Recently Snap dropped on us their new dev version of AR glasses. There was not much on specs, save 2000 nits (1000 per eye I guess) waveguide displays. Since its tethered I would guess its pretty much following most of the other AR glasses I have seen pop up based on the QC chip.
However, what was really interesting to me what the announcement from Snap the following day. $500M purchase of WaveOptics. This was a signal to me.

Typically announcements like the Snap DK glasses, or Lenovo, or even the Niantic announcement always feel like a soft foot in. Basically trying to gauge interest while at the same time work with developers to create content, but more importantly, shake out the bugs in the wearable as well as eco system for an AR experience be it a hardware, software, or eco system play.

M&A, however, always catches my attention. Yes companies like Apple and Facebook are buying companies left and right, however, when those companies that are not quite as washed in cash start spending, that tells me something.

I have been around for a while, seen the first great transformations, and thus VR bubbles, in the late nineties, and again back around 2016’ish. And after both great leaps in XR capability, it always seem to follow a hype that XR will explode on the market.

ABI Research Reports $2 Billion+ in Funding and M&A for AR/VR

Although I do not believe we will see growth like this prediction above, something I do believe is the market will grow, and in 2025’ish we will see a 3rd revolution in XR systems. I’m not the only one who sees this, in fact, its somewhat expected 2025 will be when we really see AR glasses. Eco systems are already being built and developers being invited in. Its 2025 and after that I think we will see a change in consumer habits and substantial market opportunities.

So returning to why I think Snaps purchase of WaveOptics is so interesting. To compete in the new AR market, you need 3 things: Experience delivery. In this case, light weight attractive glasses. Content. Simply having a few cool apps is not going to do it. You need just as much content as we have on our phones today. Finally, users. Does not matter how good your system is, if you do not have a user base ready to consume it.

The last two takes quite a bit of investment unless you already have access to the phone (be it Apple, Google, or a major platform player like Microsoft, or a major phone manufacture). So hardware is the 3rd part where you can make a play to create content for your eco system and hopefully build a user base. Snap has already tried this with their first foray in to camera only glasses. Didn’t work out all that well. But the concept is still sound. If you own the hardware for display and/or input, you have at least some control over the content created for AR consumption, be it wearable or currently, phone based. Thus the investment in WaveOptics.

Snap has a very good customer base. Its apps are popular. So if they can also create a good set of glasses that enhance the particular content that its use base already enjoys, it can find itself well positioned to insure its apps are part of any AR eco system in the future. And that is the key here. The future play. As we move into a new eco system that is part phone and AR glasses based, how do you insure relevancy?

$500M is no small M&A. Snap is betting that they can get enough glasses out there to insure content for their eco system is sustained. This current device is clearly a DK, but you do not drop .5B on a company unless you plan to build future devices.

In the future, near future, there will be an interesting battle of eco systems. Open system and closed. Apple will create a closed system as we can already guess. Niantic is creating a metaverse, as is Nvidia for engineers, as is Epic which just raised $1B for this effort. However, if AR Glasses can talk to phones like Bluetooth devices can, then the question will be, how do these glasses consume content and access these various metaverses? If for example, Google creates a protocol to allow any wearable AR device to access and display phone content, then those apps that are already matured for the AR wearable market will have a substantial advantage over other apps, and in fact, will find they can grow and capture new users with features that other apps that are not already matured may find themselves displaced. Those apps in turn, can decide which metaverse(s) to support.

This I can see being worth a .5B investment.

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