Intel – Spime Wrangler

Those who read this blog are more than likely among the group that shares some level of conviction (maybe not as strongly as I do!) that Augmented Reality is going to be important. We are a small minority, but April 2012 will represent an important historical milestone. Perhaps it is as important as the June 2009 release of Layar's AR browser in terms of demonstrating that AR has traction, has graduated from the laboratory, captured imaginations and will have huge commercial impacts.

In the past three weeks many more people are finally getting to see the signs that indicate how important Augmented Reality will be in the future. The curtain that formerly prevented people from knowing how much investment was truly happening is dropping. Major companies are now following Qualcomm and putting resources into AR.

They are putting "skin in the game" and that's what it takes to convince many (including the mobile pundits such as Tomi Ahonen and Ajit Jaokar) that AR has passed a treshhold. In case you didn't catch it, Tomi posted on his blog, Communities Dominate Brands, on April 11, 2012 (probably the shortest blog he's ever written!) that he has seen the light and he can now believe that AR is the planet's 8th mass medium.

Twenty-eleven was a slow year for AR revenue growth but those who were paying attention could see small signs of the growing captial influx. Intel had already demonstrated its interest in AR by investing in Layar in late 2010 and in Olaworks in early 2007 and expanded its investments (e..g, in Total Immersion). Texas Instruments, Imagination Technologies, ARM, ST Ericsson and Freescale all revealed that they have established programs on their own or in partnership with AR companies to accelerate AR on mobile platforms.

But, with only a few exceptions, these announcements by semiconductor companies were "me too," forced by the apparent (media) successes of Qualcomm's Vuforia and Hewlett Packard's Aurasma. These last two companies have heavily contributed to the media's awareness of mobile AR, but, sadly, also contributed to the perceived image that AR is a gimmick.

We can now pinpoint the catalytic event when AR is taken more seriously: the 9:00 AM PDT April 4, 2012 announcement by Google that confirmed prolific rumors that it is indeed working on see-through head-mounted displays (posted on TechCrunch here). Many jumped to the conclusion that these are AR glasses, although the applications are not, strictly speaking, limited to AR. A blog called Glasses from Google calls them "a new paradigm in computing."

While the figures have not been (and never will be) disclosed by Google, I estimate that the company has already invested well over $4M, approximately ten percent of the entire AR industry revenues in 2011, to get to its current prototype (even one that reboots regularly). And (most likely) without reaching far beyond its internal intellectual properties and a few consultants. Note that, in light of the Project Glass announcement, the Google acquisition of Motorola Mobility for total of about $12.5 billion is very strategic. It surpasses the October 2011 $10 bilion Hewlett Packard acquisition of Autonomy by only a few billion dollars. Very big Skin in the Game.

While the global media has for 15 days steadily reported on and speculated about Project Glass, and the video broke social media records, this is not the only example that there have been and are new investments being made in mobile AR in April 2012. Tiny by financial standards, but significant developments nevertheless, include the Olaworks acquisition, and today Total Immersion has announced that Peter Boutros, a former Walt Disney VP will be its new president. And Google isn't the only company that's working on eyewear for information. For example, Oakley's Apri 17 announcement that it has been working on an eyewear project shouldn't have taken anyone by surprise but managed to make the headlines.

What and who is next?!

And how much skin will the next announcement be worth?

Without strong business cases this second question will be the most difficult to answer and, for this reason, it is a topic to which I have recently written another post.

The Korea Herald is not where I normally get my news. Nor do I regularly visit The Register (whose tag line is "Biting the Hand that Feeds IT"). But today I visited both in order to learn more about Intel's $30.7M acquisition of Olaworks.

In case you are not familiar with it, Olaworks was one of the early companies to dedicate itself first to computer vision (primarily face recognition) and then to apply its intellectual property to solve Augmented Reality challenges. The founder of Olaworks, Dr. Ryu Jung-hee, has been a long-standing friend and colleague and one of the most outgoing Koreans I've met. Ryu has attended at least four out of the past five AR Standards Community meetings and miraculously shows up at other events (e.g., he accepted my invitation to come to the first Mobile Monday Beijing meeting and showcase on the topic of mobile AR, and presented about Olaworks during the first AR in China meeting, one year ago).

Not only am I pleased for Ryu and the 60 employees who work for Olaworks, I'm also impressed that an analyst concluded that one reason for the acquisition might be Olawork's facial recognition technologies. At present LG Electronics, Pantech, and HTC make use of Olawork’s face recognition technology in their phones. Gartner analyst Ken Dulaney told The Reg that Intel’s decision to acquire was probably informed by the growing popularity of face recognition software in the consumer space. In fact, Texas Instruments recently shared with me that they are very proud of the facial recognition performance they have on the OMAP. Face recognition could be used for a lot of different applications (not just AR) when it is embedded into the SoC, as an un-named source suggested might be Intel's intention since Olaworks seems to be heading for integration with another Intel acquisition, Silicon Hive.

Another analyst speculating on the acquisition, Bryan Ma of IDC, sees the move as one of many steps Intel is taking to "prove it’s better than market leader ARM in the mobile space. It has been trying to position Medfield as a better performance processor using the same power consumption as ARM,” he told The Reg. “In the spirit of this it would make sense for Intel to move for technology and apps which can harness that horsepower to differentiate it from ARM.”

I'm not familiar with the Korean investment landscape but it may be important that the Private Equity Korea article on the acquisition makes a point about Intel's acquisition of Olaworks being the first full Korean acquisition the chip giant has made. It seems that we rarely hear about Korean startups in the West and I suspect that one reason is that the most common exit strategy of a young Korean company is acquisition by one of the global handset manufacturers (LG Electronics, HTC, or Samsung), or one of the large network operators. It's perfectly logical, not only from a cultural point of view but also because the Korean mobile market is large and has a long history of having its own national telecommunications standards.

After NTT-DoCoMo's launch of its 3G service in October 2001, the second 3G network to go commercially live was SK Telecom in South Korea on the CDMA2000 1xEV-DO technology in January 2002 (10 years ago). By May 2002 the second South Korean 3G network was launched by KTF on EV-DO and thus the Koreans were the first to see competition among 3G operators.

I hope that the Olaworks exit signals the opening of Korean technology silos and an opportunity for other regions of the world to benefit from the advances the Koreans have managed to make in their controlled 3G network environment.