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Smart Glasses Boom Means New Business for Optical Components and Sensor

Makers

“Smart glasses” are the most characteristic product that has emerged from the wearable

computing “revolution.” They embody many of the communications capabilities of the

smartphone (which they may one day replace) along with additional visual and other sense

enhancements. They are also seen as a critical enabling technology for augmented reality.

The current poster child for smart glasses is Google’s “Glass” product, but there are more

than 20 firms offering smart glasses—or planning to do so.

Although early users of smart glasses buy them because they are “cool,” the primary selling

feature of smart glasses—the one that is supposed to turn them into a mass-market

consumer item—is their ability to display video, navigation, messaging, augmented reality

(AR) applications, and games on a large virtual screen, all completely hands free. This is

essentially the advantage that smart glasses (and wearables more generally) could

ultimately have over smartphones.

Assuming that the smart glasses concept takes off, NanoMarkets believes that it will open

up significant business opportunities for suppliers of components and subsystems ranging

from optical and audio devices, through sensors to processors of various kinds. These

opportunities are of two types, which we will call “volume sales” and “value-added.” We

profile these below.

Optical Subsystems: First in the Value Chain

Smart glasses are optical systems using cameras, lenses and displays. An important part

of the competition in the smart glasses, currently focuses on the optical subsystems that

distribute optical signals within the smart glasses system. This is because these optical

subsystems sit at the core of smart glasses products and define their most important

characteristics—size of image, color quality, resolution and even the aesthetics the glasses

themselves.

Importance of visual experience: NanoMarkets believes that there are many ways that

optical subsystems for will succeed in the marketplace. As we see it, a key factor will be in

terms of visual experience, most notably how big the display appears to the viewer.

The reason is that a “virtual” large screen provides a factor that dramatically distinguishes

how a pair of smart glasses looks and feels to the user from what that user would get with

a smart phone. This may be defined in terms of the field of view or how big the screen

appears to a user, as well as the resolution of the display.

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Two Types of Opportunity for Components and Subsystems Makers in the Smart Glasses Space Volume Sales Value-Added Subsystems

Nature of opportunity

If smart glasses ever take over from smartphones as primary mobile platform, it will create demand for billions of components

Components and subsystems makers have an opportunity to create subsystems that they can sell to smart glasses OEMs

Products Numerous types of components including audio and optical devices as well as sensors and mobile processors

Primary integrated sensor environments and optical subsystems that distribute optical signals within the smart glasses

Profitability Low. These are commodity components we are talking about.

Potential high. Value-added subsystems have high margins

Who benefits most

Makers of solid-state cameras, tracking sensors and other components that are used more by smart glasses than by smart phones. These firms have a differential advantage if there is a switch from smartphones to smart glasses

Many of the suppliers are likely to be based in China for the foreseeable future

Manufacturers of subsystems because they can access some of the value created by the smart glasses revolution

Smart glasses OEMs, because it lets them focus on the very expensive process of marketing a consumer electronics item. Important especially to OEMs that are smaller and do not have the resources of a Google or Apple

Keys to success Existing ties to major OEMs. Low prices.

Ties to OEMs. High performance/price ratio

Uncertainties Who these major OEMs are going to be and what capabilities they will emphasize

Same as with volume sales, but also the willingness of OEMs to utilize third parties for strategically important devices and modules

What else Many of the components will be the same as in smartphones, so for some components total demand may not change all that much if consumers move to smart glasses

Many of the factors on which smart glasses compete such as quality of the visual experience and motion tracking are directly related to the performance and capabilities of optical and sensing subsystems, giving

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these modules particular strategic significance

Current status Most smart glasses OEMs seem to be buying off-the-shelf components and few components makers are targeting the smart glasses sector

Currently, smart glasses OEMs mostly use off-the-shelf components and create their own “secret sauce” optical subsystems and sensor environments according to their views of price/ performance capabilities and user requirements. There has been some licensing of technologies by OEMs, however.

Source: NanoMarkets, LC

Aesthetics of optical subsystems: We also think the aesthetics of smart glasses will be

an important competitive factor for optical subsystems, since the choice of this subsystem

can impact how the glasses look when worn.

This is important because spectacles—smart or not—are articles of clothing and the

general consensus is that the current generation of smart glasses—Google Glass in

particular—look strange when they are worn. There is therefore a premium on any optical

subsystem that can improve the appearance of smart glasses by, for example, pushing

some of the electronics to the front or side of the head.

Emergence of the smart glasses opportunity for makers of optical subsystems: We

think that all of this puts the makers of optical subsystems in an excellent position to capture

an important share of the value inherent in smart glasses. Competition in this part of the

smart glasses business is currently along two dimensions:

Rival technologies. Both curved mirror and several kinds of waveguide technology

have been tried over the years (See Exhibit) None are completely satisfactory. We

note that the mindshare leader, Google Glass has adopted a mirror-based

approach, giving mirrors a kind of prominence. But there is no guarantee that

Google will continue with its current approach and NanoMarkets believes we are at

an early enough stage that a start-up could quickly generate large revenues (and

attract significant investment) by “building a better mousetrap,” that is, a smaller

firm could come up with a smart glasses technology which ultimately dominates the

market.

