Welcome to the Virtual Reality Revolution
Virtual reality is set to become the tech investment story of 2016 — maybe even the decade. My visit to this year’s Consumer Electronics Show offered all the proof I needed.
Investors, however, remain unconvinced. And that’s great news for you, because it means you can still buy some of the top names in this burgeoning field at great prices.
It is only a matter of time before these companies announce bank-busting profits and Wall Street wakes up to these stocks’ oversized growth potential. When they do, you’ll already be in line for the kind of profits that only early-stage tech investors ever enjoy.
The term “virtual reality” (VR) has been thrown around for decades. It refers to technology that can immerse you into imaginary, yet lifelike, experiences. In the broadest sense, it includes things like simulator machines — like the true-to-life mock-ups of airplanes that pilots can train on without risking an actual aircraft.
But starting in the late 1980s or so, there was a growing interest in creating a more personal and immersive style of VR. Using a helmet that positions video screens over your eyes, all you’d see is a computer-generated world. Through motion sensors in the helmet or controllers in your hands, you could look around your environment just as you would in the real world.
Science fiction quickly latched on the idea. In 1992, it inspired the sci-fi horror flick The Lawnmower Man, where VR headset-wearing test subjects are turned into evil geniuses. In 1999’s big sci-fi flick, The Matrix, humans are enslaved by machines and spend entire lives living in a sort of virtual reality.
In the real world, however, the actual technology didn’t quite live up to the hype. For years, VR headsets were bulky and uncomfortable. The graphics were blocky and unconvincing. And the equipment required to generate these digital worlds took up a lot of space… and cost far more than consumers would be willing to spend.
What has been sorely needed is the “smartphone” of virtual reality devices a device that is cheap enough to become a consumer platform. Once a device like this reaches a critical mass, great numbers of new killer apps will emerge that will exploit the capabilities enabled by VR technology.
What kinds of capabilities?
Truly immersive entertainment, for example. Imagine watching a live event and feeling almost like you are there. Not only 3-D realism and high-resolution images, but being able to turn your head and look around to your sides or behind you. Watching a concert or sporting event would never be the same again.
And what about movies with full 360-degree, 3-D capabilities? GoPro and others are already working on the camera technology to do this. The director of The Lawnmower Man, Brett Leonard, isn’t looking into making movies about virtual reality anymore. He’s looking into making them in virtual reality. “I made a movie about it over 20 years ago. Now it’s at a point where it truly can become real… which is ironic, given that it’s virtual reality.”
Or what about being able to capture moments of your own life in virtual reality? Imagine recording them in a fully immersive, realistic way. You get to relive your wedding or your child’s birth all over again in a way so hyper-real you feel like you are there again.
Isn’t that what photos with your family are? A way to travel back in time to a special moment you captured? We’ve been taking pictures and recording video for ages, but imagine capturing moments so realistically you feel like you’ve traveled back through time.
Our productivity in other areas could be greatly improved. A VR environment could help speed 3-D modeling and design in engineering and creative applications.
VR simulators could also be used for skills training. It’s already been done for years in many areas using expensive tech. But cheap VR would make it available to everyone.
It could put a dent in the cost of a college education. Online learning is already gathering steam, especially with innovators like Sal Khan at the Khan Academy or other free courses like those of MIT’s MITx. But VR would make them even better. Any number of students could tune in to a course from some of the world’s greatest teachers in all of its realistic glory.
Imagine being able to talk to a virtual William Shakespeare… observe ultra-realistic dinosaurs in their native environment… explore King Tut’s tomb, either as looked when it was rediscovered in the 1920s or as it appeared when he was first buried!
The learning potential isn’t just a high-tech field trip. A company called Learn Immersive is developing software that uses VR to help you learn a new language. Right now you can just walk through a digital environment featuring everyday objects labelled in a foreign language. But it’s not hard to imagine the software improving the point where you can have a conversation with a virtual native speaker that’s almost as good as actually visiting the country itself.
And of course, dedicated computer gamers are always looking to improve their experiences. They spend top dollar on the latest hardware to not only have a competitive edge when they game but to also have the most immersive experience possible.
On top of virtual reality, there’s a market for augmenting our view of the world. It combines virtual reality with the real world. It’s called, as you might have guessed, augmented reality. VR’s cousin, it’s like a heads-up display used by fighter pilots. The best-known example in this space is Google’s Glass, which is still in development. But it won’t be the only augmented reality device on the market. Like VR, augmented reality has too many potential applications to ignore.
