We’ve written extensively about LG’s struggling mobile business, which has suffered at the hands of aggressive Chinese Android makers, and now that unit has dragged its parent company into posting its first quarterly loss for two years. The Korean electronics giant is generally in good health — it posted a $2.4 billion profit for 2018 […]
We’ve written extensively about LG’s struggling mobile business, which has suffered at the hands of aggressive Chinese Android makers, and now that unit has dragged its parent company into posting its first quarterly loss for two years.
The Korean electronics giant is generally in good health — it posted a $2.4 billion profit for 2018 — but its smartphone business’s failings saw it post a loss in Q4 2018, its first quarterly negative since Q4 2016.
Overall, the company posted a KRW 75.7 billion ($67.1 million) operating loss as revenue slid seven percent year-on-year to KRW 15.77 trillion ($13.99 billion). LG said the change was “primarily due to lower sales of mobile products.”
Over the full year, LG Mobile posted a $700 million loss (KRW 790.1 billion) but the company claimed things are improving thanks to “better material cost controls and overhead efficiencies based on the company’s platform modularization strategy.”
LG used CES to showcase a range of home entertainment products — that division is doing far better than mobile, with a record annual profit of $1.35 billion in 2018 — so we’ll have to wait until Mobile World Congress in February to see exactly what LG has in mind. Already, though, we have a suggestion and it isn’t exactly set-the-world-on-fire stuff.
“LG’s mobile division will push 5G products and smartphones featuring different form factors while focusing on key markets where the LG brand remains strong,” the company said in a statement.
It will certainly take something very special to turn things around. It seems more likely that LG Mobile head Brian Kwon — who also heads up that hugely-profitable home entertainment business — will focus on cutting costs and squeezing out the few sweet spots left. Continued losses, particularly against success from other units, might eventually see LG shutter its mobile business.
Vive has seemed to be devoting a lot of attention to the enterprise, but the company teased their new consumer VR headset called the Vive Cosmos at CES today. The positionally-tracked headset boasts tracked hand controllers and can be interestingly be powered via PC or “other methods,” making it the first in a new class […]
Vive has seemed to be devoting a lot of attention to the enterprise, but the company teased their new consumer VR headset called the Vive Cosmos at CES today. The positionally-tracked headset boasts tracked hand controllers and can be interestingly be powered via PC or “other methods,” making it the first in a new class of hybrid VR headsets.
The consumer market is going to be a tough one for HTC to hold onto. The company’s original HTC Vive garnered a lot of early excitement, but a series of aggressive price cuts from Facebook’s Oculus forced the company into a rough spot trying to find hardware margins in the less price-sensitive enterprise market. The company can’t really compete on the same playing field as Oculus as Facebook ships hardware at seemingly break-even prices, HTC’s move seems to therefore sell products that Facebook wouldn’t make in the first place.
What’s interesting is that HTC is relying on embedded inside-out tracking technology for this device, essentially removing SteamVR — Valve’s highly-accurate tracking tech — from the equation. This could be a big risk to HTC, as their main consumer market seems to be those looking to push high-end experiences and the alignment with Valve and SteamVR has been a big selling point there. The Vive Cosmos will run HTC’s new ViveRS operating system.
It’s unclear what kind of onboard compute will be available and how exactly the device is powered besides a PC connection.
What’s really going to matter is implementation and what kind of experiences without a PC. If the company can eek out performance that enables headset and controller positionally-tracked experiences on the device without a PC connection, they’d have something that could potentially be an interesting challenger to the $399 Oculus Quest, though it would assumedly operate at a much higher price point.
There’s still a lot we don’t know like specs, price or release date. More info will be available “in the coming months,” according to the company.
HTC is giving its high-end enterprise-focused Vive Pro VR headset a feature bump in the next few months that’s focused on eye-tracking. The company has certainly been having some financial struggles recently, those issues have seemed to force the company to more firmly fix its VR efforts on enterprise markets while loosely aiming to court […]
HTC is giving its high-end enterprise-focused Vive Pro VR headset a feature bump in the next few months that’s focused on eye-tracking.
The company has certainly been having some financial struggles recently, those issues have seemed to force the company to more firmly fix its VR efforts on enterprise markets while loosely aiming to court consumers that aren’t scared away by the higher price point.
What does eye-tracking in a VR headset enable? Well, a few things actually. The most talked about technology is called foveated rendering which basically aims to reduce how much of a VR scene one’s computer has to render at full resolution by tracking where your gaze is. This can greatly reduce system requirements if you’re sporting headsets with insanely high resolutions. It doesn’t seem like this is the focus of this HTC product — at least right now — rather HTC seems to be focusing on utilizing eye-tracking as an input method for making quicker menu selections.
