Mixed Reality

1Improving Energy Efficiency and Compact Design Will Boost Sales
Companies to Bet On
Cumulative Market Size (2016-2020)
AR initially was a major revenue generator in the MR spacewith very little contribution from VR. However, recently,
with several VR product launches from big participants, theMR space is rapid growing and offering new opportunities
for application developers.

o
o
o
o
o
o
o
o

Magic Leap, US
Samsung, South Korea
Oculus VR, US
Avegant, US
Qualcomm, US
Microsoft, US
Sony, Japan
MindMaze, Switzerland

Business Models to Think Of

MR Will Disrupt
Mobile Computing
o MR

will
go
beyondsmartphones to immerseusers in technologies that blurthe line between the physicaland virtual worlds.

Smartphones
havedrastically
improved customer engagement
through improved user experience.
MR wearables are expected to bringin a more immersive experience tothis engagement.

Factors Critical for theTarget Industryo Enriched user experience andcost effectiveness of MR
glasses are 2 key areas ofconcern for MR adoption.
o Lack of standardization andlegal aspects will hinder its
adoption in industries such as
healthcare and defense.
o The framework of easycompatibility
will
boost
technology development.

o MR glasses are a major area ofdevelopment, but challenges include a lackof efficient battery technology, effective
content management, and advanced
material technologies. These areas are
gaining attention from developers todeliver more compact, lightweight MR
glasses that can seamlessly access content
while being energy efficient.

Acquisitions Will Be Prominent
A market with several big participants focusing on
hardware development and start-ups with softwareinnovations is likely to experience several
acquisitions in the coming years.

2

Venture Funding Primarily Driving Innovations across the GlobeEuropean Patent Office

124
31

237

270

2098 2588

2830

Japan 22

2015

111
2014

Funding deals for start-ups haveincreased significantly since Q4 2014. In
the first 2 quarters of 2015, around 40
deals have been closed in the MR
space.

36

2013 2014

166
2013

Funding Trends

272

United States Patent andTrademark Office2013 2014

China

127

2015
40

2013 201464

Government MR initiatives have notbeen significant, except a few, such as
Khazanah Nasional Berhad (theinvestment fund of the Malaysian
government) that invested $54 million
in Blippar, the AI-based AR technology
start-up.

2015

2015
2013 2014
2015

South
Korea

PatentGrowthAcross the 5 major patent offices, a total of about 9,000 patents
have been granted in the last 3 years of which more than 7000
have been granted in USPTO alone.

Microsoft

Microsoft is the major patent holder in the MR space with over
500 patents, followed by Canon, Google, IBM, Panasonic, Sony,
Nant Holdings IP, and Qualcomm.

$542M

North America, specifically the United States, is the key region fortechnology development. A majority of the top development
firms are based in the region. China also has been showing rapid
growth in recent years.

One of the largest funding deals for the VR space,
led by Google, Qualcomm Ventures, and KKR andother investors, is focused on development of the
prototype.

North
America

The key areas of investment are for thedevelopment of healthcare applications,mobile applications, and supporting
hardware development.
Series B funding received by Magic Leap in Q4
20143

Gaming, Entertainment, and Education will Experience Maximum Impact in the
Short Termo Gaming and Entertainment – The industry is experiencing the earliest
impact of MR technology to enrich user experience. Following thecommercialization of affordable VR-based gaming consoles, thisindustry is likely to be hugely impacted by this technology in the shortterm.
o Education – The industry will have potential benefits of VR, leveraging
simulated knowledge environments delivering better insights andengagement in training processes. There will be a medium impact inthis space in a medium term.
o Automobile and transportation – MR technology will have a medium
impact on the industry. Virtual simulation will aid in design to achieve
perfection. It is expected to face convergence in the medium term.
AR will help in enhancing the infotainment features in vehicles.

Gaming andEntertainment

Automotive andTransportation

Healthcare
Educationo Aerospace and defense – The industry can leverage VR in simulating
training programs. VR will help in delivering the best simulations withreal-life scenarios and augmenting information for better learning
processes. MR will also help improve customer service through inflight entertainment applications. Considering the strict regulatory
standards for screening technology accuracy levels in this industry,large-scale adoption would be in the long term.
o Healthcare – This industry will have an impact in the medium term
through the implementation of training applications. However,further enhancement of the technology could also help MR topenetrate critical application areas such as real-time remotesurgeries.

Short Term
(2016-2017)

Aerospaceand Defense

Medium Term Long Term(>2020)(2018-2019)4

North American and Asian Countries Will Experience Rapid Penetration
Disruptive Index

MEGA TREND
IMPACT

8/10

TechVision analysis notices a high disruptive index for MR. This signifies that AR and VR services are bringing in significant
Step-Changing innovations across sectors of economic activity.

