The Metaverse – Radio Free Mobile

Google Glass 2 – Buying TED

RICHARD WINDSOR — Tue, 22 Apr 2025 05:50:17 +0000

More about Gemini than Metaverse.

Google clearly paid the organisers of TED Talks to demo its developments for the Metaverse, but to be fair to Google, it showed good progress in improving the proposition of the Metaverse and head-mounted displays.
Google bought its way into a TED Talks session and used its time to demonstrate its AR and VR hardware and how they have been brought to life with Gemini.
This is where Google has been very clever, as it has used Gemini and processing in the cloud to make up for the shortcomings of the hardware, which remain a major barrier for everyone in this space.
Google’s strategy for the Metaverse has three elements, which are the Android XR software it is developing with Samsung, an in-house pair of smart glasses and a virtual reality device being developed by Samsung.
Stitching all of these elements together is Gemini, which, if it works as well as advertised (big if), goes a long way towards improving the user experience and making up for hardware shortcomings.
Google’s glasses (Glass 2?) are a regular pair of glasses like Meta’s Ray-Ban, except that they also have a very small and low-specification display.
This is to ensure that the glasses stay as small and light as well as have an acceptable battery life.
This is why almost all of the processing is being done off-device in the smartphone or the cloud.
The glasses demonstration was actually quite good, with Gemini being able to take inputs and give outputs in many languages, as well as recall things that the camera had seen moments before.
This immediately raises the same privacy concerns that caused CoPilot to delay the Recall feature that does the same thing, but on a PC.
Most of the demonstrations were utilising what Gemini could see and what it could do as opposed to the glasses themselves, as the glasses are nothing special when it comes to the hardware.
Gemini was also good at recognising and understanding text and diagrams in a book as well as playing music from an album viewed in the glasses, but these were obviously meticulously rehearsed beforehand.
Google also brought on the upcoming virtual reality device from Samsung, where it demonstrated more immersive use cases like visiting a destination in Google Earth, as well as Gemini helping with work-related tasks.
These demonstrations are the product of the Android XR collaboration that was launched with Qualcomm and Samsung last December, and I think that this offering is competitive with the other players, such as Meta and Apple, against whom it is going to be fighting for The Metaverse.
Android XR is also the only one that has a hint of being open, although those who choose to use it are likely to be locked into the Google Ecosystem as they are when they make smartphones.
Even in this limited scope, this openness is important as everyone else currently operates in a self-contained and vertically integrated silo which is exactly the wrong thing to have if the Metaverse is going to take off.
If the Metaverse is to become the place where users live their digital lives rather than smartphones, every device needs to be able to access the services of the other players as they can on smartphones.
This is not the trajectory that is being taken today, and unless this changes, The Metaverse is unlikely to ever become a mainstream environment.
Google has made some good progress on this front, and as long as it is less religious about putting its ecosystem front and centre of Android XR Metaverse devices, it could attract good traction.
The problem here is that this is how Google monetises the investments that it makes in this area, and so there needs to be a delicate balance.
The net result is that this does not represent a big advance in making the Metaverse a reality, as the barriers to entry remain as high as ever, but Google is cleverly using Gemini to greatly improve the experience.
If it works well and Google sells a few glasses (as Meta has done), this could help kick-start acceptance of smart glasses, but there remains a huge hill to climb.
For example, if Metaverse device shipments were to double every year for the next 7 years, they would still be just 20% of the smartphone market, indicating just how economically irrelevant the sector remains.
However, if the smartphone is ever to shed its crown, then this is the leading candidate to take over, making it an insurance policy worth having for those currently making their living from smartphones.

The Metaverse – Late Entrant

RICHARD WINDSOR — Mon, 16 Dec 2024 10:35:34 +0000

Google and Samsung are getting closer.

