Monday, October 23, 2017

Microvision Wins Even if it Loses

A reader was kind enough to send a copy of a newsletter I hadn't seen until now from 
I do rather like that they echo my 10% of the market theory.

This is a snippit of the newsletter part of a substantial article on MicroVision

Thanks Bart

MicroVision Wins Even if It Loses

You might be surprised about what I say next.

Whether or not MicroVision’s technology is in the iPhone 8 or if it licenses its technology for the iPhone 8, it will still come out a big winner.

What is important here is the impact to the overall industry. The moment that Apple releases augmented reality as a feature, the rest of the industry will copy it, just as it has with every major new feature that Apple has released since the very first iPhone in 2007.

And remember, Apple’s technology and patents are “in house.” Apple isn’t licensing its 3D sensing technology out to its competition, it wants to keep it to itself. Apple sees its technology as a competitive advantage.

So where is the industry going to go for the technology and intellectual property to compete with Apple in 3D sensing and laser beam scanning? You guessed it… MicroVision.

And the rest of the market is much larger than Apple’s shipment volumes. Samsung alone shipped 309 million smartphones in 2016, and Huawei shipped 139 million. In total, 1.27 billion non-Apple smartphones were shipped in 2016. That is a massive market. 

Now, let’s assume that 1.3 billion non-Apple smartphones are shipped in 2018. If MicroVision technology is used in only 10% of those phones, that is 130 million units.

Applying my estimation of a $2.50 licensing fee to those volumes, MicroVision gets $325 million in sales. Again, at an EV/Sales ratio of 5, we’d be looking at an enterprise value of $1.6 billion, 13 times where it is trading today.

I believe MicroVision’s time has finally come. I deeply respect the company’s tenacity after all of these years. It was too far ahead of its time. But the market is ready now and we have a shot of making 10 times our money or more on this exciting investment opportunity. 

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