Just Being Apple – New Synergies from Metaio VR Acquisition

The other day I was speaking with the CFO of a fortune 100 companies and asked him about his thoughts on TESLA. His response was that as much as he loved the new TESLA cars, he wished that Apple could come with up with their own electric cars. It got me thinking. What is the brand difference between the two? I realized that it has to do with the execution premium. Apple has proven that it can flawlessly execute on scaling ideas into actual products that develop loyal fan following.

Every other day we hear the “Me too” headlines in the space of virtual and augmented reality. Recently Amazon made headlines in that it filed a patent for a type of VR headset that connects to one of the Amazon devices and would provide an immersive experience. It appears that every major tech darling has had to dabble in this space to keep itself in the game given that industry pundits are predicting a big market for VR related products and platforms.

So how does Apple play its part? A little differently. Buying a Germany based VR company with strong roots since 2003 and brand alliances in the Chinese market.

Apple purchased Metaio in May 2015 and then there were headlines about poaching talent directly from the Mircosoft Hololens team. Metaio has a significant community of developers with about 1,000 customers and 150,000 users worldwide in 30 countries. It has also already worked hand-in-hand with some big-name brands to develop unique experiences, like the Ferrari car. Prior to the acquisition, Apple had also filed for a patent in Feb for a VR headset. There were also rumors of augmented reality based features in IOS 9 platform by a reputable wall street analyst

What is more interesting to me is that Metaio has had a country strategy for China as early as in 2013. It entered the Chinese market place in 2013. According to Metaio, they were now across animation, print media and heavy industry. According to the German-based company, they have over 150 international AR patents, making them the largest such holder in the world. In 2014 Metaio saw a fast-growing demand for Metaio-patented technologies such as CAD edge based tracking, 3D environment tracking, and thermal touch algorithms in the Chinese market. 2014 saw a steady growth of AR products in China. From character translation apps like Pleco and Waygo, to the public unveiling of Google glass competitor Baidu Eye in September, AR is slowly creeping into the day-to-day lives of Chinese people.

At the end of 2014, Beijing-based ANTVR also released a slew of virtual reality (VR) products, including a headset that will compete directly with San Francisco-based Oculus VR, which was recently acquired for US$2 billion by Facebook.

This acquisition by Apple does provide it with better access to the Chinese VR market. Apple’s iphone now makes up more than 25% of all smartphones sold in China. There is definitely some synergies here if Apple molds the capabilities of Metaio to its advantage. AWE Conference just concluded in Xian in china last week with more than 3000 participants and also unveiling the largest and first of its AR Industrial park in Xian. Major players such as Intel and Qualcom Vuforia were featured at these largest Asian VR Event.

It remains to be seen how Apple shapes up VR/Augmented offerings in its product offerings and where the Metaio acquisition provides it with the best bang for the buck. I know from my conversations with the CFO that the execution will be a thing of beauty.

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