Vuzix Corp. sees future in augmented reality
ROCHESTER, N.Y. — If this year has been a turning point for wearable technology, next year should be when it really takes off for a Henrietta-based company.
Vuzix Corp. kicked off 2015 by being listed on the NASDAQ and then announced a nearly $25 million investment from Intel for 30% of its stock. Roughly 11 months later, the company is moving into an approximately 30,000-square-foot facility with a stronger cash flow and better share prices despite higher operating expenses and some challenges in the marketplace for smartglasses, a wearable computer that adds information to what the user sees.
When Vuzix returns in about six weeks to the annual International Consumer Electronics Show in Las Vegas, it'll do so with eight awards from the electronics and technology trade show, including one of its coveted innovation awards. More than 3,600 exhibitors and about 170,000 people attended the show last year.
"This business is finally starting to happen," said Paul Travers, CEO and president. "Wearable technology is here to stay, and when you think about what you can do with a wearable pair of glasses that can connect the cloud to the real world, it really is game-changing stuff."
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Vuzix has been ramping up production of its Android-based M100 Smart Glasses to commercial customers, and is taking orders for its wireless iWear video headphones expected to hit the market sometime next year.
The company's efforts come with industry analysts expecting 2016 to be a turning point for augmented and virtual reality smartglasses, an industry expected to grow annually by approximately 75% through 2020, according to ABI Research.
The technology market research firm projects 21 million units of augmented reality smartglasses, which includes Vuzix's M100, being shipped in 2020. Total sales are expected to reach roughly $100 billion, with products being purchased mostly for health care and general business use, and to a much lesser extent in gaming and retail. Investors from Morgan Stanley also have said 2016 will be an turning point for augmented reality smartglasses.
Companies with a history of adopting new technology are expected to drive demand, Eric Abbruzzese, a research analyst with ABI Research, said in a recent report.
Vuzix Corp., which was founded nearly 20 years ago in Travers' basement, is already operating in several of those industries.
Travers is one of a number of former Eastman Kodak Co. workers who set out on his own by starting his company. The Clarkson University engineer graduate founded e-Tek Labs Inc. and Forte Technology Inc. before launching Vuzix Corp in 1997.
The company started to turn out virtual reality headsets that were large and unwieldy and couldn't deliver an optimal experience to gamers and commercial users. It left company engineers scratching their heads over several questions.
How does a gamer move in a first-person shooter? How do engineers solve the disorientating feeling when the eye sees movement that's not felt by other parts of the body? How do you prevent users from feeling nauseous?
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"If you move too fast, you've got to grab the table to keep your balance — that is not an easy one to fix," said Travers.
So Vuzix set out to develop smartglasses using wave-guide optics that combine virtual information into the real world, otherwise known as augmented reality.
It targeted other companies that could adopt the smartglasses with their own augmented software, including:
• Warehouse workers at German-based DHL Express who use the smartglasses to read bar codes on boxes. The smartglasses then relay information about the contents of the box and where it should go to help ship products more efficiently.
• Hewlett-Packard uses smartglasses for remote maintenance, where an offsite technician can relay information through the glasses on how to fix a product.
• Tennessee-based health care technology company Octovis Inc. partnered with Vuzixto allow health care professionals to assess critical information remotely, allowing for a determination if emergency care is needed.
• French airliner maker Airbus uses the smartglasses for final assembly of its cabins and seating to help reduce production errors and time spent building aircraft, said Benoit Rollin of Airbus.
"These are just some examples of what life is going to be like in the future and when you see these things, you are not going to want to go back to your phone," Travers said. "It's computing and communications colliding with the Web and the real world in a different way that's completely going to change the way things are looked at."
He said users eventually will be able to put on a pair of smartglasses at home to see what it looks like from the 50-yard line of a football game. "People would pay for that experience for an hour or two, I believe," Travers added.
Shares of Vuzix have increased nearly 30% from the beginning of the year, starting at $4.21 a share on Jan. 2 and closing at $6 on Monday. Shares peaked at $7.20 in January after the investment from Intel.
"The growth of wearable technology is creating a new playing field for innovation, and Vuzix's expertise in the design and production of wave-guide optics positions them well to compete in the emerging smart eyewear segment," Intel said in a statement on Monday. "This investment underscores Intel's goal of accelerating the market for wearable computing, and will help Vuzix move more quickly in developing its next generation smart glasses platform."
Vuzix's new facility on Thruway Park Drive is Henrietta is designed to help the firm produce as many as 5 million units in a year in its effort to counter mounting competition. Everyone knows about Google Glass, but a variety of other companies also are trying to break through. For instance, Microsoft and Volvo are developing HoloLens, an augmented-reality goggles for car demonstrations, customizations and test drives.
Vuzix has promised to add 47 new jobs in the next three years for receiving about $213,000 in various tax exemptions earlier this year for its new plant from the County of Monroe Industrial Development Agency. The facility, which includes research, development, manufacturing and other spaces, is meant to hold about 100 workers. The company also has options to buy other nearby space if it becomes available, Travers said.
While Vuzix reported higher losses from operations in its quarter ending on Sept. 30 compared to a year earlier, it also finished the quarter with significantly higher cash or cash equivalent on hand in that quarter compared to its entire 2014 fiscal year.
Losses were roughly $2.3 million in the latest quarter compared to $1.27 million a year earlier, according to the firm's quarterly results. Still, it ended the quarter with about $16 million cash and cash equivalent, compared to nearly $85,000 at the end of 2014. Sales in its third quarter were up about 30%. Its M100 Smart Glasses sell for $999. A related software development kit lists for $199.
Travers said users will be able to use its smartglasses for hands-free mapping, photo and video recording, computing, text messaging, voice recognition and more. Its iWear Video Headphones, which comes in a wireless model, is set to go to market next year.
"This stuff has the possibility to change completely how people communicate," Travers said. "It's commuting and communications colliding with the web and the real world in a different way that's completely going to change the way things are looked at."
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