"The augmented reality market is raw, and we are ready to beat it": General Manager tells about Belarusian AR glasses technology
Mikhail Doroshevich, photo by Alexander Glebov, probusiness.io
When a year ago we met Mikhail Doroshevich, General Manager of Izovac, he was ready to convince us that "hardware is as good as IT". Today Izovac is a double resident of the Belarus High-Tech Park (HTP): apart from the main company, its startup, Izovac Augmented Reality, joined the Park as well. Meanwhile, the video module for AR glasses that it developed is ready to compete with global leaders. The project's birth and development – that is what we discusses with Mikhail.
Izovac Research and Development Company deals with development and optimization of optical coating, prospective technologies for thin-film vacuum coating, and manufacturing machines for coatings deposition.
Izovac Augmented Reality company developed as a technology as an optical electronic devices which enables augmented reality effect.
How did Izovac, a manufacturing company, get into the augmented reality area?
Once we did a project in our core area, which is optical coating. And in the meantime we discovered that we can develop a technology for augmented reality, i.e. a module for it. We had this idea 2.5 years ago. Development was launched by one of our staff members, Artem Artamonov, chief technical officer. We provided him with necessary resources, including a team. And those guys invested all that time into working on the technology and the prototype. Recently we formed a new company, Izovac Augmented Reality, obtained a patent and introduced our product.
What do you mean by saying "product"?
A video module for augmented reality glasses. Actually, that is what we invented, that is our technology. The augmented reality glasses have 3 core components: hardware, optics and software.
1. Hardware is the easiest part. It is about producing nice glasses, inserting a Wi-Fi module etc.
2. The software enables you to see the content in your glasses. This the job of IT companies.
3. And optics, the video module, which I think is the core. That is what we do.
We specialize in optics. For this very reason we put our hands on augmented reality: we can produce optical video module, which eventually allows to see the picture in AR glasses. At the moment the demand for quality video modules on the market is very high. This segment is just gaining pace. On the other hand, hardware and, to an even greater extent, software, is not our thing.
What has been done during these 2.5 years? Where do you stand now?
We developed a video module and improved it. We also worked on content. We produced the first prototype and then did a lot of R&D with it. The second prototype is already available. And again, we are improving this one in terms of technology and the quality of optics, and also shaping the product to launch it in the market or introduce it to investors. Ready-made glasses will come at the next stage. We designed them ourselves, and soon we will fill them with augmented reality content so that we can demonstrate an understandable object, an off-the-shelf product. I think that within a year we will arrive at ready-to-use glasses and quality content. So far one can see text, the company's logo and simple pictures in the glasses. We are going to build up the content to demonstrate something worthwhile.
Let me stress that we are talking only about a certain number of prototypes of glasses. We do not plan to produce them on a mass scale.
The photo is provided by Izovac
Why aren't you ready to manufacture glasses?
We know that we are good at producing the augmented reality video modules that compares to similar products internationally, or is even better. But producing a fully-fledged product – glasses – is beyond our capacity. It is very costly. One needs to purchase machinery and produce each component of the glasses separately, which implies tens of millions of dollars in investments. Moreover, one should also invest lots of time into such a project, and we have our core business.
It is also unlikely that augmented reality glasses will be produced somewhere in Belarus, since the budget is too big.
Who works on the software component – the image?
We do not have many software engineers on board, only 8 people. We can do some basic things to demonstrate performance capacities of the glasses ourselves. Nevertheless, to produce specific content we need to cooperate with specialized companies.
Augmented reality images are still a challenge, and not only for us, but all over the world. They mainly represent very basic things: very simple games or limited functionality content. The market for augmented reality is rather raw, it is only emerging, unlike the virtual reality market, which is quite mature in many respects.
Do you mean that glasses and the software component are things that you are not ready to produce yourself, but when it comes to the video module, you can compete with global leaders?
Yes. Now we have practically no competitors in this segment. The market is only evolving.
Microsoft and Lumus, an Israeli company, are our main competitors when it comes to modules for AR glasses. However, based on our assessments, the technology we developed is as good as theirs, and it might be even better. And, trust me, we did a good research on our rivals
Finally, we invested the last year and a half into intensive accumulation of competitive intelligence: we attended various exhibitions and conferences devoted to augmented reality, we looked at other companies and assessed ourselves.
Large companies do invest hundreds of millions of dollars in the final product. They have all the entourage, including the glasses themselves. But we are worthy of competing with them in the narrow niche of video modules for augmented reality.
Furthermore, the final product is not sold massively yet. The glasses cost from 700 to 3,500 USD. But few buy them - there is no content. Or, again, it is very primitive. A toy you cannot play with. You buy them, use them once - and put them on the shelf. It is very similar to 3D glasses, that used to come with a TV. They add 50 to 70 USD to the cost, but there is practically nothing to watch using them.