Google has finally launched its play for The Metaverse with the launch of Android XR where it has sensibly decided to leave the hardware to Samsung and Qualcomm in what may be the beginning of the end of Google making consumer devices.
Google has launched Android XR which is a version of Android that has been optimised for head-mounted displays.
This means that it will share a basic level of compatibility with Android used in smartphones but extra systems such as real-world perception and 3D environments have been added so that both virtual and augmented reality can be added.
Confusingly, at the same time, Google launched Project Astra powered by Gemini 2.0 (see here) with videos demonstrating its use on a pair of glasses not unlike those shown recently by Meta (Orion).
I am pretty certain that whatever this product is, it is not running Android XR which brings us to the first limitation of Android XR.
The capability of a platform needed to run something like the Apple Vision Pro and something like Meta’s Orion are very different and so how a single platform such as Android XR can cover all of these use cases is unclear.
One possibility would be to use a microkernel OS (like Huawei does with Harmony OS) which gives much greater flexibility in terms of form factors and use cases, but I do not think that this is what Android XR is.
Instead, it seems to be a compatible version of Android in that apps and services from smartphones will run on it but with the extra components to ensure that it offers a good Metaverse experience.
This means that it will be next to impossible to have this Android XR running on a pair of glasses because the platform will be too large and too power-hungry to make this a practical reality.
Consequently, how a single unified XR ecosystem is going to be built without fragmenting the Android XR platform remains a mystery.
The only product running Android XR that has been announced is Project Moohan which is made by Samsung using Qualcomm’s XR chipset.
This device looks very similar to the Apple Vision Pro and shares the same approach in terms of implementing The Metaverse backwards.
Everyone seems to agree that the main use case for The Metaverse is a mixture of the real world and the virtual world but the right way to do it is to overlay the virtual world onto the real.
The problem with that is that this is very technically demanding so as an interim step, Apple (and now Samsung) are doing it the other way around.
There is nothing wrong with this intrinsically, but I continue to think that The Metaverse will not take off until the technical problems are solved such that it can be implemented in the right way.
These announcements are significant because they demonstrate an ever closer collaboration between Samsung and Google where Google does the software and Samsung does the hardware.
I have long thought that this is what needs to happen for the Android Ecosystem to really compete with the Apple Ecosystem (see here).
The Metaverse is a great place to test this new form of cooperation as there is very little risk to revenues if it fails.
If it works, it could completely change the way the relationship works and herald the end of Google making its own hardware products.
This is something of which Ms Porat is almost certain to approve of.

Meta Platforms vs. Apple – Metaverse Debate

RICHARD WINDSOR — Mon, 30 Sep 2024 08:21:57 +0000

Apple is back to front but can easily flip.