―Smart‖ is the
Health, Wellness,
New Green Bricks and Clicks and Well-Being

New Business
ModelsEnabling Technologies
from the Region
Facilitating Adoption

Most Revenue
Generating Market

o The United States has been exhaustively working
on innovative R&D projects on MR solutions.
Several universities and research institutes havebeen actively exploring new dimensions in thisspace. Supported by federal bodies, such as the
National Science Foundation, these research
projects are focused on applying AR and VR invarious fields, such as healthcare, defense, andeducation. This region is home to several top
technology developers in this space.

Connectivity and Future of Mobility
Convergenceo

The region is primarily focusing on developing enabling
technologies. The European Union is leading the space inresearch in VR. The EMOSPEECH project has been
extensively working on integrating speech-based
emotions in VR. The German company SensoMotoric
Instruments GmbH is researching the implementation ofeye tracking technologies to VR, making it more
responsive. However, this region is focusing on thehighest revenue-generating hardware segment for AR
and VR that will facilitate adoption considerably acrossthe globe.

6

MR directly
impacts 6 Mega
Trends as identified
by Frost & Sullivan

Growing Fast andPushing Hard to
Commercialize
Productso Japan is actively looking into VR. Companies such as
Nintendo and Sony are making huge investments in
R&D as well as acquisitions to make a mark in the
global MR market. Another company, Capcom(originally a gaming company), has started an initiative
to implement VR into gaming and entertainment.
Another key country is South Korea, which is actively
participating in the MR space. Innovators such as
Samsung and LG along with many start-ups are pushinghard to commercialize their products.

5Technology Licensing is the Key Strategy for Expansion among Large
Corporates

Microsoft is the pioneer in Magic Leap is revolutionizing VR

Asuka Lab Inc.

MR researchand ARis innovating applicationso Microsoft HoloLens is a classic example of
MR that leverages a set of sensors,stereoscopic 3D head-mounted display(HMD), and spatial sound technology tointeract with AR applications throughnatural user interfaces. Microsoft has also
launched the HoloStudio application for 3Dmodeling.

o The US-based start-up is utilizing its hugerounds of funding from top ventures such as
Google and Alibaba toward development of acinematic VR device. The Magic Leap device
eliminates the need for VR glasses; instead, it
uses a head-mounted virtual retina display toproject objects directly in the eyes of users.

o The research lab from the University ofTokyo is working toward the developmentof a cross-platform software library for
application development. The platform isoffered as an SDK to application
developers that can be seamlessly
integrated into any HMD for MR
applications.

Sony is delivering next-

Facebook is bringing VR to

Jaunt is focusing on

generation gamingsocial media

cinematic VR

o PlayStation VR is a hardware and software
integrated system from Sony that uses a VR
Gear HMD device along with its standalone
application platform to provide a fully
immersive experience that can be linked
with the PlayStation platform.

o Acquisition of Oculus VR by Facebook is
primarily aimed at developing a new social
networking platform leveraging convergencewith the virtual environment. Considering thefact that the future of computing andcommunication will be dependent on mobile
and wearable devices, the initiative focuses on
new experiences of communication.

o Palo Alto-based Jaunt is aiming to innovate
the future of the immersive viewing
experience through its cinematic VR
solution for entertainment. Leveraging
advanced algorithms and computational
photography, the aim is to bring the VRexperience into mainstream entertainment.

Other Innovators:

Qualcomm

Samsung

Oculus VR

MindMaze

6

Key Questions for Strategy Planning

How can cloud computing improve MR systems ?
With the convergence of cloud and MR systems,
most system software and data content can be
distributed to the cloud server. This will allow theMR system to fully utilize storage for improved
user experience instead of using its processing
power and storage space for keeping big amountsof data.

How can we improve the energy
efficiency of MR systems ?
Running VR on a HMD device requires sufficientenergy, which is a key challenge with current systems.
With the introduction of materials such as graphene,
thin-film thermoelectrics for future MR devices can use
renewable energy materials that may boost energy
harvesting from MR systems.

What are the key areas of development to makeMR systems more compact ?

Key Questionsfor Strategy
Planning

Nanotechnology can play a vital role in this aspect.
The capabilities of nanotechnology are boundless.
The main modification to hardware that
nanotechnology can provide is the compact
features in a tiny IC or transistor. With theintroduction of nanotechnology into MR systems,
future HMDs will be extremely compact andlightweight.

How can the industry overcome
integration challenges for software andhardware?
Standardized frameworks could play a significant role inaddressing integration challenges. Initiatives such as the OpenSource Virtual Reality Consortium and Extensible 3D (X3D) by
Web3D Consortium could help to bridge the gap. However,there is also a requirement for regulations and policies for
system security enhancements.

