Microvision: Heads Up!

10/21/2005 12:00 am EST

Focus:

George Gilder

Founder and President, Gilder Publishing, LLC

"I have been visiting for five years and each time I become enthusiastic about its opportunities," notes technology visionary George Gilder. Here, along with analyst Bret Swanson, he looks at Microvision, which he calls a "paradigm play on heads-up displays."

"Based on MEMS (micro electronic machines) technology, Microvision (MVIS NASDAQ) makes heads-up displays (HUD) that provide the ‘teleputer’ with a screen-free visual image. It currently supplies heads-up displays and helmet-mounted monitors for the military. Its near-term opportunities now include a range of commercial and even consumer applications. The market for solid-state displays is growing rapidly. Solid-state displays are everywhere: cell phones, cameras, lap top computers, signs, and home-entertainment systems. There are so many different applications that the market almost defies classification.

"In September, Microvision signed a letter of intent with Bosch, one of the world's largest automotive suppliers, to jointly develop heads-up displays for cars. With GPS navigation now becoming more widespread, more advanced HUDs are needed to display high resolution, multi-color graphics on the windshield. We note Audi's statement that it will begin installing laser-based HUDs in its cars, and we believe Microvision is a key technology player.

"While HUDs represent a large near-term market but do not yet yield revenue, another auto product has begun to kick in. The company's Nomad automotive technician display system achieved sales of $669,000 in the quarter, about $500,000 worth coming from the US Army. Honda and other automakers have announced their dealerships have begun using the system for maintenance and repair. Hunter Engineering, meanwhile, a key supplier of wheel alignment and brake systems at some 65,000 locations, is cooperating with MVIS to deploy Nomad and says technicians initially are achieving 30% productivity increases.

"The opportunities for Nomad-like systems across the manufacturing, repair, and medical markets are large, but as our analyst Nick Tredennick often cautions, the company always seems to have more good ideas and prospects than money. But in August and September the company acted to upgrade its balance sheet. This new funding will help Microvision capitalize on what could be its largest markets in consumer products, from ergonomically pleasing goggles for high definition gaming, movies, and sports to micro-displays for mobile phones and cameras.

"Any of Microvision’s systems will beat the competition in every category: cost, quality, compactness, power-efficiency, and versatility. It’s no contest, but the markets it is trying to break into in cameras, in projectors, in displays, and in cell phones have entrenched competition and a long history of legacy development. It is a difficult sell to overcome a bias for incremental improvement over transition to a novel approach, but these breakthroughs will come and then it’ll be an avalanche."

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