Microsoft (NASDAQ: MSFT) just hired Ruben Caballero, former vice president of engineering at Apple (NASDAQ: AAPL), as the company’s new VP for its engineering department. Caballero will head the hardware design department of Microsoft’s Mixed Reality & AI division, which previously developed HoloLens and its mixed reality headsets.
Caballero worked at Apple from 2005 to 2019 and led the development of various wireless technologies for iPhones, iPads and Mac. What does this new recruit tell us about the future of the AR / VR market?
Microsoft has yet to give up mixed reality
Microsoft unveiled the HoloLens four years ago and launched its successor, the HoloLens 2, last November. However, the helmet still costs $ 3,500 and targets developers rather than traditional consumers.
Microsoft launched HoloLens alongside its “Mixed Reality” platform for Windows 10, which encouraged developers to create holographic experiences. It also extended the brand to hardware partner VR headsets in late 2017, but most of these devices disappeared last year – probably due to poor sales.
Microsoft Xbox chief Phil Spencer recently said there are no plans to bring virtual reality experiences to the next Xbox Series X. This position, which has broken with SonyThe adoption of VR experiences with PSVR was another indication that Microsoft was giving up on dreams of mixed reality.
However, Microsoft’s decision to hire Caballero to head the Mixed Reality & AI division indicates that it still has irons. Caballero will likely help Microsoft develop next generation AR devices – which could be significantly cheaper, lighter and more powerful than current generation devices – to keep pace with technological rivals such as Alphabetit is (NASDAQ: GOOG) (NASDAQ: GOOGL) Google, Amazon (NASDAQ: AMZN), Apple and Facebook (NASDAQ: FB) in the emerging market.
Google is targeting its second-generation Google Glass, which costs $ 999, for corporate customers. Last year, Amazon launched Echo Frames, a pair of glasses powered by Alexa. Apple plans to launch a pair of AR glasses in 2022, and Facebook is developing two AR devices, Stella and Orion, which could arrive between 2023 and 2025. Several companies are also developing AR contact lenses.
In other words, the AR device market could explode over the next five years with smaller, cheaper and more powerful chips. Last November, IDC predicted that global spending on VR / AR products and services could increase at a compound annual growth rate of 77% between 2019 and 2023.
How New Mixed Reality Devices Could Strengthen Microsoft’s Business
Microsoft’s HoloLens and Mixed Reality devices are not yet generating enough revenue to move the needle. But as manufacturing costs go down and small devices gain ground with traditional customers, Microsoft’s Mixed Reality unit could launch a new line of next-generation headsets to complement its Surface devices.
This expansion would increase the weight of its device unit, which generated less than 5% of Microsoft’s revenues last year. It would also tie more developers and businesses to Azure, the main growth engine of its commercial cloud business, and more users to its Windows 10 and Xbox platforms with holographic apps and VR / gaming experiences. AR.
The expansion of this ecosystem would then widen Microsoft’s moat and prevent it from falling behind on another technological curve, as was the case when Apple and Google divided the mobile market more than a decade ago.
But let’s not jump to conclusions
Microsoft’s roadmap for the AR / VR market is unlikely to take shape soon. However, its decision to hire one of Apple’s experienced engineers to lead its mixed reality and artificial intelligence unit indicates that the company is still actively preparing new projects that could extend its presence beyond PCs, consoles and mobile applications.