7

Self-healing Materials

8

Need for Materials with Increased Lifespan and Durability
Market Potential in Billion $, Global, 2015-2019
CAGR: 75%

1.5
0.9Billion $

0.5
0.3
0.2

2015

2016

2017

2018

2019

o The paints and coatings
sectorandtheautomotive sector will be
the 2 key markets for
self-healing materials by
2019.
o Self-healing materials will
not be limited to highend applications and willfind adoption in daily use
consumer products andtextiles by 2019.

Trending Now
o NASA and the University of Michigan have developed amaterial that can heal itself in seconds. It can self-heal evenbullet holes.
o Apple has developed a self-healing elastomer for making its
phones waterproof.

Key Innovators

Year

BENEFITS AND DRAWBACKSo Minimizes production cost of processes required for damage
repairo Prolonged life of materials
o Improved efficiency of materials due to the ability for quick repairof damages/faults/cracks on the surfaceo Minimizes need for repair in inaccessible locations such as highrise buildings and wind turbineso Scalability issues
o Absence of standardso Availability and cost9Mix of Private and Public Funding with Improving Performance and Durability as
Key Focus Areas
The self-healing materials sector is receiving a lot of government funding globally. Private funding is more toward specific productapplication. Academia play a key role in basic research and lab scale product characterization.

11%

1%

65%
North America

1246

27

Europeo Countries that are receiving fundingo The United States is receiving the are UK, Germany, and the
maximum funding in the North Netherlands.
American region.
o Ilika was awarded a grant ofo Autonomic Materials, a research $660,000 in 2015 for a 3-year
organization formed by Scott White, collaborative project with Reliancea professor at the University of Precision Engineering, University of
Illinois, has been awarded with more Sheffield, GKN, and BAE Systems.
than $7 million by the US Air Force o Delft University of Technology has
Officeof
Scientific
Research received funding for 35 projects(AFOSR). AFOSR has also awarded from the Dutch government under$50 million to the University of the Innovation-Oriented Research
Illinois for research projects on self- Programme (IOP).
healing materials.

Patents Filed[2012- 2015]

21,263China

331

o Countries
arepartnering with eachother for funding on selfhealing materials.
o Under the Cooperation
China(NSFC)
Programme launched in2014, Netherlands andChina have collaborated
for research on advanced
self-healing materials.

Asia-Pacific
38

South
Korea

o Countries that arereceiving funding
in the Asia-Pacificregion are China,
South Korea, andJapan.

1966

Australia

23%
Patents filed from [2012-2015]

4,857 patents
Filed In WIPO

Regional share of total patents
filed in self-healing materials during
the period [2012- 2015]

Source: Frost & Sullivan/Lens.org

10

Paints & Coatings and Construction Markets to Be Highly Impacted in the Next
5 Years

Key Materials
Features

Sectors of Impact

Aerospace

Consumer
goods

Military

A

B
Embedded healing agents

Reduced maintenance andreplacement costo Fiber-reinforced composites
withliquidself-healingmaterials can be used in theaviation industry.
o University of Bristol, UK, hasdeveloped a ―bio-inspired"vascular system, which could
be used in high-performancecomposite polymers. These
polymers can replace metalin the aerospace industry.
Self-healing materials can beused in various consumer
products, such as the packaging
of cosmetics, sporting goods,
sportswear,
andhome
appliances.

SELF-HEALING MATERIALSMicrovascular materials

Reduced machine downtime

C

Shape-memory materials
Increased productivity

D

Reversible polymers
Enhanced productperformance

MarineSelf-healing coatings can be usedon marine assets, such as ships
and docks, to protect metal
beneath the sea from corrosion.

Construction Self-healing
concreteforbuildings
andself-healing
coatings for metal structures inbridges are being adopted in theconstruction sector.

Oil & Gas

Self-healing coatings can reducethe maintenance period andincrease the lifespan of oil rigs
and pipelines and refineries byreducing corrosion.

Automotive

Paints &Coatings

Self-healing materials in the
microcapsule systems can beused in coatings, paints, andadhesives, which can be further
used across industries such as
marine, oil and gas, buildings,
and automotive.

o Self-healing materials canimprove asset life and reduce
maintenance and overall cost.
o NissanMotorcommercialized the world’s
first self-healing clear coat for
car surfaces.

Healthcare
Biocompatible
self-healing
composites can be used in
artificial bones and teeth toincrease their life.

Electronics
Self-healing glass can be used in
the armored windscreens ofmilitary vehicles and exterior
body panels of military jets.

Self-healing materials can be usedin conductors, semiconductors,
stretchable sensors, and soft
robotics.

EnergySelf-healing materials can beused in wind turbines toincrease their service life anddecrease maintenance cost.