It’s certainly a nice thing to have in a headset, and something that has long been expected to be an included feature in next-gen headsets. HTC’s standard Vive actually had support for an eye-tracking add-on from a ViveX portfolio company called 7invensun. That being said, eye-tracking that isn’t being used to support a ludicrously high-res display probably isn’t that much of a system seller and it’s a little odd that they would ship such an iterative product.
No details on pricing but the product is slated to ship in April, the company says.
This was a bad year for the smartphone. For the first time, its seemingly unstoppable growth began to slow. Things started off on a bad note in February, when Gartner recorded its first year-over-year decline since it began tracking the category. Not even the mighty Apple was immune from the trend. Last week, stocks took […]
This was a bad year for the smartphone. For the first time, its seemingly unstoppable growth began to slow.
Things started off on a bad note in February, when Gartner recorded its first year-over-year decline since it began tracking the category. Not even the mighty Apple was immune from the trend. Last week, stocks took a hit as influential analyst Ming-Chi Kuo downgraded sales expectations for 2019.
People simply aren’t upgrading as fast as they used to. This is due in part to the fact that flagship phones are pretty good across the board. Manufacturers have painted themselves into a corner as they’ve battled it out over specs. There just aren’t as many compelling reasons to continually upgrade.
Of course, that’s not going to stop them from trying. Along with the standard upgrades to things like cameras, you can expect some radical rethinks of smartphone form factors, along with the first few pushes into 5G in the next calendar year.
If we’re lucky, there will be a few surprises along the way as well, but the following trends all look like no-brainers for 2019.
GUANGZHOU, CHINA – DECEMBER 06: Attendees look at 5G mobile phones at the Qualcomm stand during China Mobile Global Partner Conference 2018 at Poly World Trade Center Exhibition Hall on December 6, 2018 in Guangzhou, Guangdong Province of China. The three-day conference opened on Thursday, with the theme of 5G network. (Photo by VCG/VCG via Getty Images)
Let’s get this one out of the way, shall we? It’s a bit tricky — after all, plenty of publications are going to claim 2019 as “The Year of 5G,” but they’re all jumping the gun. It’s true that we’re going to see the first wave of 5G handsets appearing next year.
Others, most notably Apple, are absent from the list. The company is not expected to release a 5G handset until 2020. While that’s going to put it behind the curve, the truth of the matter is that 5G will arrive into this world as a marketing gimmick. When it does fully roll out, 5G has the potential to be a great, gaming-changing technology for smartphones and beyond. And while carriers have promised to begin rolling out the technology in the States early next year (AT&T even got a jump start), the fact of the matter is that your handset will likely spend a lot more time using 4G.
That is to say, until 5G becomes more ubiquitous, you’re going to be paying a hefty premium for a feature you barely use. Of course, that’s not going to stop hardware makers, component manufacturers and their carrier partners from rushing these devices to market as quickly as possible. Just be aware of your chosen carrier’s coverage map before shelling out that extra cash.
We’ve already seen two — well, one-and-a-half, really. And you can be sure we’ll see even more as smartphone manufacturers scramble to figure out the next big thing. After years of waiting, we’ve been pretty unimpressed with the foldable smartphone we’ve seen so far.
The Royole is fascinating, but its execution leaves something to be desired. Samsung’s prototype, meanwhile, is just that. The company made it the centerpiece of its recent developer conference, but didn’t really step out of the shadows with the product — almost certainly because they’re not ready to show off the full product.
Now that the long-promised technology is ready in consumer form, it’s a safe bet we’ll be seeing a number of companies exploring the form factor. That will no doubt be helped along by the fact that Google partnered with Samsung to create a version of Android tailored to the form factor — similar to its embrace of the top notch with Android Pie.
Of course, like 5G, these designs are going to come at a major premium. Once the initial novelty has worn off, the hardest task of all will be convincing consumers they need one in their life.
Bezels be damned. For better or worse, the notch has been a mainstay of flagship smartphones. Practically everyone (save for Samsung) has embraced the cutout in an attempt to go edge to edge. Even Google made it a part of Android (while giving the world a notch you can see from space with the Pixel 3 XL).
We’ve already seen (and will continue to see) a number of clever workarounds like Oppo’s pop-up. The pin hole/hole punch design found on the Huawei Nova 4 seems like a more reasonable route for a majority of camera manufacturers.
Embedded Fingerprint Readers
The flip side of the race to infinite displays is what to do with the fingerprint reader. Some moved it to the rear, while others, like Apple, did away with it in favor of face scanning. Of course, for those unable to register a full 3D face scan, that tech is pretty easy to spoof. For that reason, fingerprint scanners aren’t going away any time soon.
