possibility that it could not be delivered and the trust of the company would be lost.
About the future of Diver-X and Half Dive
However, we have not given up on the goals of "complete life while sleeping" and "realize an experience close to a full dive by combining existing technologies" from the beginning. First of all, we will improve the cash flow and organizational structure that were mentioned as the reason for the cancellation, steadily solidify the foundation as one startup, and we will be able to properly deliver Half Dive and other new products to everyone. I would like to try again after I can build it.  In the future, we would like to not only continue the development of Half Dive and new products, but also carry out contract development. If you have any questions about hardware / software prototyping or product design, we would appreciate it if you could let us know.  Last but not least, I would like to thank all the people who supported HalfDive's Kickstarter and those who cooperated with the public relations.
All Diver-X employees
​

Apple (AAPL) is expected to revolutionize the world of AR (Augmented Reality) later this year with the release of its first AR/VR headset, just as Google (GOOG) had intended roughly 9 years ago as noted in a piece published by Verizon (VZ) titled “How Google Glass Will Change Our Lives” or CNN’s (T) 2014 “Google Glass Signals a Wearables Revolution”, but while speculation toward such a device is never-ending, we look to some of the more obscure points that might make such a device more than just a shiny new toy for Apple aficionados.  One problem that plagues AR/VR users, and one that is not display related, is audio in the AR/VR world, an often overlooked item in the evaluation of the current state of headsets and AR/VR.
Typically AR/VR audio is delivered to a headset through a Bluetooth connection between the transmitting system, which could be a PC in a non-standalone device, or directly through headphones or buds that are part of the headset itself, such as with standalone devices.  As Bluetooth has a maximum bandwidth of ~1Mbps, and a lossless audio signal requires at least 1.4Mbps, compression techniques are used to ‘squeeze’ the audio into a Bluetooth stream, and those are under the best of conditions, which vary with source distance and obstacles.  It’s not to say that there are not some good codecs that can preserve much of the quality of an audio stream, but the ideal is always lossless transmission and in the case of immersive headsets, not only are the eyes sensitive to receiving misinformation, so is the body’s audio system.
In a sophisticated VR headset, perhaps one with eye tracking capabilities, the field of view is constantly being shifted as the user looks in different directions.  If those transitions are not made succinctly, the brain becomes fatigued or confused.  That same issue is also present for audio signals, where the sound source must change as the viewer moves his point of focus, and any inability to match those movements leads to the same problems noted for video with low latency in the audio signal critical in extending the number of users that can use such devices comfortably.  Wireless headphones stream data from a smartphone or similar device by cutting the audio data into packets and storing those packets in ‘buffers’ until the transmission stream is available.  Once transmitted to the earphones, the packets are again stored in buffers and then processed and reconstructed into audio signals for the headphones. 
While this process encompasses a few hundred milliseconds of time, the overall latency can be as much as 250 milliseconds, before any error correcting systems or additional compensation is added, but this should not be a problem for most audio as ‘time’ is not an issue for audio on its own.  However, when tying audio and video together, such as in a VR headset, that latency can become an issue.  Apple has recently been granted a patent that works toward solving this problem by adding an optical transmission system to a headset or buds, which does not need the packetization and buffering that a Bluetooth/codec system must use, transmitting raw data that can be immediately sent to the audio device.
There are issues that might cause the optical system to be unable to provide a complete connection from the source (say a smartphone) to the headset or buds, so an RF system would also be present with a sensing system that would evaluate the speed of the optical system and revert back to RF if necessary, but the overall result would be a ‘closer to lossless’ system that would be able to respond more naturally to the user’s movements in a VR system, and could provide lossless audio when used alone.  Whether Apple adopts such a system in its AR/VR device or even for its Air Pods remains to be seen, as with all IP, but such a system would go toward reducing or eliminating one of the issues that limit the AR/VR user base currently and towards Apple’s goal of providing lossless audio.