While the commentariat is impressed with Meta Platform’s new Orion AR device, it is also unusually critical of Apple which it thinks has made the wrong technical choice, but I suspect that Apple has got much more up its sleeve than everyone thinks.
Although there appears to be a lot of debate surrounding how to implement The Metaverse, there is no disagreement that it needs to be made up of the real world and the virtual world blended together.
This can be achieved by either overlaying the virtual world on top of the real world or the other way around.
Meta has chosen the former which is technically very demanding while Apple has chosen the latter and Meta’s demonstration of Orion has reignited the debate about whether Apple has made the wrong choice.
This is where I think the commentariat is not looking far enough ahead.
When it comes to the mass market takeoff of The Metaverse, there is no doubt in my mind that overlaying the virtual world on top of the real world is the only way to do it.
If users are going to live their digital lives in The Metaverse rather than on smartphones, they will need to stay in touch with reality rather than a representation of it.
Overlaying the virtual world on top of the real will ensure that the resolution of reality will remain infinite with world-beating latency of 0ms.
Hence, there is no doubt in my mind while Apple talks about AR being the only way to do The Metaverse, it has implemented it backwards which is a dead end.
The commentariat agrees but where we differ is that I think that in a few generations from now, Apple will be in a position to flip its implementation on its ahead and move to implementing the virtual world on top of the real world.
It will be able to do this reasonably easily as Apple has built two completely different systems that run independently of one another where one captures and interprets reality and the other creates the virtual world.
Meta’s Orion has taken a similar approach, and the device uses a puck roughly the size of a smartphone to achieve its 100g weight.
The system that interprets reality and the battery is in the glasses while the virtual world is processed and rendered on the puck and then wirelessly streamed to the glasses.
Hence, it is very clear that the two worlds need to be created or detected separately and then interlaced together with the virtual world being overlayed via transparent lenses.
The assumption is that the future roadmap for the Vision Pro is to remain a VR-based device, but I think that this is not the intent.
Apple has a reputation for user experience and even now with Meta’s new product, the only way to deliver this today is to do it the way that Apple has.
Once the technology is ready to deliver this quality of user experience with the virtual world being implemented on top of the real world, then I think Apple will be able to quickly flip its offering around.
The fact that these are two independent systems will make it much easier to do this.
I have long viewed the Vision Pro as an insurance policy against the demise of the smartphone rather than a statement of where Apple thinks the market is going and so I think Apple will change the Vision Pro to match what the market is demanding.
Consequently, I don’t think that Apple has gone down a blind alley or taken or wrong turn but has merely produced a device with the best user experience using technology that is available today.
It is also important to remember that the Meta Orion produces an inferior user experience and costs around $10,000 to make meaning that it is very far from being a commercially viable device.
What Meta is looking for is something that offers at least as good or better in terms of user experience, weighs less and that it can sell for something closer to $1,000.
Taken in this context, it is clear that Meta has very far to travel and so I see no need to change RFM’s current forecast of a viable Metaverse device much before 2026 or even later.
Even from that point, and in an optimistic scenario, The Metaverse will take years to seize the digital life crown from the smartphone and so the iPhone business looks pretty safe for the foreseeable future and certainly for the usual investment horizon.
That does not mean that I want to hold Apple shares as it remains expensive for a company struggling to show growth and so I would continue to look elsewhere.

Meta Platforms Connect – Land Grab

RICHARD WINDSOR — Fri, 27 Sep 2024 08:09:49 +0000

Meta moves first to take unclaimed territory.