OnePlus’ 6T was among the first to bring the in-display fingerprint scanner to market, and it works like a charm. Here’s how the tech works (quoting from my own writeup from a few months ago):
When the screen is locked, a fingerprint icon pops up, showing you where to press. When the finger is in the right spot, the AMOLED display flashes a bright light to capture a scan of the surface from the reflected light. The company says it takes around a third of a second, though in my own testing, that number was closer to one second or sometimes longer as I negotiated my thumb into the right spot.
Samsung’s S10 is expected to bring that technology when it arrives around the February time frame, and I wouldn’t be surprised to see a lot of other manufacturers follow suit.
Cameras, cameras, cameras (also, cameras)
What’s the reasonable limit for rear-facing cameras? Two? Three? What about the five cameras on that leaked Nokia from a few months back? When does it stop being a phone back and start being a camera front? These are the sorts of existential crises we’ll have to grapple with as manufacturers continue to attempt differentiation through imagining.
Smartphone cameras are pretty good across the board these days, so one of the simple solutions has been simply adding more to the equation. LG’s latest offers a pretty reasonable example of how this will play out for many. The V40 ThinQ has two front and three rear-facing cameras. The three on the back are standard, super wide-angle and 2x optical zoom, offering a way to capture different types of images when a smartphone camera isn’t really capable of that kind of optical zoom in a thin form factor.
On the flip side, companies will also be investing a fair deal in software to help bring better shots to existing components. Apple and Google both demonstrated how a little AI and ML can go a long way toward improving image capture on their last handsets. Expect much of that to be focused on ultra-low light and zoom.
The entertainment business was founded by former Disney and Paramount executives.
Moonbug, a kid-focused media business founded by a pair of entertainment executives, has brought in a $145 million Series A investment led by The Raine Group, a merchant bank that supports technology, media and telecom efforts.
Venture capital firms Felix Capital and Fertitta Capital also participated in the financing.
Moonbug, headquartered in London, acquires and distributes media content made for kids. Recently, the company completed its first IP acquisition of Little Baby Bum, a children’s sing-along show popular on YouTube, Amazon and Netflix. According to a Los Angeles Times report, one of the show’s videos is the 20th most popular video in YouTube history, boasting 2.1 billion views. In total, Moonbug says Little Baby Bum has clocked in 23 billion views across multiple platforms.
With its Series A investment, Moonbug will amp up its M&A activity to expand its portfolio of content that “helps children build essential life skills.” Moonbug chief executive officer René Rechtman, who spent the last three years as the head of digital studios at The Walt Disney Co., says they plan to acquire eight media businesses.
Rechtman and John Robson, a former senior vice president of digital distribution at Paramount Pictures and vice president of global content at HTC, launched Moonbug earlier this year.
“I see an independent creator and I put them in very simple brackets: one is high viewership and engagement and one is quality of IP,” Rechtman told TechCrunch. “If they have both of those, I am very interested.”
Virtual Reality is in a public relations slump. Two years ago the public’s expectations for virtual reality’s potential was at its peak. Many believed (and still continue to believe) that VR would transform the way we connect, interact, and communicate in our personal and professional lives. It’s easy to understand why this excitement exists once […]
Virtual Reality is in a public relations slump. Two years ago the public’s expectations for virtual reality’s potential was at its peak. Many believed (and still continue to believe) that VR would transform the way we connect, interact, and communicate in our personal and professional lives.
Google Trends highlighting search trends related to Virtual Reality over time; the “note” refers to an improvement in Google’s data collection system that occurred in early 2016
It’s easy to understand why this excitement exists once you put on a head mounted display. While there are still a limited number of compelling experiences, after you test some of the early successes in the field, it’s hard not to extrapolate beyond the current state of affairs to a magnificent future where the utility of virtual reality technology is pervasive.
However, many problems still exist. The all-in cost for state of the art headsets is still out of reach for the mass market. Most ‘high-quality’ virtual reality experiences still require users to be tethered to their desktops. The setup experience for mass market users is lathered in friction. When it comes down to it, the holistic VR experience is a non-starter for most people. We are effectively in what Gartner refers to as the “trough of disillusionment.”
Gartner’s hype cycle for “Human-Machine Interface” in 2018 places many related VR related fields (e.g., Mixed Reality, AR, HMDs, etc.) in the “Trough of Disillusionment”
Yet, the virtual reality market has continued its slow march to mass adoption, and there are tangible indicators that suggest we could be nearing an inflection point.
A shift towards sustainable hardware growth
What you do and do not consider a virtual reality display can dramatically impact your view on the state of the VR hardware industry. Head-mounted displays (HMDs) can be categorized in three different ways:
Screenless viewers — affordable devices that turn smartphones into a VR experience (e.g., Google Glass, Samsung Gear VR, etc.)