Formation of a mass AR market will take at least 2 or 3 years.
We have time to find opportunities for cooperation to produce the glasses and the content. And the one who will be first to come up with a flawless video module technology will receive offers from, say, Microsoft. And chances are good that they will come to us.
So your strategy is cooperation…
Yes. Our further actions are necessarily cooperation with some large global corporation that is ready to manufacture these glasses and sell them on the mass market. At the same time, we do not rule out the possibility of selling the technology. If, of course, the proposal is worthy - but it's about millions of dollars. According to our estimates, we are on par with the competitors.
In the meantime, we need investments to improve our technology.
What is the amount of investments you are talking of?
For the time being, it is hundreds of thousands of dollars. Of course, global leaders invest tens and hundreds of millions of dollars in this area, but, as the market is only emerging, there is still time to get to the international level without that intensive investment.
How soon are you ready to showcase your technology at the international market?
It does not come soon, especially in the case of unique products. It takes at least two years of soaking yourself into the topic to enter the market fully armed. And with much better chances.
Augmented reality glasses resemble a one-of-a-kind unicorn-like product. If they are well-made, they will beat the emerging market for sure.
When you come to a well-formed market, say, to an exhibition in Shanghai, where you are faced with tens of thousands of square meters and hundreds of companies working in your segment, things get much more complicated. You have to be stubborn and keep proving that "Ours is better" or "We have the same, but at a lower price", while a unicorn-like product allows you to say: "I am one-of-a-kind. And my product is well-made". Then you can feel fine for a year or two – until someone repeats you.
What areas, besides gaming, are interested in the development of the augmented reality technology and manufacturing of glasses?
The work you do while you procrastinate is probably the work you should be doing for the rest of your life.
Nevertheless, it is clear that games will still be the locomotive of the whole industry. Games in general steampower everything that happens now. They do produce huge returns. Remember the Pokemon at least. Their popularity peaked and, later, declined seemingly quickly… But how many of their creators had time to make money on them!
Game content always marches ahead, because entertainment is a mass market, there are many people and lumpy earnings for global corporations. That is why everything starts with games.
And later on, things that are really useful for the mankind come along. But nowadays games are not just about entertainment. We hear now and then that learning and development through gaming are trendy and effective. 30 years ago people used to call sitting at the computer just a waste of time. Today everything has changed. Nobody laughs at people playing games anymore. Because everyone plays them.
Tell us more about Artem Artamonov, who initiated the project, and his team.
Artem came to us quite long ago, about 8 years back. He was very young then. He started off at regular positions in the company, but moved on to become one of the leading production engineers quite quickly. And he came out full force in the augmented reality project. Presently he is one of our key staff members and one of the owners of Izovac Augmented Reality.
We decided to follow the fashion of the IT industry and give the leading developer a share in the company: for motivation and to ensure more transparent goals. Furthermore, this serves as extra motivation for the rest of the employees: they see that if a person comes up with something cool, he can become a co-owner of the project.
We pay much attention to initiatives within the company. This initiative is not the first one, but it is one of the most successful. It is very rarely that a startup shoots so straight that it tempts you to develop it as a stand-alone project. But Izovac Augmented Reality is exactly the case.
As for the team, it is small, up to 10 people - a classic start-up. At the same time, behind them there is a large and experienced team of "Izovac": we can advise them on different business-related issues any time. A number of works for the project are outsourced.
During our previous meeting you said that startups in hardware do not come that easy…
Of course, hardware startups are much more complicated than startups in IT. And they demand much greater investments. While in IT it is possible to engage a software engineer who will write the code, and all he needs is a computer, a table and a chair, in our case we need to invest heavily in production. Therefore, to finance our internal start-up, we decided at the board of directors, by voting, to take money from Izovac's profit. And now we are the only investors in the project.
However, we constantly seek investments and are open to proposals. As I said earlier, one of the clearest business models for this technology is cooperation with global leaders.
We take great interest in cooperation of that sort. By the way, large companies show interest in the project, it is just that we are not ready to talk about it at the moment.
Recently you established residency in the HTP. What will it give to the company and the project?
Yes, starting from June 1 both Izovac Technologies and Izovac Augmented Reality are HTP residents.
That will enable us to develop our new project more actively and within a shorter timeframe. HTP is an IT ecosystem that gives great opportunities. For instance, having leading developers next door makes it easier and quicker to find new partners for creating augmented reality software content.
Also, that means good investment prospects. Say, if an investor comes to the HTP, the HTP's administration assists him in seeing interesting companies, including ours. That way we gain access to foreign investments and the global market.
What does Izovac Augmented Reality startup plan for the near future?
I hope that within a year we will get a finished copy of the glasses – several prototypes, produced by us. And those will be the first augmented reality glasses "made in Belarus".
And, surely, we will continue looking for investments to improve the technology, as well as for cooperation options – for now, this is of key importance to us.