Meta showcased the results of billions of dollars of investment and at the same time was not shy of taking shots at its competitors as it staked its claim to the next generation of the digital ecosystem.
Connect is Meta’s showcase for developers where the focus this year was all about AI and The Metaverse (something most people have completely forgotten about).
In my opinion, ignoring The Metaverse is not a smart move as one day, the technology is going to be ready by which time those who have chucked it on the scrap heap will be too late.
This is why Apple has the best VR device with the best reality detection system that hardly anyone has purchased because if Meta stumbles upon the formula that popularises The Metaverse, it will be ready to compete.
There were three main announcements:
- First, Orion: which is a pair of augmented reality spectacles that are far from ready for the market, but make a number of key advances.
- Orion has a 70-degree field of view which is pretty good as well as a bright display and all of the compute onboard the device.
- The demonstration of the device is pretty good but most of the functionality makes use of AI to identify objects and situations in the real world and make suggestions based on that.
- How much of that was happening on the glasses themselves, remains to be seen.
- It will also prioritise voice, but gestures and neural impulses are also being worked on.
- The demonstrations were slightly glitchy but by and large, Orion is a good step forward but remains far from anything that a consumer is going to use on a daily basis.
- Meta has shown its progress, and the results show that if The Metaverse takes off, it will be in pole position to be a major player and not have to remain dependent on Apple or Google.
- This has been one of Mr Zuckerberg’s gripes for many years and ever since Apple messed around with his business model, he has been adamant that this will not be repeated.
- Orion is a step along that journey but the road yet to be travelled remains long.
- Second, AI: where Llama 3.2 was released in its 11bn and 90bn parameter sizes but not the really big 405bn variant.
- Llama 3.2 is multimodal for the first time and catches up with the latest versions of Gemini and OpenAI in terms of capabilities.
- Here, Mr Zuckerberg could not resist taking a swipe at his competitors stating that Open Source is the way to go and that his competitors are already slashing prices to stay competitive with Llama.
- I have seen no hard evidence of this but if it is true, it is a sign that the bubble is beginning to burst.
- Llama 3.2 11bn and 90bn will not be available in EU and Mr Zuckerberg once again could not resist taking a shot at the EU for its excessive regulation.
- I continue to think that with its flagship 405bn Llama 3.1 model available for free to anyone that wants it, Meta is rapidly commoditising generative AI and its foundation models meaning that differentiation will increasingly be in the services that are built on top (see here).
- Third, VR: which is where the volume of The Metaverse exists today.
- A new, cheaper device Quest 3S was launched which starts at $299 which is clearly a subsidised price.
- This device is all about a land grab and ensuring that all early moves in The Metaverse are made using Meta’s platform and with its independent competitors having largely given up, the road ahead is clear.
- This will light no fires under Metaverse adoption but crucially it will ensure that Meta dominates the fledgling market positioning it well for a take-off if it comes.
These launches are all about positioning Meta well in the growing market for AI services and The Metaverse when / if it takes off.
Meta was not shy in calling out the shortcomings of its competitors and regulators and, to be fair to Mr Zuckerberg, he is putting his money where his mouth is and delivering progress.
Llama is already a thorn in the side of Google, OpenAI, Microsoft and Amazon and is building a barrier to entry for Apple in both AI and The Metaverse.
5 years ago, Meta Platforms was a laggard in AI and while it has spent a fortune, it has gone up significantly in my rankings and is now challenging the leaders.
However, it may also be the cause of the bubble bursting and so while there is AI upside priced into Meta’s shares, I would be wary of investing.
The cheapest AI investment available remains Baidu which along with its peers is having a bounce as China has finally decided that it needs to do something about its moribund economy.
It is still risky, but this could be the beginning of the long-awaited rerating of Chinese technology.

Apple’s Metaverse – Fool’s Errand

RICHARD WINDSOR — Tue, 02 Jul 2024 06:21:21 +0000

A cheaper Vision Pro makes less sense than the original.

In response to poor sales, it appears that Apple is working on a cheaper version of the Vision Pro which will make even more horrible compromises than the original meaning that volumes will again be low leading to another disappointment.
Furthermore, this obviates the entire reason that the Vision Prio exists which is to develop the best Metaverse technology just in case Metaverse devices take off and start to eat into smartphone shipments.
At some point in time, the smartphone may suffer a “Nokia moment” when some other new form factor becomes a better place for users to live their Digital Lives.
Almost the entirely of Apple’s business depends on the iPhone remaining at the centre of the digital ecosystem, and if it does not have the other product ready to go when the switch happens, it will suffer Nokia’s fate.
I have long argued that this is what the Apple Vision Pro has always been about and that the number of devices that it sells is virtually irrelevant.
The lacklustre shipments of Apple Vision Pro also argue strongly for my long-held view that Apple came to market way too early with a Metaverse device as the technology is not yet available that would allow a viable smartphone replacement to be created.
RFM Research has long concluded that this will not come before 2025 to 2027 at the earliest and so there is very little point in coming to market with a device with the intent to make money before that time.
Instead, the Vision Pro is an insurance policy that allows Apple to get its architecture developed such that when the right technology is available to make a marketable device, it can move quickly.
A good example of this is the RealityOS system that Apple has developed that perceives the real world, hand gestures and the state of the user and overlays that over the virtual world.
Apple made the right decision to develop this system completely separately from the system that creates the virtual world, and this puts it in an excellent position to create a device quickly when the market is ready for it.
Following the slump of 2022, the Metaverse market has recovered somewhat but remains very far away from anything approaching the mainstream and it remains an irrelevant rounding error compared to smartphones.
This is precisely why it makes no sense for Apple to seriously address this market now meaning that its efforts should be focused on fixing the technology issues and getting developers onside.
A cheaper device that makes even more compromises but remains orders of magnitude more expensive than market leader Meta’s Quest 3 makes no sense at all in my opinion.
Instead, I think Apple will continue to develop the technology, curate developers and wait for the right time to really go after this market.
The right time may be never but even billions of dollars in expenditure are a rounding error in terms of the payout should the Metaverse take off and Apple successfully transfer the iPhone business to a Metaverse device of some description.
This is why the Vision Pro remains an insurance policy and very little more.
Apple has rallied recently on the idea that it is now an AI company which in my opinion has done nothing else other than make the valuation of a company struggling for growth look even more expensive.
I would continue to look elsewhere.