Standalone HMDs — devices that are not connected to a computer and can independently run content (e.g., Oculus Go, Lenovo Mirage Solo, etc.)
Tethered HMDs — devices that are connected to a desktop computer in order to run content (e.g., HTC Vive, Oculus Pro, etc.)
2018 has seen disappointing progress in aggregate headset growth. The overall market is forecasted to ship 8.9M headsets in 2018, up from an approximate aggregate shipment of ~8.3M in 2017, according to IDC. On the surface, those numbers hardly describe a market at its inflection point.
However, most of the decline in growth rate can be attributed to two factors. First, screenless viewers have seen a significant decline in shipments as device manufacturers have stopped shipping them alongside smartphones. In the second quarter of 2018, 409K screenless viewers were shipped compared to approximately 1M in the second quarter of 2017. Second, tethered VR headsets have also declined as manufacturers have slowed down the pricing discounts that acted as a steroid to sales growth in 2017.
Looking at the market for standalone HMDs, however, reveals a more promising figure. Standalone VR headsets grew 417% due to the global availability of the Oculus Go and Xiaomi Mi VR. Over time, these headsets are going to be the driver of the VR market as they offer significant advantages compared to tethered headsets.
The shift from tethered to standalone VR headsets is significant. It represents a paradigm shift within the immersive ecosystem, where developers have a truly mobile platform that is powerful enough to enable compelling user experiences.
IDC forecasts for AR/VR headset market share by form factor, 2018–2022
A premium market segment
There are a few names that come to mind when thinking about products that are available for purchase in the VR market: Samsung, Facebook (Oculus), HTC, and Playstation. A plethora of new products from these marquee names — and products from new companies entering the market — are opening the category for a new customer segment.
For the past few years, the market effectively had two segments. The first was a “mass market” segment with notorious devices such as the Google Cardboard and the Samsung Gear, which typically sold for under $100 and offered severely constrained experiences to consumers. The second segment was a “pro market” with a few notable devices, such as the HTC Vive, that required absurdly powerful computing rigs to operate, but offered consumers more compelling, immersive experiences.
It’s possible that this new emerging segment will dramatically open up the total addressable VR market. This “premium” market segment offers product alternatives that are somewhat more expensive than the mass market, but are significantly differentiated in the potential experiences that can be offered (and with much less friction than the “pro market”).
The Oculus Go, the Xiaomi Mi VR, and the Lenovo Solo are the most notable products in this segment. They are the fastest growing devices in this segment, and represent a new wave of products that will continue to roll out. This segment could be the tipping point for when we move from the early adopters to the early majority in the VR product adoption curve.
A number of other products have also been released throughout 2018 that fall into this category, such as Lenovo’s Mirage Solo and Xiaomi’s Mi VR. Even more so, Oculus recently announced that they’ll be shipping a new headset called Quest this spring, which will sell for $399 and will be the most powerful example of a premium device to date. The all-in price range of ~$200–400 places these devices in a segment consumers are already conditioned to pay (think iPad’s, gaming consoles, etc.), and they offer differentiated experiences primarily attributed to the fact that they are standalone devices.
The Exodus 1 didn’t make its global debut on stage at TechCrunch Shenzhen. That was the plan, but stuff, as the saying goes, happens. It simply didn’t make its way from Hong Kong to China in time. I won’t lie, I was a bit suspicious of this latest turn of events. After month of teasing […]
The Exodus 1 didn’t make its global debut on stage at TechCrunch Shenzhen. That was the plan, but stuff, as the saying goes, happens. It simply didn’t make its way from Hong Kong to China in time.
I won’t lie, I was a bit suspicious of this latest turn of events. After month of teasing its blockchain phone, HTC had mostly relied on wire frames and renders, and now it was MIA, a matter of weeks before it was set to hit the market.
But we did manage to get our hands on the thing, following the event. Here it is, for all the world to see, framed against some hideous hotel carpeting, which appears to be one of the few constants, regardless of where you happen to go in the world.
The device is a pretty bog standard piece of HTC hardware — one that’s tough to distinguish from the U12. HTC’s been pretty upfront about that, and it’s no surprise, really. The company doesn’t seem to be operating under any illusions that the Exodus will be a blockbuster — or, the sort of hit the company needs after a couple of rough years that culminated with 1,500 layoffs in July.
As such, the company is using the device as the conduit for a sort of beta testing among the sort of crypto enthusiastic who might pay the Bitcoin/Ether equivalent of $700-900, sight unseen. For that reason, HTC hasn’t done to much to tweak the hardware, beyond some chip-level adjustments like the addition of a secure enclave on the Snapdragon chip. The single major aesthetic update here is the addition of an Exodus HTC logo etched onto the transparent backing (which is highly reflective, hence the somewhat awkward angles here).
