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The part of the AR ecosystem that we think holds the greatest value in these early days is underlying technology and components. Just like any other hardware-oriented sector, AR glasses have a value chain, and one of its key links is optical systems and display technologies.
This is where Digilens has planted its flag. It’s a market-share leader in waveguide-based displays, which channel light in ways that render line of sight graphics. As CEO Chris Pickett discusses with Jason McDowall on The AR Show, this involves several business and technological choices.
For example, one of the barriers in consumer AR glasses is that its a device meant to go on someone’s face. And that’s an inherent challenge from both marketing and technological perspectives. Capability is in conflict with style as specs are inexorably tied to hardware bulk.
With that key challenge in mind, Pickett believes that a waveguide-based approach to smart glasses is the shorter path to consumer acceptance. Compared with alternate approaches like passthrough video, it’s more conducive to near-term hardware that’s lighter and stylistically viable.
People have big egos. When they put something on their face, they want it to be stylish… So when I look at displays for smart glasses, there’s a fair number of types of displays. I think waveguides are the only ones that will eventually be able to actually make at least the jump to a consumer product. Because ultimately, waveguides take the light from the projector system and the display panel and manipulate it in a thin sheet of glass or potentially plastic, and then present that to the eye of the user. So ultimately, it looks like glasses that you would have on your face anyway… whereas a lot of other technologies that people are using are much bulkier… and I don’t actually think that’s going to be adopted in a mass market way.
Beyond the matter of waveguides versus other approaches, waveguide fabrication and materials are subdivided into additional choices. After firm vetting and years of perspective (and market validation), Pickett believes that Digilens’ photopolymer approach has a competitive edge.
Typically, there are three basic approaches… and each of the approaches essentially takes a light source, captures it within a thin sheet of glass or plastic, manipulates that light in a way that then reflects it into the eye and makes the information appear projected at a distance. So there are beam splitters in waveguides and those pretty good for certain applications. There’s something called surface-relief gratings, which is essentially a diffraction grating. It’s etched directly onto the surface of a sheet of glass. It’s a semiconductor process, done with semiconductor equipment. And then there’s what we do, which is the use of photopolymer material that essentially through an exposure step, reacts to that the light that’s exposing it, and self assembles into a brag grading, which is a different type of grading that used in fiber optics… it’s extremely efficient at transferring the light from one point to another. And because we use a photopolymer approach, we don’t have to etch the surface of glass and use a semiconductor process and it puts us into a wholly different lower cost.
Another key choice is business model and positioning within the value chain. There, Pickett is a big believer in best of breed specialization and licensing, rather than trying to do everything from design to manufacturing. This traces back to his early-career work at Tessera Technologies.
Translated to Digilens’ current model, it creates a technology suite for building waveguide lenses, which it licenses to AR glasses makers. That lets it do what it does best while avoiding non-core competencies like manufacturing. It’s the classic “teach a man (or woman) to fish” approach.
Licensing about doing what you do best and allowing the people you interact with to do what they do best… We’re licensing a full suite of technology that will allow [our customers] to make and design waveguides themselves for their customers. That starts with our photopolymer material… combined with a process and machinery that puts the photopolymer down and builds the waveguide. We also have software that designs the elements within the waveguide to manipulate light, and to model the performance in the construction of those waveguides…I liken it to teaching them to fish, instead of giving them a fish.
Moving from the underlying technology to its application, Pickett too often sees companies make the mistake of dwelling on generic specs versus a clear vision for end-user experience. This puts the cart before the horse, as use case goals should come first… then work backward from there.
When we look at customers, Niantic as a potential customer is exactly the right type of customer that we like to see. We like to see customers that know and experience the user experience, as opposed to customers that come to us with specs for field of view or resolution… I don’t actually think those customers are mature enough to know what they want yet. Whereas a customer like Niantic starts with the end experience… how do we work backward and deliver that experience? That seems to be the right approach.
Speaking of Niantic, it’s an investor in Digilens. In fact, the company is fortunate to not only have a substantial batch of A-list investors (and a recent $50M C round), but strategic ones as opposed to venture investors. Pickett sees this as smart money, given Digilens’ strategic needs at this stage.
The thinking is to bring in those customers that are leaders in their respective areas and give them a reason to be successful when we’re successful. So as we deliver on the technology, then they can then deliver on the volume, we both win. And really, at this stage of the company, a venture investor doesn’t bring that same sort of value. Your investor does bring you money, and they bring contacts and relationships. And those are valuable. But a strategic investor that is a leader in the field typically knows exactly what the end application should look like. And they can help you accelerate to that point… And that ultimately means accelerating to revenue.
As for where things are headed next from the vantage point of an industry insider like Pickett, a lot will be determined by what Apple ends up doing. This isn’t just because of its halo effect on consumer demand, but for the common standards it will set… like it did with iPhone and iOS.
Everybody has looked at Apple in some sense to lead the way, because they have a closed garden system where they provide the entire experience. And in mobile, for quite some time people looked at what they did and iterated on that. We really need that type of leader to provide hardware and a way for the software to interact smoothly. So you see a number of different companies trying to do that: Microsoft clearly with HoloLens; Magic Leap clearly with Magic Leap One. Everybody thinks Apple will come out with something at some point, and I think that’s probably true. You need those types of things so that other people can build around standards.
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