Specialist
Former manager at HoloLens Mixed Reality
Agenda
- AR (augmented reality) and MR (mixed reality) adoption trends and key themes, including metaverse
- Microsoft's (NASDAQ: MSFT) early enterprise and defence opportunities and Hololens' competitive positioning
- Hololens 2 and application ecosystem development
- Outlook for 2022 and beyond plus five-year story outlook for Hololens
Questions
1.
Can you discuss the adoption trends for AR [augmented reality] and MR [mixed reality] hardware, specifically, and contextualise the adoption in consumer vs enterprise? It’s pretty well known the consumer AR has struggled, for example, given what we’ve noted from Magic Leap.
2.
What’s your outlook for the number of AR or MR-enabled devices in the market over the next few years? You talk about 20% type growth rate. What is the number of devices in the market today?
3.
Can you discuss the leading drivers and key areas of AR adoption by application set? What are the key applications today that are driving adoption of headsets?
4.
Can you discuss the metaverse, which came up over the last few weeks, given some of the announcements? Is there an inflection point in adoption for AR-type handsets and devices and the development work that’s likely to follow due to some of the announcements, or is that already factored into a 20%-type growth rate?
5.
Can you discuss the competitive landscape in the AR and VR device market? How is Hololens positioned relative to some of the peers in this market and how does the competitive landscape shape up?
6.
Who are the top 2-3 winners in enterprise, the AR/MR hardware, over the next few years? Who should we focus on as winning or being likely to win share, based on key products or integrations they may have available, with cloud or other enterprise applications that are very commonly in use?
7.
Can you discuss the key differentiators for enterprise in the adoption of AR headsets? Could Magic Leap not collaborate tightly with Google and be able to offer the same types of integration for cloud, or even just be agnostic from a cloud perspective? How do the key differentiators impact enterprise’s decision making in the adoption of AR and MR devices?
8.
How is Hololens sold or attached to different sales within Microsoft? What are the key points where Hololens enters the conversation for Microsoft and its customers? What’s the go-to-market strategy?
9.
Is Hololens mostly part of discussions when it comes to Teams? Is Teams a very typical opener in how to bring Hololens or some of this AR-type functionality into the discussion? Is that the way it would typically work or is that, in the majority of cases, how Hololens is brought into the discussion?
10.
Can you discuss the revenue breakdown for Hololens or the key focus on markets for the company today? What’s the revenue split that the company derives from Hololens’ efforts across different vertical segments? What are the largest components to the customer base in end markets? Where has penetration been the greatest?
11.
Can you comment on the US army deal that Hololens landed and discuss the usage of Hololens for military applications and defence-type applications? Is that an expanding market for the company?
12.
Can you discuss device sales and your outlook there? In 2018, there were some presentations indicating that Hololens had some 50,000 devices sales for the actual Hololens 1, and then there was some public commentary that even by 2020, the company had seven times as many devices sales at some 300,000- 400,000 device sales. How do you expect sales ramping? Do those numbers sound right to you? Over what time period do you expect Microsoft to reach a million Hololens 2 device sales?
13.
Can you discuss the Azure packages that are typically alongside the device? If an industrial customer buys the industrial addition of Hololens 2, what are the implicit bundling requirements? What’s the implicit Azure package that it needs to also buy to be able to properly get the full functionality out of a Hololens 2, that particular addition?
14.
How aggressive is the development work within Microsoft to create the applications or software solutions for Hololens to be used in different applications, so in medical or industrial? What is the extent to which Microsoft is driving that in house vs the extent to which third-party developers are also being leveraged to fully build out software on top of Microsoft platforms that really enables the hardware to be used?
15.
How is Unity positioned today? What’s your take on the extent to which it can participate and leverage the growth trends in this market, based on its platform Unity MARS or some of the other offerings it has in the market?
16.
Do you have any other thoughts on the development of applications and software for AR and MR? Do you have any broad conclusions or anything to emphasize about that, that is important for investors to get a handle on about that market before we talk a bit more about the hardware, product development and pricing?
17.
Can you discuss Hololens 2 and its key functionality? What are the critical steps forward that Hololens 2 made over Hololens 1, the main advantages, the main boundaries that were pushed? What are some of the challenges that you think the Hololens 2 still faces today in its actual functionality? Are there bugs or kinks that still need to be worked out for the next generation?
18.
Can you discuss the product road map? Do you think Hololens can take a more goggles-type approach vs a more glasses-type approach in what it offers? Do you think its product offering may widen to be able to accommodate the glasses, where it’s more comfort focused but you might sacrifice battery life or certain functionality, vs the goggles where you have a bit more of an obvious headset but there could potentially be more battery life and additional functionality?
19.
Can you speculate on Hololens 3 and what you expect out of the Hololens 3 in product development? What are the next features that you think Microsoft or Hololens will be focused on to be able to drive further applications or broaden what the devices are able to do? Would you think 2023-24 for release?
20.
Are there any critical design decisions that you think might be changed? We’ve heard that laser-scanning display technology could be something to upgrade for the Hololens 3. Are there things, specifically, that they may try to tinker with or really improve or are there any specific gaps that you think need to be addressed?
21.
Can you discuss the pricing strategy of the Hololens 2? Hololens 2 price is I think USD 3,500 and some of the industry-specific editions have come in at more like USD 5,000. Can you discuss the pricing decisions for Hololens? Do you expect direction? How do you think about pricing moving for Hololens 2 or just for the upcoming generations of Hololens? Should we expect a downward pricing curve, stability or upward?
22.
Can you speak anecdotally about the proportion of customers that choose to lease the devices vs to outright purchase them? What’s the preference for customers?
23.
What is your five-year outlook for Hololens, including device sales and the ecosystem development enabled by the devices?
24.
Is there anything we failed to discuss today that you’d like to tie the discussion together with, or any final thoughts?