While we did get to hold the device, HTC still wasn’t ready to show off the Zion (keeping with the Genesis block/Exodus biblical theme) interface — the micro OS that sits on top of Android, offering a secure place in which to store one’s keys. Though the does plan to show that off before or around the handset’s December ship date.
In a conversation at this week’s event in Shenzhen, HTC’s Decentralized Chief Officer Phil Chen told TechCrunch that the company is “as committed as they are to the Vive. I don’t think it’s number one of the priority list, but I would say it’s number three or four.”
The category’s growth, however, will be a slow one — even more of an uphill push than the HTC had in its early days of embracing Android. As such, the company is taking baby steps with the Exodus, rather than incorporating these technologies into one of its more mainstream devices. Though that shift is likely to happen soon. I wouldn’t be too surprised to see some sort of blockchain tech incorporated into an upcoming successor to the U12.
The company is open to licensing such technologies out to third-parties — similar to the deals its already struck with the likes of Google to help provide industrial design for Pixel devices. Chen says he can also see a model similar to the ways HTC’s Viveport technologies operate with third-parties, though those companies would have to be willing to give up some access to user data — an essential part of many current business models.
That said, the future of all of this is still very much up in the air. “I see us as the trusted Android,” Chen says, vaguely alluding to a future road map that finds HTC shifting its focus from hardware to software and IP. “We’re not talking about [monetization] right now, but we have some ideas.”
While the devoted blockchain phone is largely a stepping stone toward incorporating that technology into more mainstream devices, there are plans to continue development on the line, as the Exodus 1 name optimistically implies. Chen explains that the company is working on follows that will be further distinguished from other handsets, though he’s not ready to discuss specifics.
Presently HTC has between 20 and 30 engineers working on the blockchain project, bringing in expert in the space to educate them on the intricacies of the technologies. Event among those who are currently devoted to building out the device, this is all clearly very much a learning process.
After months of talk, HTC’s blockchain phone is finally arriving — albeit in limited quantities. The hardware maker announced today at a crypto conference in Berlin that it’s opening up access to an early version the Exodus 1 handset to “cryptographers and developers from all over the world” through its official site. Of course, “early […]
After months of talk, HTC’s blockchain phone is finally arriving — albeit in limited quantities. The hardware maker announced today at a crypto conference in Berlin that it’s opening up access to an early version the Exodus 1 handset to “cryptographers and developers from all over the world” through its official site.
Of course, “early version” implies that we’re not dealing with anything final here. Add to that the fact that the phone isn’t expected to actually ship until December, and the thing doesn’t really feel all that much more real than it did a few months back. Still, if you believe in the tech — or at least find yourself morbidly curious about it — you can pick one up using either Bitcoin or Ethereum, naturally.
Images of the phone are still renders, but the device appears to share a lot of design language in common with HTC’s most recent flagship, the U12 — down to the translucent glass backing. That’s a good thing, honestly. Too often these kinds of novelty devices are produced by companies too focused on a single underlying technology to get the rest of the phone right. Here, at least, you know you’ll be getting a solid, working handset as the foundation.
The phone itself runs Android. From the sound of it, much of the underlying tech is about keeping the phone secure, being used to store things like keys to cryptocurrencies and, moving forward, all of the phone’s data. There’s also an interesting built in function for accessing lost data in a decentralized way.
HTC has developed a unique Social Key Recovery mechanism in case your phone is lost or stolen, or you forget your keys. It is an easy and secure way to recover keys lost in the hardware. It also ensures that HTC does not hold your keys in a central location at any point – you maintain full custody at all times. HTC allows you to pick a few trustworthy contacts, and each one of those must download a key management app. Your seed then gets split using a secret sharing algorithm and is sent to the trusted contacts. Should the need arise, you can successfully regain access to your funds.
For now, HTC is using this program to pilot the tech here — taking feedback from a small core of users. Though it’s tough to imagine this becoming much more of a mainstream device for a company struggling to stand out in the smartphone space.
Tim Merel Contributor Tim Merel is managing director of Digi-Capital. More posts by this contributor The Reality Ecosystem: What AR/VR/XR needs to go big China could beat America in AR/VR long-term Last year 30 leading venture investors told us about a fundamental shift from early stage North American VR investment to later stage Chinese computer vision/AR […]
Digi-Capital’s AR/VR/XR Analytics Platform showed Chinese investments into computer vision and augmented reality technologies surging to $3.9 billion in the last 12 months, while North American augmented and virtual reality investment fell from nearly $1.5 billion in the fourth quarter of 2017 to less than $120 million in the third quarter of 2018. At the same time, VC sentiment on virtual reality softened significantly.