The Metaverse – Dark Horse of WWDC

RICHARD WINDSOR — Mon, 24 Jun 2024 06:23:48 +0000

A winning product with almost no sales.

While Apple Intelligence got all of the attention at WWDC, an extraordinary amount of content was provided to developers on how to develop apps for VisionOS for a product that has almost no users.
This would appear to be counterintuitive until one considers that in the very long-term some form of augmented reality (AR) may end up replacing the smartphone meaning that Apple needs something ready to go or face going the way of Nokia, Ericsson, Blackberry and many others.
The Apple Vision Pro is Apple’s first foray into the Metaverse and although it is without doubt the best experience available by far, sales have been disappointing.
I don’t think that this is necessarily due to the price tag but more to do with the horrible compromises that Apple was forced to make to get the experience where it wanted.
These include a large device that is front-heavy, 2 hour battery life meaning that it needs to be plugged in most of the time and the fact that Apple was forced to implement its experience back to front.
Apple thinks of this device as AR but the reality is that the Vision Pro is a VR device in that reality is superimposed on the virtual world rather than the other way around.
True AR is where the virtual world is superimposed on the real world, but this is so technically difficult to do right now, that Apple had to do it the other way around which is what I mean by back to front.
Despite all of these problems and weak sales, Apple dedicated many of its WWDC sessions to teaching developers how to write apps for Vision OS as well as upgrading its tools and capabilities which appears strange for a device that has very few users.
I think that Apple’s strategy is to prime its ecosystem to be ready to switch to AR should The Metaverse start to take off to ensure that whatever it loses in smartphone sales is made up by Metaverse devices.
Furthermore, I think that Apple is also leading the way in terms of how AR should be implemented by splitting the processing of the virtual and real world into two completely different systems.
This is because interpreting reality is very latency intolerant and hence requires a real-time system whereas the virtual world is much more forgiving.
Hence, the optimal solution is two systems which create the two worlds separately and then overlay one over the other.
This will also make it much easier for Apple to switch from VR to AR when the technology is ready for it to do so which I think will be around the 2026-to-2028 time frame.
I think that the Apple Vision Pro is successful because it is fulfilling its function which is to be an insurance policy to prevent the kind of implosion that Nokia suffered between 2007 and 2012.
If developers are familiar with how the system works and how to program for it, then Apple will be one step ahead of the competition for AR.
The current leader is Meta which makes devices that are far cheaper which means that it has sold far more devices and has a much larger installed base but its system is not that well suited to be migrated to AR.
Consequently, I expect that Apple is not about to ditch the Vision Pro system but will continue developing it just in case it is needed.
Given the gargantuan size of the iPhone business and the peripheral businesses that it enables, spending a few billion a year on developing a Metaverse offering just in case it is needed is a worthy and successful investment in my opinion.
Furthermore, it is a rounding error in the accounts and investors will barely notice its impact.
That being said, Apple is not suddenly an AI company and the recent rally only serves to reinforce my view that the valuation of the company is too high and that there are much better bargains to be had elsewhere.

Apple Vision Pro – Too Much, Too Early.