We expect most investors are unfamiliar with the characteristics with which VR headsets are judged.  Some are similar to those used to specify smartphone displays or TV displays, but some are a bit more esoteric, albeit important to the VR space and our VR/AR headset database gives some insights into not only those specifications and what they mean, but also into the development of VR headsets over time. Our database contains almost 100 VR headsets that have been released between 1994 and 2021, along with another 15 that have been announced but have not yet been released.  In Figure 3 we show the number of models released yearly that use a particular type of display, with LCD and OLED being the primary contenders, LCoS, a long past technology, and Micro-LED the new contender.
The initial consideration shown in the data, which includes only released headsets, is the number of VR headsets released each year.  There was little activity after the 1994 release of the Forte (defunct) VFX1 headset, the first commercial headset we can find, that used a Kopin (KOPN) LCD display and a Sharp (6753.JP) video processor, until September of 2002 when Sony (SNE) released the PUD-15A (catchy name?) as a 3D headset for the Playstation, and NVIS (pvt) released a $24,000 headset (the nViser), which was considered a quasi-commercial device.  Little commercial VR equipment was produced until 2013 when Oculus (FB), a Kickstarter funded company at the time, released the Oculus Rift DK1, an inexpensive LCD based VR headset, and followed it in 2014 with the Oculus Rift DK2, which was based on an OLED display.  Facebook (FB) bought Oculus for $2.3b in 2014 and has partnered with a number of large CE companies using the Oculus platform as a basis for such branded VR products.
In 2015 Razer (1337.HK), currently a producer of PCs and smartphones and accessories, released the OSVR HDK (Hardware Development Kit), which allowed for enthusiasts to develop their own modifications to the headset, which was based on an OLED display.  That same year 3Glasses (pvt) (aka Shenzhen Virtual Reality Technology Co.) released its first VR headset the D2, based on an LCD display.  2016 was a better year for VR as 8 headsets were released from a variety of small companies, and a number of large ones, such as LG Electronics (066570.KS), HTC (2498.TT), Sony, and Oculus, with the type of displays evenly split between OLED and LCD, however the resolution of these displays was still relatively low until 2018 when the first dual QHD (Wide Quad HD) display was released by VRgineers (pvt), a Czech based company that specializes in VR for pilot training.  Since then the development of micro-LCD and micro-OLED displays for VR has increased and continued improvements have followed with a number of high resolution LCD models released in late 2020 and last year’s first micro-OLED headset from Arpara (pvt), that pushed VR display resolution and technology forward.
While we expect at least a dozen new VR headset releases this year, we also expect to see VR displays based on quantum dot enhanced LCD and both updated micro- LCD and Micro-OLED displays, however also expected is the first Mini-LED LCD display and an ultra-high resolution LCD display that would be more than double the resolution of the best released thus far.  That said, we do note that there can be a big difference between when a VR headset is announced and when it is actually released, sometimes more than a year (and in some cases never, so we wait until such promises become actual products before including them in our ‘current’ VR database.
The objective in developing such high resolution displays is to reduce what is called the screen door effect, which occurs because of the space between pixels and can be both distracting to the user and confusing to the user’s brain causing fatigue.  The spaces are hidden with a black ‘mask’ that separates the light from each pixel, but also creates the effect if the PPI (pixels/inch) is relatively low, especially when the displays are so close to the user’s eye.  Companies have found ways around the problem by blurring pixels slightly but these are solutions that do not address the real problem, display resolution. 
As display technology improves, resolution improves, which is absolutely necessary for VR and the Metaverse to become anything other than a toy for the dilettante, but such improvements in micro-displays are both difficult and costly, while headset volumes are relatively low when compared to other CE display products.  With the focus on the Metaverse creating renewed interest in VR, we should see additional capital being spent on micro-display development, but such developments take time and the question remains as to whether the current enthusiasm over the Metaverse will last long enough for the next level of micro-display development or will we have to wait for Metaverse 2.0 a few years forward?

​We get a lot of questions concerning who will benefit from the “Metaverse wave”, particularly when it comes to headsets, and that is a hard question to answer considering VR headset development, despite lots of hype about how easy it will be for VR users to spend hours and hours visiting new worlds, playing games with friends, and buying things that do or don’t exist in the real world.  This year’s crop of announced but unreleased VR headsets sport a wide range of display types, ranging from LCD to QD?LCD to Mini-LED and Micro-LED, so there is little agreement on just this one aspect of VR.  But there is one component, out of all we track, that seems to be the de facto standard in almost all VR headsets.
The chipset that sits in every headset that we are able to disaggregate, going back as far as 2017 seems to be made by Qualcomm (QCOM), starting with Snapdragon 835, a mobile platform produced on the 10nm node, released in late 2016, up to the current Snapdragon VR2, a more specialized chipset designed for AR/VR.  It is unusual to see almost any component show up with such regularity in the CE space as competition from at least a few competitive offerings finding their way into devices, but not so in the VR space, where the continued migration to more robust and focused chipset designs has kept all others from breaking into the VR headset space.  We have seen VR chipsets from Huawei’s (pvt) HiSilicon (pvt), although not in any product as of yet, and we expect there are development projects underway at Mediatek (2454.TT) and others, but there has been little in the way of real competition for Qualcomm, who continues to upgrade its platform every two+ years.  For reference, of the 53 VR headset models released between 2019 and 2022, we have been able to identify 22 chipsets.  Of the 22, all were Qualcomm Snapdragon chipsets.  So far we have seen no other major component in VR headsets come anywhere close to that ratio.  More to follow…

