Virtual Reality as an Emerging Market - Coursework Example

Virtual Reality as an Emerging Market

Virtual Reality is an emerging industry because it has not developed into its full potential despite having emerged many years ago. The industry produced its first devices in 1956 but it is less popular compared to other industries like the phone industry. However, the 3D and 4D technologies for the industry are growing in popularity. This is shown by the integration with industries like in the manufacturing, communication, and healthcare besides its dominance in the entertainment industry (Baird, 5). Due to the development in technology, applications, and opportunities in the virtual reality products has gradually grown in the defense sector, communication, healthcare, industry, and entertainment. In the last few years, the number of 3D TVs has increased in significant numbers due to the increase in demand. In terms of revenue, the 3D and 4D technology generated more than $93 billion and are expected to grow up to $280 billion in 2018 and a further growth to $470 billion in 2020 (Tougaw & Will, 10).

Early 2015, Sony introduced “Project Morpheus” a new VR technology for its PlayStation. This technology projects real-time images ahead of the player’s eyes and tracks their head movement that would increase the sales for the Sony console. Microsoft also provides the console hence the competition between the two companies may lead to improved services. The windows holographic are a VR system developed by Microsoft and the company planned to present it in windows 10 operating system (Ashline, Peter & Lai, 83). This device is a smart glass unit that uses advanced sensors. Other companies with the interest in the company include Facebook acquisition of the Oculus VR that is the biggest sale for VR Company, Qualcomm, Google, and other companies $542 million funding for the Magic Leap and Samsung partnership with Vortex VR that developed the VR headset, which uses LG’s G3 Quad HD smartphone as its display.

In such a financially profitable and fast growing market, the company needs to safeguard its interest through creation of patents with its customers. The classification of patents and patent application in VR was done basing on the functional parts and their application fields. These include the computing whereby there are 1,646 patent applications in data processing, 861 data transferring, and 1308 image processing (Barfield & Woodrow, 70). In systems and devices there are more than 520 patent application in the in the stereoscopic devices, 1,427 in display devices and about 630 processing devices. Other applications in education, E-Commerce, gaming and optics have 1,130, 1,520, 766 and about 738 respectively. Medical applications have applications in patents with 630 in the medical devices and 370 in identification. The top assignees include Sony Company with 366 patents, Microsoft with 365 patents, Samsung with 348, Qualcomm with 252 patents and LG with 174 patents. Most of the patents for these companies are located in the United States. The US government has invested in the industry through the US military. This involves creation of the combat scenarios and the Trauma Management Therapy Program (Greenbaum,” 20).

Due to the continued growth of the industry, the government investment is also projected to increase. The employees of the company continue to grow as the company grows. For example, before Facebook bought the Oculus VR’s, the employs were about 70 individuals. However, the number has increased recently to over 350 individuals as more individuals are getting to understand the use of the products of VR.

Factors Affecting Emergency of an Industry

• Firm strategy

This involves how a firm positions itself in the industry and the manner in which it uses resources to sustain its position. The strategic situations and decisions of firms vary as the industry emerges. This is because the early entrants search for opportunities while an industry begins to emerge. The organizations enter competition for the market share as the industry emerges and grows (Rae & Vince & Jones, 19). In addition, as the industry continues to emerge, the reorganization occurs due to the new entrants and exit of other firms as well acquisition of others (Raskind & Steven, 12).

The graph indicates that the global revenue for the headsets would hit $895 million by 2016; this growth is due to the newly released products including the Samsung gear, oculus rift and the Sony product. The volume share for the phone is highest with 87 percent, while its value share is lowest at 23 percent. The PC based volume share is lowest at 4 percent with a relatively higher value share of 31 percent.

The Virtual Reality industry is an early industry that is growing slowly due to limited applications. However, due to the improved technology, the industry has grown and it is projected to be the most lucrative currently. This has led to the change in the strategies of the company that enables it to provide quality products to its customers. In order to provide its services to its customers the company gives patents to other company that use its products. Therefore, through other companies, VR is able to provide its services to its customers such as the use of VR headset through Samsung provides customers with the best experience in the hearing sense (Heim & Michael, 43). Furthermore, due to the recent projection of increased sales and growth in the market the patents also control the completion of the products by various companies like the console wars between Sony and Microsoft.

