Technology & Life Sciences Alert - May 2016

May 2016


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A Step into Virtual Reality

Virtual reality (VR) is being hailed as the next big disruptor in tech, with industry heavy-hitters from Facebook to Alphabet to Amazon launching VR initiatives. The nascent VR market is forecasted to generate $70 billion by 2020, according to market researcher TrendForce—a tenfold increase from anticipated revenues this year. A confluence of trends, including wearable devices, gaming culture and national security concerns, has generated significant appetite for innovation in augmented and virtual reality technologies. In an environment where tech financing is harder to come by, funding for VR has yet to dry up: VR startup Magic Leap’s recent funding round of $793.5 million marks the largest “C” round in Internet history. As excitement continues to build, industry insiders are predicting that 2016 will be the year VR shifts from concept to reality.

What is Virtual Reality?

VR uses computer technology to create a simulated, three-dimensional (3D) environment that a user can explore and interact with. A user becomes immersed in the VR environment and is able to manipulate objects or perform tasks in what feels like an all-encompassing world. There are various technology systems that are used to interact with VR, pairing tracking devices, such as headsets or specialized gloves, with a processing unit—most often a computer program or gaming console. The tracking devices work by emitting a signal to sensors that calculate orientation, position and speed from the user’s point of view. This information is then sent to the computer processing unit, which responds with the correlating image.
Augmented reality (AR) is a close cousin of VR, but enhances the existing visual environment instead of creating an experience of full immersion. Microsoft’s HoloLens, which it’s calling “mixed reality,” falls into this category.

Advances in VR

Entertainment remains one of the most widely popular uses for VR, particularly with the advent of interactive movies and video games. Oculus Rift (acquired by Facebook for $2 billion) led the charge on this front, with first shipments in March 2016 targeting everyday consumer audiences—the first VR system to do so. Oculus uses a headset that allows the user to look in all directions while still being a part of a virtual world. The system has already sold thousands of kits and console studios are creating original content to partner with the system, mostly in the form of gaming.
Advances in VR go well beyond entertainment. Soon after the HTC Vive VR headset started shipping to consumers, BMW shared plans to incorporate the technology in the development process of new vehicles. With this VR environment, functions of a vehicle and interior designs can be modeled and reviewed faster, and developers can use the technology to simulate driving the car, enabling them to make decisions quickly and even remotely.

On the tourism side, Samsung recently announced a partnership with Carnival and AT&T to let potential customers explore cruise liners using VR headsets. Marriott also partnered with Oculus to satisfy users’ wanderlust by transporting them virtually to vacation spots.
One of the greatest potentials for VR can be found in healthcare, with institutions using VR images for diagnosis and treatment. On April 14, 2016, a British doctor performed the world’s first operation broadcast around the world via VR in which viewers were able to watch using a smartphone and a virtual reality headset.

Retail has also experimented with virtual stores that users can move through. Ikea, for example, is piloting a VR kitchen experience for the HTC Vive, enabling users to visualize product offerings via the headset. Other large retailers such as Lowe’s, Toms and North Face are also turning to VR to sell products, boost their brand and engage the new age consumer.

BDO Insights

VR has been rapidly developing as a viable business tool to connect with consumers in new ways and revolutionize business processes. While the gaming and entertainment sectors are likely to be the first beneficiary of VR, businesses across industries are closely evaluating potential uses.
Technology will play a key role in bringing VR to life. Opportunities abound--not only for VR startups and virtual content providers, but for companies offering complementary hardware components, software and services. Opportunities for growth include:
  • Innovative VR applications: According to analyst firm CCS Insight, VR has the potential to one of the most disruptive technologies for the next decade. Every industry—from retail to manufacturing to aerospace and defense—will be looking to technology companies to figure out how they can take advantage of VR and get a leg up on competitors. Businesses will be on the hunt for unique and creative VR applications that increase productivity, improve processes and provide the next level of customer service.
  • Software development and compatibility: As VR technology becomes more advanced, devices and operating systems will need to be updated to support new functionalities and applications. Developers will need new platforms and kits to support those efforts and unlock VR’s full potential. Ultimately, compatibility and user interface are integral to mass adoption.
  • Chip design: The semiconductor market may get a much-needed boost from rising demand for VR devices—and the high frame rates they require. Intel, for example, makes the high-powered graphics processing units used in virtual reality headsets, while Qualcomm’s Snapdragon 820 smartphone chip powers VR via mobile.
  • Kicking data visualization into high gear: VR holds the potential to transform data science, rendering 3D data visualizations. Extracting insights and creating value from Big Data continues to be a top challenge across industries. VR data science applications may eventually become the new standards of data analysis.
  • Cyber solutions for VR: The rise of VR means an unprecedented level of connectivity and a whole new world of data to capture—and protect. The virtual environment can and will be hacked, introducing a host of new threats, from theft of biometric and sensory data to corruption of the virtual environment itself. Consumers and businesses alike will need to ramp up their cybersecurity efforts and deploy new solutions to protect information stored in or produced by virtual reality.

For more information about the burgeoning virtual reality market and how the tech industry can benefit, please contact:

Tim Clackett
Los Angeles


Aftab Jamil
Silicon Valley

Slade Fester
Silicon Valley
  Anthony Reh

Hank Galligan
  Ryan Starkes

Paul Heiselmann
  David Yasukochi
Orange County