RICHARD WINDSOR — Mon, 29 Apr 2024 06:17:20 +0000

Apple loses very little with the Vision Pro.

It looks like Apple is going to miss its 1m target for the Apple Vision Pro with commentary from suppliers indicating volumes of 200,000 – 400,000 but this is very far from the disaster that it would appear to be.
Apple’s main assembler for the Vision Pro (see here) appears to be cutting back its manufacturing capacity for the Vision Pro to 400,000 while other suppliers are talking volumes down to less than 200,000.
I suspect that the lower numbers are coming from suppliers who may be part of dual source arrangements and so I would be more inclined to trust the numbers from the assembler itself.
At a very high level, this looks like a humiliation for Apple, but it is important to remember that this is a tiny market and shipping 400,000 units is still pretty good performance, especially at a price point of $3,500.
Furthermore, I don’t think that this has very much to do with the device or the user experience but is really about the market not being ready to receive it.
The Metaverse is the leading contender to take over from the smartphone as the place where users live their digital lives, but this is a trend 10 to 15 years in the making.
The original smartphone was launched by Nokia in 2001 but it took 7 years for someone to figure out the right user experience and then another 8 for it to become the preeminent digital device.
If this time is overlayed onto the Metaverse, then it is likely to be 2027 or 2028 before a really usable device is even launched and 2035 before there are real volumes in the market.
All of this assumes that the interoperability issues with the Metaverse are solved and as of today, there is very little sign of this as everyone is busy developing their own silo that is incompatible with anyone else.
With these kinds of caveats, it is far from certain whether The Metaverse will ever really take off which is why I have always argued that Apple was too early to come into the market now.
However, the Vision Pro is not a serious attempt by Apple to grow its revenues but an insurance policy so that it has something ready to go just in case The Metaverse does take off.
This is how Apple avoids Nokia’s fate and given how much better the Vision Pro is compared to anything else on the market, I think this insurance policy is in pretty good condition.
Furthermore, Apple has undoubtedly learned an enormous amount from making the Vision Pro and has, in my opinion, created a foundation for how some of the problems will be solved.
This is the reality perception system which is a standalone real-time system that is responsible for the perception of the user’s surroundings which are then overlayed on top of the virtual world to create the user experience.
Assuming that one could make the system small enough, this could be used just as well in augmented reality which is where the future of The Metaverse lies if it is going to hit the mass market.
Apple is the only one to create a standalone system which makes it much more expensive to make, but the difference in performance could easily mean that this is the route that everyone will end up taking.
A downgrade to sales estimates of 60% always looks bad, but I am not sure that Apple has lost very much here as it looks to be a step ahead in Metaverse device design which will put it in a good position to migrate the iPhone to the Metaverse should this transition ever occur.
I still think that Apple has a difficult year ahead with low growth and challenges in China to name two and so I remain ambivalent about owning the shares.

Nvidia GTC 2024 Day 1 – Entrenchment

RICHARD WINDSOR — Tue, 19 Mar 2024 04:21:35 +0000

Nvidia knows exactly what it is doing.