• Technology

Technology involves the design aspects, the knowledge, and the physical components. Technology growth is initiated with research discovery and then creation of the working model of the technology. The working model is then implemented to show the functional use of the new technology. Technology in the Virtual Reality is highly advanced though most of the recent ones are yet to be implemented despite proof of the viability. For instance, the purchase of Oculus Rift by Facebook for about $2 billion is a proof that the device has been proven to be working, because Facebook could not risk such an amount of money for something that is not proven (Olbrich & Pralle, 2217). Though the device has been invented for years, it has not yet been released into the market. It was set for released into the market in the first quarter of 2016 (Hughes & Ian, 3880). Other advanced technologies like the HTC Vive, which is a headset, created by the smartphone maker HTC and the Valve video company was to be released on April 2016. Meanwhile Sony Inc. is developing its own headset, the PlayStation VR that is to be released in June.

• Investment

Investment is committed to support venture and enables an industry to emerge. As the markets emerge, there are changes in the investment opportunities. Moreover, availability and sources of investments are likely to vary as other factors that affect the emerging industries also change. The entrepreneurs provide their own financial resources, but as the industry grows, the risks often decrease hence attracting financial investors. Private and venture capitalists often replace the personal investment (Kirriemuir, 238).

VR investment has increased drastically in the recent years due to the high growth rate in its market. The purchase of the Oculus Rift by Facebook by 2billion in 2012 marked the greatest investment ever in the company. Furthermore, the interest from other companies is indicated by the numerous patents indicate how the industry is in high demand. Thus the industry is no longer supported by personal investors but through private investors like Samsung and Sony companies. Currently the investment in the industry indicates a large amount and a projection of high investment in 2016. This is because for the first 2 months of 2016, the company had already received $1.1 billion that surpasses the $680 million investment in the whole of 2015. Most of the capital came from the Magic Leap with $790 million, as reported by the Digi-Capital (“Digi-Capital,”3).

Due to more investment by the companies with high rates of patents, and the expected demand in the industry, the revenue for AR/VR is forecasted to increase to about $150 Billion by 2020, where by argumented reality accounts for 80 percent, while virtual reality takes the remaining percentage.

• Supply Networks

The supply networks change in a manner that supports the growth industries. New industries are formed from single technologies; however, several technologies are developed to meet the new needs of the emerging industry. The supply networks depend on other elements in the emerging industries framework. A virtual reality supply network enables the organizations to design in 3D, assess designs, and make key decisions about new products and customers purchases decisions (Pearson, 52). The purpose of supply network for VR includes improvement of velocity, quality, and simplification of the products, realization of significant revenue increment, profitability and the superior customer experience. Furthermore, the VR supply network ensures increase on the sales configuration and upselling opportunities.

The supply chain works by developing a complete digitalized product directory that includes all the product manufacturing, lead times, availability and delivery dates. The main success for the supply chains in the VR is that the stakeholders are synchronized at all times. The customers often receive on the sport commitment to delivery and installation (Giorgio & Cloete, 47). Furthermore, 3-D VR application, software is able to digitalize the image of the room and could create quote data in real time at the project site at any time.

• Production

Production of goods changes as an industry emerges. Production is essential because it transforms the ideas and research discoveries into physical products. Firms need to develop diversified product abilities. Early prototyping is necessary in advancing the research and the ability to make new products attracts new investments. VR is characterized by development of new products that has led to many companies desire to acquire the new products. These includes the oculus rift and latest highly demanded product, the Magic Leap. Google paid this product for $542 million in October (Plasencia & Martinez, 20). Other innovations include the Matterport which sales $4500 3D sensing cameras and provides software across VR, razor is another product that attracted Intel Company that invested in it for more than $50 million in 2011 and it is used to develop keyboards, mice and controllers and jaunt among many other products

The graph shows the forecasted growth in revenue for software and hardware products starting from 2016 to 2020. The growth for both kinds of products is expected to rise due to increased technology and applications that provides markets for these products. The brand awareness is also provided to indicate how the products are yet new and unknown proving that the products are new in the market (SUPERDATA, 2)

Playstation is the highest known product while the HTC Vive is the least know product among other products like the samsung gear and the occulus rift.