Imagine looking at an object and instantly receiving information about it. Go to a museum and have information presented when you look at a display… or look at a storefront and see what’s on sale inside. What about a heart surgeon seeing a 3-D image of what lies beneath superimposed on his field of view? That last example has already happened… doctors in Poland created a 3-d image of a patient’s artery using Google Glass and used it to clear a blockage.
The potential market for VR and AR is huge. One market analysis predicts it will be as large as $5.2 billion by 2018. Another believes VR and AR markets will grow as large as $150 billion by 2020.
It may sound far-fetched… but the history of another widely used technology tells me that it’s not. In fact, if VR follows this tech’s example, 2016 will be the year it really takes off.
The example I have in mind is the smartphone industry…
The idea of mobile phones with Internet capabilities had been around since the 1970s or so, but the first Internet-capable cell phones didn’t hit the markets until the 1990s. By and large, they were terrible — incredibly expensive with limited functionality. Even Apple got into the action, releasing a device called the Newton in 1993. It was discontinued after just five years.
The reason these devices couldn’t gain traction is simple — the technology simply wasn’t advanced enough to be worthwhile.
Less than a decade after Apple pulled Newtons from the shelves, Apple’s engineers finally had the tools to make a useful, super-mobile computer and communications device a reality for hundreds of millions of people. In June 2007, it released the iPhone to great acclaim. And other companies rushed to get their own smartphones on the market.
The smartphone market saw sales of $276 billion last year alone. That’s just phones. Units sold per year have increased by 10-fold since 2007.
And as smartphones started going mainstream, Apple shareholders have been greatly rewarded. AAPL shares are up 580% or so since it started selling iPhones.
All because technology finally became available to enable the vision.
I believe we have reached that moment with virtual reality today. The technology is finally ready. The pieces necessary to create virtual world in 3-D with exquisite 360-degree detail have fallen into place.
It’s more than just headsets. Like I said, those have been around for decades. The limiting factor has been the software that delivers the lifelike experience. The computer must redraw every moving element rendered on the screen, so you need a high number of frames of per second to make it work.
You also need very low latency, meaning that when you move your head or interface with the VR in some way, the feedback comes extremely fast. This isn’t just important for a realistic experience. A bad VR experience can make you nauseous and sick.
Up until now, then, the thing holding VR back was the lack of a graphics processing unit (GPU) powerful enough to create a realistic virtual environment and the ability to interact with the virtual environment in a realistic way. Both of those hurdles have been jumped, as my trip to the 2016 Consumer Electronics Show (CES) in Las Vegas proved.
The CES is a place for manufacturers to show off their latest electronic innovations. And this year, VR tech was everywhere.
One of the stars of the show was the Oculus booth, where huge lines of people waited to demo the company’s Rift headset. You may recall that Facebook’s Mark Zuckerberg gave Oculus $2 billion to help bring this product to market because he thinks this tech trend will be the next big thing after mobile computing. Now Oculus’ headset is on the verge of shipping out, meaning it will be in consumers’ hands soon.
But that’s not all — because even non-VR companies were using the tech as a way to give visitors a way to interact with their displays. Last year, if an automaker wanted to give you a virtual tour of a concept car, you were handed a tablet. This year, you are wearing a VR headset.
The use cases for this technology seem to be inexhaustible. I can see it being used in everything from logistics to health care to more.
In fact, a few months back, CNN reported that Google’s Cardboard headset — a relatively cheap and simple VR solution — enabled a surgeon to visualize how to operate on a newborn baby girl who was missing a lung and half her heart. By interacting with a scan of the baby’s chest, he was able figure out how to operate on her with minimal damage, as well as what needed to be done to improve her heart’s ability to pump blood.
Microsoft, Samsung, HTC, Sony and others are also working on their first VR consumer products. Some models will become available as early as the end of this year.
With so many VR is ready to hit the big-time, just like smartphones did. In fact, since VR applications hold so much more potential than smartphones, it could prove to be the most lucrative tech story of the century.
Major media outlets are already spreading the word, with VR stories appearing in The New York Times, The Atlantic, Time magazine and more over the past 12 months. So the time left to act is now.
After two years of digging, dozens of meetings, and 11,000 air, miles… my research tells ,e This is the biggest story of 2016 and perhaps the next decade.
And while all of the companies I mentioned will benefit nicely from this new tech, I believe some smaller companies stand to make even more. They’re quietly working behind the scenes, creating the next-gen technology that makes VR finally worthwhile to consumers.
That means I expect their profits to skyrocket over the next 12 months and beyond… taking their shares higher as a result. I’ve put together this free presentation to help you learn about the three investments that will take you along for the ride.
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