11United States Leading in Technology Adoption While UK and China Accelerate
R&D EffortsUKUSo The United States is working on
innovative R&D projects and programs
to increase the adoption of self-healingmaterials. Georgia Tech, US, iscurrently investigating the propertiesof self-healing concrete and developinga system for measuring cracks.
o NASA has patented a self-healing
polymeric material that can be used forvariousapplications,
includinginsulation.
o Autonomic Materials, US, is also
working on self-healing coatings,
sealants, and adhesives based on
microcapsule technologies created by
the University of Illinois, US.

Intensity of
ImpactHigh
MediumoGermany

UK companies have developed
smart polymers and elastomers
for textile and clothing sectors.
They are also working on selfhealing concrete. In 2015, theUniversity of Cambridge, theUniversity of Bath, and the
University of Cardiff andCostain developed a self-healing
concrete and conducted its first
UK trial.

o Germany also developed a selfhealing polymer that can fully
restore its mechanical properties
in just a few minutes after damage.
This can be used in theautomotive space, specifically forfenders, doors, and bumpers.
Companies are also developing
self-healing coatings for industrial
and construction applications.

Japan

China
o
China is focusing on developing
self-healing concrete for boosting
its infrastructural capabilities. It is
focusing
onencapsulation
techniquesandsurfacefunctionalization approaches to
this.

Japan is actively looking into thedevelopment of shape memoryhydrogelsandotherbiopolymers for drug delivery
and
other
healthcare
applications. Photonic gels arealso being researched for use inelectronics
andelectricalapplications,especiallyforobtaininglightmodulation
properties.

Low
12

Highly Disruptive Technology with Wide Application Potential
Disruptive Index
7/10

TechVision analysis provides a high score to self-healing materials for disruptive index. This signifies that self-healing
technology is bringing in Game Changing innovation across sectors of economic activity with the potential to replace
existing materials in various industries.

Smart Is the
New Green

Future ofMobility

Urbanization—City as a
Customer

Health,Wellness, andWellbeing

FutureInfrastructure
Development

Innovating
to Zero6

Self-healing materials directly
impact 6 Mega Trends as
identified by Frost & Sullivan due
to wide application potential andhighperformance
characteristics.

Competitive Landscape
Most Lucrative Marketso North America is leading in terms ofmarket potential for self-healingmaterials. It is the most lucrative market
for investment in the short to mid termwith various research and funding
activities are happening in the region.
o In the long term, Europe (Germany,
Netherlands) and Asia-Pacific (China,
Japan) could be the target markets forinvestment.

Industries to Watch Out
For

Emerging Marketso The segments that will be impacted themost in the short to mid term are
paints & coatings, construction, andautomotive. This is because corrosion
is a huge problem across the globe, andcountries spend huge amounts ofmoney on maintenance.
o Other industries that will be impacted
include aerospace, marine, and oil andgas.

o While the United States and Germany can beconsidered attractive markets in the near term,
Asia-Pacific is one of the fastest growing
markets in the adoption of self-healingmaterials with the construction industry being
foremost.
o Other countries that will actively adopt thistechnology in the near to mid term include
Japan, South Korea, and Australia.

13Key Questions for Strategy Planning

What are the major applications that would be
impacted in the near term?

Should I be concerned about the disruption
potential of self-healing materials?

The development of micro capsulated coatings (e.g.,
anti-corrosion coatings that can repair on their own)
will impact the market in the next 1 to 2 years.
Another market that will be impacted in the short tomid term is the building and construction industry,
with self-healing concrete being investigated acrossthe world.

Where does the long-term potential ofself-healing materials reside?
In the long term (3 to 5 years), high performancecomposite polymeric materials will hit the market. They
will find use in the aerospace industry for removing tiny
cracks on aircraft’s wings and fuselage. This will materializein the long term because of the high standards of producttesting required for the aerospace industry. Other
industries that will be impacted are consumer, oil and gas,and healthcare.

Self-healing materials could have a high degree of
disruption potential because they find applications ininnumerable sectors such as paints, aerospace, oil andgas, consumer, automotive, and healthcare. One of themain reasons this will be disruptive is that its use will not
only be limited to high-end applications, but also in
products required for everyday life.

Key Questionsfor Strategy
Planning

In-house R&D or Technology
Acquisition?
Partnerships, mergers & acquisitions, and joint ventures are
the main strategies adopted by companies operating in thissegment. An example includes the first trial of self-healing
concrete done by Costain—a research organization thatsponsored the research done by the University of Cardiff,
University of Bath, and University of Cambridge. Anotherexample is the development of self-healing coatings based on
microcapsule technologies by Autonomic Materials incollaboration with the University of Illinois.

14