• Markets

The creation of markets for the products and services for the emerging industries follow certain patterns. The acceptance of new products and services is dependent on the features of the technology and potential customers. The adoption of markets starts with the visionaries followed by adopters. The followers are next and are important for the emergency of an industry. In a competitive market, the products of new industries compete with products of the dominant industries (Racorean & Sorin, 55).

The adoption of the VR products is high because the visionaries believe that these products have features that are able to combat with other products from other companies in order to create the market. The adopters of the products who include the various companies highlighted above have invested in the products. The followers, who act as the customers to the products created enhance the emergence of the industry through creation of the market for created products.

• Government

The government makes use of various strategies that influences the growth of the emerging industry. This includes creation of infrastructure for technological development and growth of markets. In addition, as the industry continues to grow, the government provides the support in research, finance and provides ways through which the industry addresses the challenges. These include provision of intellectual property protection and establishment of rules and regulations (Reznek, 83). In US, the government supports the VR industry through investment in the military. The military uses the VR technology like the oculus rift for training. Furthermore, in the similar way that there is need for the government in the real world, there is also need for the government to engage in the VR. The US government requires that the operation of the VR should follow the internet policy.

Future roles for stakeholders in technology, investment, and markets for virtual reality

When people hear of virtual reality, they always think of the results, which is the experience. This experience is brought by the parts of VR, which include the software in which the Virtual Reality programs create a concurrent sense of immersion and interaction with the environment. In order to achieve this, the depth and the breadth of information are discussed. The depth of VR information transmitted to the user is of high quality both in audio quality and in the environmental level among other qualities. The breath of information for virtual reality is a concurrent performance of the input of the senses (Rheingold & Howard, 22). It results in different types of methods of stimulating the senses at the same time creating a complete feeling of immersion. The response created by the VR is primarily audio-visual, but could result to tactile response when the gloves are used. Other simulations like Soaring over California bring a sense of smell through wafting the scent of orange trees. The VR technology includes the headset that provides the mode in which the user interacts with the environment. This technology include the Oculus discussed above, utilizes the refresh rate of 90 Hz and an image of low persistence that enhances VR immersion hence eliminating the motion blur. The hardware also functions as a heads tracking through which the Oculus Rift uses the infrared camera known as the Constellation that tracks LEDs on the surface of the headsets. However, the new technologies like the Sony’s Morpheus Prototype have a rating of up to 1000 Hz hence expected to bring out the best VR experience. Despite the Headsets, there are the Input Devices a component of the VR system through which the user interacts with the environment. This includes the use of the gamepad or a motion control device. The devices like the data gloves track the motion of the fingers hence producing a haptic feedback by means of pressure, texture, and vibration. Other systems enable the user to walk literally through the environment, by use of the multidirectional platform.

The inventors shall increase new products through research and innovation of new products. These products could make the customers experience the real world in the technologies, hence increase demand for these products. In turn, the investors would be interested in the industry further, due to projection of generating profit as the demand of the products increases. This may result into competition between firms in the industry in the future.

VR would be more physical in the future; this is seen with the HTC Vive, which is controlled with the sensors that allow the users to swing a virtual golf club in an imaginary paintbrush. Despite this feeling, the VR environment provides by the Oculus does not provide the physical touch which in to be improved in future. Currently, the VR provides audio and visual experience, but could be improved in order to encompass the sense of touch, smell that shall strengthen virtual reality.

Furthermore, there are rumors that nanotechnology would be introduced into Virtual Reality. This would involve allowing individuals to push beyond the boundaries of the human body and bear the virtual environment feeling. The brain would be uploaded into the network system that would mean immortality that is much of a science fiction rather than the real facts. The government would improve its services especially in military training using the new technologies. Furthermore, its investment would increase due to the importance of the VR products. However, there could also be an increase in unethical issues that could make the government to be strict and setting rules and regulations (Shana & Kevin, 432).

Nevertheless, the markets for the VR industry are projected to improve in future due to continued innovations in technology and application that provide the opportunities for incorporating the VR technology. This shall increase demand for the VR products. Additionally, new markets shall be opened globally since; the VR technology is currently dominant in the US. Through the increase in markets, there would also be an increase in the number of investors. This translates to competition that would make it necessary for the government involvement in the industry with the purpose of provision of the intellectual property protection.