Internal versus external development. The optical subsystems currently being

used in smart glasses have often been developed internally by the smart glasses

makers themselves, although in some cases they have licensed the technology from

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third parties. NanoMarkets expects to see more such licensing with the strong

possibility that independent third-party developers of optical subsystems may

emerge. These firms could sell profitably to OEMs, but would not themselves have

to become involved with mass consumer marketing

Optical Subsystem Technologies for Smart Glasses

Technology Technology Selected OEMs Using Technology

Disadvantages

Mirror Curved, semi-transparent mirror

Google, Vuzix, Olympus, Laster Technologies

Light loss and distortion that needs to be corrected electronically

Diffraction optics Slanted diffraction gratings Nokia licensed to Vuzix Color non-uniformity and manufacturing issues

Holographic optics

Holographic optical elements sandwiched together

Sony, Konica Minolta Intrinsically limited in terms of field-of-view

Polarized optics Multilayer-coated polarized reflectors in glass sandwich

Lumus Expensive—not suited for consumer glasses

Reflective optics

“Clear Vu” waveguide made from thin monolithic molded plastic with surface reflectors and conventional coatings

Optinvent Thick waveguide

Thick light guide with single semi-reflective mirror

Epson

Switchable waveguide SG Labs

Virtual retinal display

Projects a raster image directly onto the eye

Early stage technology also known as retinal projector and retinal scan display

Source: NanoMarkets, LC

Sensors for Smart Glasses: Volume Opportunity and Beyond

Many kinds of sensors are already being used in smart glasses. These include time-of-

flight sensors, accelerometers, gyroscopes, compasses, image sensors, thermometers,

GPS, pressure and touch sensors, as well as medical and biosensors of various kinds. As

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far as NanoMarkets can tell, today smart glasses OEMs are simply buying off-the-shelf

sensor components.

As discussed at the beginning of this Chapter, there is an immediate volume opportunity

for sensors as the smart glasses concept begins to take off. But NanoMarkets believes

there is also potential for more profitable higher value-added products aimed at the same

market. Subsystems embodying complex environments have become possible primarily

because the ongoing LSI advances associated with Moore’s Law, which have made it

practical to integrate MCUs, signal processors, sensors, amplifiers and wireless interfaces

into something as small and flimsy as a pair of spectacles.

Sensor fusion and sensor subsystems: “Sensor fusion” has become a hot topic within

the sensor community and refers to the subsystems that combine data from different kinds

of sensors to provide information that is more accurate, more complete, and/or more

dependable than is obtainable from individual sensors.

At one level almost all smart glasses use sensor fusion, since they provide stereoscopic

vision by combining the data from two or more image sensors/cameras at different

locations. However, NanoMarkets believes that the potential for sensor fusion in the

context of smart glasses has only just begun to be explored and opens up important

opportunities for industrial designers to distinguish smart glasses products in the market.

Communications modules and access to remote sensors: NanoMarkets believes that

a more immediate opportunity for sensor subsystems will emerge as the result of a need

to connect with external sensors or to send data from wearable sensors to remote

processors—for example to a remote site such as a hospital server for further clinical

analysis.

Again, exactly how these subsystems may be developed in the context of smart glasses

are unclear and will be a matter for future industrial designers. However, the processor

electronics necessary for such subsystems are well advanced (possibly more so than for

sensor fusion subsystems) as are various appropriate communications protocols—most

notably ZigBee.

NanoMarkets also thinks that what may prove to be a key enabler for this type of sensor

subsystem is/will be cloud technology. Not only will cloud technology make it easy for smart

glasses to access remote sensors, but cloud computing will enable the sensing software

in smart glasses to be easily upgraded without the need for user installation of software in

their monitoring devices, which makes it easier and cheaper to maintain the health

monitoring system networks.

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Control of wearable sensors from a smartphone: A related concept—and perhaps a

more immediate one—is a subsystem that provides connectivity between smartphones

and smart glasses and other wearable electronics. In fact, some early smart glasses are

specifically designed to work with smart phones. This somewhat refutes the notion that

smartphones and smart glasses are in competition, although we think they will be in the

long run, for now the situation is more fluid.

As an illustration of where we are now in terms of such opportunities, consider three

recently published U.S. patent applications from Apple. These cover a method in which an

iPhone 5, along with one or more remote wearable sensors, gathers and processes raw

data to track a user's activity level, as well as control certain scheduling functions like

alarms. After processing the data from the wearable, the iPhone can deduce what the user

is doing—running, walking, sleeping, etc. and provide information on the user's lifestyle

and perhaps more. This is also an example of sensor fusion.

NanoMarkets believes that all the business opportunities profiled above will be realized in

the next five to eight years. However, strategic plans designed to capture this potential

should be seen in the context of the fact that the evolution of smart glasses is at a very

early stage at the present time. No one can be sure that any particular current product line

or smart glasses company will survive for long; presumably many will not. In addition,

smart glasses compete at some level with the capabilities provided by the Internet-of-

Things (IoT). The balance among the IoT, wearable computing, and conventional

smartphone/tablet computing has yet to be worked out by the marketplace.

The information contained in this article was drawn from the NanoMarkets report,

Smart Glasses: Component and Technology Markets: 2014

See more at: http://nanomarkets.net/market_reports/report/smart-glasses-component-and-

technology-markets-2014