What a difference a year makes.
What VCs said a year ago
When we spoke to venture capitalists least year, they had some pretty strong opinions.
Mobile augmented reality and Computer Vision/Machine Learning (“CV/ML”) are at opposite ends of the spectrum — one delivering new user experiences and user interfaces and the other powering a broad range of new applications (not just mobile augmented reality).
The market for mobile AR is very early stage, and could see $50 to $100 million exits in 2018/2019. Dominant companies will take time to emerge, and it will also take time for developers to learn what works and for consumers and businesses to adopt mobile AR at scale (note: Digi-Capital’s base case is mobile AR revenue won’t really take off until 2019, despite 900 million installed base by Q4 2018). Tech investors are most interested in native mobile AR with critical use cases, not ports from other platforms.
Computer vision and visual machine learning is more advanced than mobile AR, and could see dominant companies in the near-term. Here, investors love startups with real-world solutions that are challenging established industries and business practices, not research projects. Firms are investing in more than 20 different mobile augmented reality and computer vision and visual machine learning sectors, but there is the potential for overfunding during the earliest stages of the market.
What VCs did in the last 12 months
Perhaps the most crucial observation is the declining deal volumes over the last year.
Deal volume (the number of deals) declined steadily by 10% per quarter over the last 12 months, and was around two-thirds the level in Q3 2018 that it was in Q4 2017. Most of the decline happened in the US and Europe, where VCs increasingly stayed on the sidelines by looking for short-term traction as a sign of long-term growth. (Note: data normalized excluding HTC ViveX accelerator Q4 2017, which skews the data)
Deal Volume (number of deals by stage)
The biggest casualties of this short-termist approach have been early stage startups raising seed (deal volume down by more than half) and some series A (deal volume down by a quarter) rounds. This trend has been strongest in North America and Europe, but even Asia has not been entirely immune from some early stage deal volume decline.
While deal volume is a great indicator of early-stage investment market trends, deal value (dollars invested) gives a clearer picture of where the big money has been going over the last 12 months. (Note: investment means new VC money into startups, not internal corporate investment – which is a cost). Global investment hit its previous quarterly record over $2 billion in Q4 2017, driven by a few very large deals. It then dropped back to around $1 billion in the first quarter of this year. Since then deal value has steadily climbed quarter-on-quarter, to reach a new record high well over $2 billion in Q3 2018.
Over $4 billion of the total $7.2 billion in the last 12 months was invested in computer vision/AR tech, with well over $1 billion going into smartglasses (the bulk of that into Magic Leap) . The next largest sectors were games around $400 million and advertising/marketing at a quarter of a billion dollars. The remaining 22 industry sectors raised in the low hundreds of millions of dollars down to single digit millions in the last 12 months.
A tale of two markets
Deals by Country and Category (dollars)
American and Chinese investment had an inverse relationship in the last 12 months. American investors increasingly chose to stay on the sidelines, while Chinese investor confidence grew to back up clear vision with long-term investments. The differences in the data couldn’t be more stark.
North American Deals (dollars)
North American investment was almost triple Asian investment in Q4 2017, with a record high of nearly $1.5 billion dollars for the quarter. Despite 2018 being a transitional year for the market (Digi-Capital forecast that market revenue was unlikely to accelerate until 2019), North American quarterly investment fell over 90% to less than $120 million in Q3 2018. American VCs appear to have taken a long-term solution to a short-term problem.
China Deals (dollars)
Meanwhile, Chinese VCs have been focused on the long-term potential of the intersection between computer vision and augmented reality, with later-stage Series C and Series D rounds raising hundreds of millions of dollars a time. This trend increased dramatically in the last 12 months, with SenseTime Group raising over $2 billion in multiple rounds and Megvii close behind at over $1 billion (also multiple rounds).
Smaller investments (by Chinese standards) in the hundreds of millions have gone into companies Westerners might not know, including Beijing Moviebook Technology, Kujiale and more. All this saw Chinese quarterly investment grow 3x in the last 12 months. (Note: some recent Western opinions about market investment trends were based on incomplete data)
Where to from here?
With our team’s investment banking background, experience shows that forecasting venture capital investment is a fool’s errand. Yet it is equally foolish to ignore hard data, and ongoing discussions with leading investors along Sand Hill Road and China indicate some trends to watch.
American tech investors might continue to wait for market traction before providing the fuel needed for that traction (even if that seems counterintuitive). While this could pose an existential threat to some early stage startups in North America, it’s also an opportunity for smart money with longer time horizons.
Conversely, Chinese VCs continue to back domestic companies which could dominate the future of computer vision/augmented reality. The next 6 months will determine if this is a long-term trend, but it is the current mental model.