We mentioned in our note yesterday that the hardware focus on Apple’s (AAPL) potential AR/VR products is missing the big picture surrounding the long-term viability of such a product’s ecosystem.  For others, especially smaller companies, AR/VR is a hardware game, and there is considerable competition between VR development teams and companies to provide the latest technology to differentiate their products and justify entering a smaller and likely less robust AR/VR environment.  As we have noted previously, we keep an AR/VR database, separating out those products that have been released from those that have been announced, given that some announced products are still unreleased more than a year after being announced.
One AR/VR product from a Prague based company called VRgineers (pvt), who showed their XTAL 3 Mixed Reality and Virtual Reality headsets at CES, and while both are still in pre-order mode, they have a release date of April 2022, only a few weeks away.  These headsets are the next generation following the company’s XTAL 8K headset released in 2020, with much of the design oriented toward the use of VR headset in pilot training.  While gaming VR headsets do have to meet demanding specifications, VR headsets used in pilot training are a bit more specific in use but more demanding in terms of their ability to interface with physical cockpit training systems, and in the case of the XTAL 8K and XTAL 3 headsets, they were designed in cooperation with the USAF and the Royal Air Force and interface with a wide variety of cockpit simulation hardware and software, something not part of most VR headset specifications.
These are not your typical $500 headsets, as the older XTAL 8K (currently on sale) model sells for $4,800, while the two newer versions sell for $8,900 and $11,500, so they are really at the top end of the AR/VR universe, but also not out of the range of some of the AR headsets that have been developed for industrial use.  That said, they have some interesting features that make them a bit different than other VR headsets and justify the price in the right environment, particularly eye and hand movement tracking and 4K resolution.
A number of VR headsets employ eye tracking, a technique that uses internally mounted cameras to measures the position of a reflection on the cornea of the eye (Fig. 1) (red arrow) against the center of the pupil (blue arrow) and calculates where the user is looking, regardless of head movement.  In most VR systems the data is used to move the user’s field of view in game software, so when the user looks to the side, the game view shifts the same way.  In the VR headsets mentioned above, not only does the eye tracking data re-locate the FOV, but the data is recorded and used to measure how long it takes a pilot to notice something appearing in the periphery, or how often they look at controls or other external objects.  Similar data is collected from controllers that evaluates hand motions and can give insight into how quickly a pilot reacts physically to visual stimuli.
Taking eye tracking out of the aerospace environment and into the Metaverse, eye tracking information can be used to give game developers ways to help you improve your gaming ability.  By tracking where you are looking during a game, the eye tracking information can adjust where you are throwing or shooting to more accurately align the shot.  But eye tracking information also gives clues as to emotion and reaction to various situations, which is the kind of data that can help data collectors build a more accurate model of you in the Metaverse, although when we say model, we don’t mean your avatar but more things like your level of excitement when viewing a new smartphone or piece of clothing, data that helps them ‘improve the user experience’ or in real terms produce a better selling environment.
This is just one small aspect of why on-line data collectors like Facebook (FB) and Google (GOOG) are excited about and promoting the Metaverse.  By increasing the amount of information a user generates, the value of the data is also increased, and while there will be much said about selling virtual real estate and other virtual items that don’t exist in the real world, the game remains the same as it is in the 2 dimensional internet, collect more data and sell it to folks so they can sell more stuff, whether its virtual or physical.

​CES is certainly a place for CE companies to show not only what they sell, but also what they are working on.  In the XR space (combined AR and VR) there are a number of companies, both large and small, that have announced XR headsets but have not quite released them, and by released, we mean a date and price where the devices can be bought by retail customers, not on a future ‘Gofundme’ date or a pre-order book.  One company that we were hoping would be releasing their latest VR headset was Pimax (pvt), a relative small VR development company out of Shanghai.   Pimax has been releasing VR headsets since 2016 with the goal of moving the display resolution to 4K and beyond with each successive model.
Starting in 2016 with a headset containing a single LCD 1920 x 2160 display and ending with the 11/30/20 release of a model (Pimax 5K Super) with a dual LCD display having 2560 x 1440 resolution.  What makes the company unusual is they have been promoting a very high resolution model (Pimax Reality 12K QLED) based on a Mini-LED quantum dot LCD display, that, if we were to believe the promos, would have a single eye resolution of 5760 x 3240 (1200 ppi), far above the highest currently available.  This device also includes a horizontal FOV (Field of View) of 200⁰  and a vertical FOV of 135⁰, with the average VR headset FOV around 100⁰ and the limit of human eye at 220⁰ horizontal and 135⁰ vertical.   Not only would this be a spectacular FOV and highest VR resolution available, it would also have the highest screen refresh rate at 200Hz, making it the all-around best VR headset to date, all of which comes, according to the company, with no image distortion, which is usually the result of expanding FOV.
Unfortunately, after stating that they would have a booth at CES and offering discounts if you buy at the show, they did not show up at CES, citing COVID-19 travel restrictions as the reason, leaving only the hope that this device will not be one of the many that fall months or even years behind the initial announcement date of October 2021.  With expectations for 2022 XR unit volumes to expand by between 55% and 67% and the promise of new AR/VR display technologies such as Micro-OLED and even Micro-LED leading the 2022 charge, we hope others do not fall by the wayside or postpone releases.  As we have noted, for the Metaverse to work, even at a limited level, VR headset technology has to advance quickly, with less hype and more ‘reality’ behind it.  Hopefully there will be less space between announcements and releases with some of the larger companies, although the long-awaited Sony (SNE) Playstation VR2 was again shown at CES but no release date or price was given.