If mobile AR revenue accelerates in 2019 as critical use cases and apps emerge (as in Digi-Capital’s base case), this could become a catalyst for renewed investment by American VCs. The big unknown is whether Apple enters the smartphone tethered smartglasses market in late 2020 (as Digi-Capital has forecast for the last few years). This could be the tipping point for the market as a whole (not just investment). However, Apple timing is hard to predict (because Apple), with any potential launch date known only to Tim Cook and his immediate circle.
Steve Jobs said, “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”
Chinese investors embraced a Jobsian approach over the last 12 months, with Western VCs increasingly dot-connecting (or not). It will be interesting to see how this plays out for computer vision/AR investment over the next 12 months, so watch this space.
It’s been 10 years since Google took the wraps off the G1, the first Android phone. Since that time the OS has grown from buggy, nerdy iPhone alternative to arguably the most popular (or at least populous) computing platform in the world. But it sure as heck didn’t get there without hitting a few bumps […]
It’s been 10 years since Google took the wraps off the G1, the first Android phone. Since that time the OS has grown from buggy, nerdy iPhone alternative to arguably the most popular (or at least populous) computing platform in the world. But it sure as heck didn’t get there without hitting a few bumps along the road.
Join us for a brief retrospective on the last decade of Android devices: the good, the bad, and the Nexus Q.
HTC G1 (2008)
This is the one that started it all, and I have a soft spot in my heart for the old thing. Also known as the HTC Dream — this was back when we had an HTC, you see — the G1 was about as inauspicious a debut as you can imagine. Its full keyboard, trackball, slightly janky slide-up screen (crooked even in official photos), and considerable girth marked it from the outset as a phone only a real geek could love. Compared to the iPhone, it was like a poorly dressed whale.
But in time its half-baked software matured and its idiosyncrasies became apparent for the smart touches they were. To this day I occasionally long for a trackball or full keyboard, and while the G1 wasn’t pretty, it was tough as hell.
Moto Droid (2009)
Of course, most people didn’t give Android a second look until Moto came out with the Droid, a slicker, thinner device from the maker of the famed RAZR. In retrospect, the Droid wasn’t that much better or different than the G1, but it was thinner, had a better screen, and had the benefit of an enormous marketing push from Motorola and Verizon. (Disclosure: Verizon owns Oath, which owns TechCrunch, but this doesn’t affect our coverage in any way.)
For many, the Droid and its immediate descendants were the first Android phones they had — something new and interesting that blew the likes of Palm out of the water, but also happened to be a lot cheaper than an iPhone.
HTC/Google Nexus One (2010)
This was the fruit of the continued collaboration between Google and HTC, and the first phone Google branded and sold itself. The Nexus One was meant to be the slick, high-quality device that would finally compete toe-to-toe with the iPhone. It ditched the keyboard, got a cool new OLED screen, and had a lovely smooth design. Unfortunately it ran into two problems.
First, the Android ecosystem was beginning to get crowded. People had lots of choices and could pick up phones for cheap that would do the basics. Why lay the cash out for a fancy new one? And second, Apple would shortly release the iPhone 4, which — and I was an Android fanboy at the time — objectively blew the Nexus One and everything else out of the water. Apple had brought a gun to a knife fight.
HTC Evo 4G (2010)
Another HTC? Well, this was prime time for the now-defunct company. They were taking risks no one else would, and the Evo 4G was no exception. It was, for the time, huge: the iPhone had a 3.5-inch screen, and most Android devices weren’t much bigger, if they weren’t smaller.
The Evo 4G somehow survived our criticism (our alarm now seems extremely quaint, given the size of the average phone now) and was a reasonably popular phone, but ultimately is notable not for breaking sales records but breaking the seal on the idea that a phone could be big and still make sense. (Honorable mention goes to the Droid X.)
Samsung Galaxy S (2010)
Samsung’s big debut made a hell of a splash, with custom versions of the phone appearing in the stores of practically every carrier, each with their own name and design: the AT&T Captivate, T-Mobile Vibrant, Verizon Fascinate, and Sprint Epic 4G. As if the Android lineup wasn’t confusing enough already at the time!
Though the S was a solid phone, it wasn’t without its flaws, and the iPhone 4 made for very tough competition. But strong sales reinforced Samsung’s commitment to the platform, and the Galaxy series is still going strong today.
Motorola Xoom (2011)
This was an era in which Android devices were responding to Apple, and not vice versa as we find today. So it’s no surprise that hot on the heels of the original iPad we found Google pushing a tablet-focused version of Android with its partner Motorola, which volunteered to be the guinea pig with its short-lived Xoom tablet.
Although there are still Android tablets on sale today, the Xoom represented a dead end in development — an attempt to carve a piece out of a market Apple had essentially invented and soon dominated. Android tablets from Motorola, HTC, Samsung and others were rarely anything more than adequate, though they sold well enough for a while. This illustrated the impossibility of “leading from behind” and prompted device makers to specialize rather than participate in a commodity hardware melee.
Amazon Kindle Fire (2011)
And who better to illustrate than Amazon? Its contribution to the Android world was the Fire series of tablets, which differentiated themselves from the rest by being extremely cheap and directly focused on consuming digital media. Just $200 at launch and far less later, the Fire devices catered to the regular Amazon customer whose kids were pestering them about getting a tablet on which to play Fruit Ninja or Angry Birds, but who didn’t want to shell out for an iPad.
Turns out this was a wise strategy, and of course one Amazon was uniquely positioned to do with its huge presence in online retail and the ability to subsidize the price out of the reach of competition. Fire tablets were never particularly good, but they were good enough, and for the price you paid, that was kind of a miracle.
Xperia Play (2011)
Sony has always had a hard time with Android. Its Xperia line of phones for years were considered competent — I owned a few myself — and arguably industry-leading in the camera department. But no one bought them. And the one they bought the least of, or at least proportional to the hype it got, has to be the Xperia Play. This thing was supposed to be a mobile gaming platform, and the idea of a slide-out keyboard is great — but the whole thing basically cratered.
What Sony had illustrated was that you couldn’t just piggyback on the popularity and diversity of Android and launch whatever the hell you wanted. Phones didn’t sell themselves, and although the idea of playing Playstation games on your phone might have sounded cool to a few nerds, it was never going to be enough to make it a million-seller. And increasingly that’s what phones needed to be.
Samsung Galaxy Note (2012)
As a sort of natural climax to the swelling phone trend, Samsung went all out with the first true “phablet,” and despite groans of protest the phone not only sold well but became a staple of the Galaxy series. In fact, it wouldn’t be long before Apple would follow on and produce a Plus-sized phone of its own.
The Note also represented a step towards using a phone for serious productivity, not just everyday smartphone stuff. It wasn’t entirely successful — Android just wasn’t ready to be highly productive — but in retrospect it was forward thinking of Samsung to make a go at it and begin to establish productivity as a core competence of the Galaxy series.
Google Nexus Q (2012)
This abortive effort by Google to spread Android out into a platform was part of a number of ill-considered choices at the time. No one really knew, apparently at Google or anywhere elsewhere in the world, what this thing was supposed to do. I still don’t. As we wrote at the time:
Here’s the problem with the Nexus Q: it’s a stunningly beautiful piece of hardware that’s being let down by the software that’s supposed to control it.
It was made, or rather nearly made in the USA, though, so it had that going for it.
HTC First — “The Facebook Phone” (2013)
The First got dealt a bad hand. The phone itself was a lovely piece of hardware with an understated design and bold colors that stuck out. But its default launcher, the doomed Facebook Home, was hopelessly bad.
How bad? Announced in April, discontinued in May. I remember visiting an AT&T store during that brief period and even then the staff had been instructed in how to disable Facebook’s launcher and reveal the perfectly good phone beneath. The good news was that there were so few of these phones sold new that the entire stock started selling for peanuts on Ebay and the like. I bought two and used them for my early experiments in ROMs. No regrets.
HTC One/M8 (2014)
This was the beginning of the end for HTC, but their last few years saw them update their design language to something that actually rivaled Apple. The One and its successors were good phones, though HTC oversold the “Ultrapixel” camera, which turned out to not be that good, let alone iPhone-beating.
As Samsung increasingly dominated, Sony plugged away, and LG and Chinese companies increasingly entered the fray, HTC was under assault and even a solid phone series like the One couldn’t compete. 2014 was a transition period with old manufacturers dying out and the dominant ones taking over, eventually leading to the market we have today.
Google/LG Nexus 5S and 6P (2015)
This was the line that brought Google into the hardware race in earnest. After the bungled Nexus Q launch, Google needed to come out swinging, and they did that by marrying their more pedestrian hardware with some software that truly zinged. Android 5 was a dream to use, Marshmallow had features that we loved … and the phones became objects that we adored.
If the Nexus was, in earnest, the starting gun for Google’s entry into the hardware race, the Pixel line could be its victory lap. It’s an honest-to-god competitor to the Apple phone.
Gone are the days when Google is playing catch-up on features to Apple, instead, Google’s a contender in its own right. The phone’s camera is amazing. The software works relatively seamlessly (bring back guest mode!), and phone’s size and power are everything anyone could ask for. The sticker price, like Apple’s newest iPhones, is still a bit of a shock, but this phone is the teleological endpoint in the Android quest to rival its famous, fruitful, contender.