Nvidia once again distanced itself from its rivals revealing yet more hardware advances and new features for its platforms that aim to increase the degree of its entrenchment which will support its revenues and gross margins for some time yet.
The highlights were:
- First, Blackwell: which replaces Hopper and once again puts Nvidia at the cutting edge of AI training and (if Nvidia gets its way), inference in the cloud as well.
- Blackwell is two separate dies made on TSMC’s 4nm process that are stuck together in such a way that they behave as a single piece of silicon.
- This combined with the new Nvidia Link Switch chip allows every GPU to communicate with every other GPU in real time meaning that they can work as a single system.
- Blackwell has been designed for trillion-parameter models which is effectively a leak of Open AI and everyone else’s latest model architectures (see below).
- This is significant because the biggest problem with multi-GPU training systems is that they are limited by the speed at which data comes on and off the individual chips and how well the GPUs can work together.
- This combined with further iterations of the InfiniBand technology it acquired from Mellanox re-establishes the lead it acquired two years ago when it launched Hopper.
- Rivals have made some progress in closing this gap only to have Nvidia open it up again.
- The take-home message on Blackwell vs Hopper is that it can do the same job as Hopper but with ¼ the number of GPUs and ¼ the amount of power consumption.
- If one assumes that the price of Blackwell will be double that of Hopper, then the cost to the client compared to Hopper to train large language models still drops by 50%.
- This, combined with the complete lock that Nvidia has on the development platform, is how revenues grow, gross margins stay the same and a lot of cash is generated.
- Second, LLM Architectures: The Blackwell specification has given the game away on the latest generation of LLMs where everyone is playing their cards very close to their chests in terms of what the architectures are, how big the models are and how they are trained.
- If everyone had stopped growing the size of their models, then the Blackwell architecture would be very different and Blackwell has been specifically designed for trillion parameter models.
- Nvidia cited GPT-4 as being 1.8tn parameters (10x the size of GPT-3) but I can find no reference anywhere to a disclosure by OpenAI as to the size of this model and so I suspect that Nvidia is using the current market estimate.
- However, there is no way that Nvidia would have designed Blackwell the way that it has unless its customers were asking for systems that can support models with trillions of parameters, meaning that the industry is still following Kaplan’s bigger is better approach.
- There is some evidence to suggest that this is not always the case, but for now, the stage is set for massive models to become even more massive over the next 12 months at least.
- This is excellent news for Nvidia because bigger means more compute which means more chips at higher prices and fat 70% gross margins.
- Third, inference in the cloud: Following on from its Q4 results, inference again took an increasingly important role.
- Nvidia’s partners are talking about a compute requirement for inference 4-5x the size of that for training and inference is already taking up 50% of the capacity that Nvidia has already deployed.
- Blackwell has been also designed with inference in mind and as such offers a 30x improvement over Hopper using a combination of 4-bit processing and the new NVlink Switch chip.
- This is a very large improvement and a reflection of my view that 2024 is the year of inference compared to 2023 which was all about training.
- However, it does not change RFM’s view that the real market for inference will be at the edge which will remain an economic no-brainer for the provider of a generative AI service at scale regardless of what Nvidia does in the cloud (see here).
- Third, Nvidia Inference Microservices (NIMs): which reinforces Nvidia’s move towards inference as well as aims to preserve its appeal should the focus in AI move away from silicon.
- NIMs are pre-packaged and trained generative AI models that can be deployed anywhere in the ecosystem where CUDA is being used.
- I thought that Nvidia might launch a foundation model for developers to push back against the threat of losing its control point as developers move from developing on silicon to instead developing on foundation models.
- This approach is different but is likely to have a similar effect if it proves to be very popular.
- Nvidia will create a library of NIMs with specific pre-trained capabilities such as chip design, medical expertise, drug discovery and so on that customers can license and use to improve their business performance.
- If these prove to be popular, they could help to shore up the stickiness of Nvidia silicon if this comes under pressure from developers moving towards foundation models as their preferred development platform.
- Fourth, partners: Nvidia is moving to lock up the AI industry before any of its potential rivals get a look in.
- This is classic first-mover advantage with the idea being that by the time competitors have equivalent products, everyone is already on Nvidia’s platforms and can’t be bothered to switch.
- Critically, Nvidia announced extensions and enlargements to its partnerships with Microsoft, Google and AWS which are significant as all three already have competing silicon or are actively developing it.
- The problem for them is that the AI freight train is leaving the station and currently it has Nvidia’s badge on it meaning that right now, one has to climb on or get left behind.
- While the development platform for AI remains CUDA, there is very little that anyone can do to reduce their dependence on Nvidia.
- Fifth, Omniverse: where Nvidia is breathing some life into what has become a moribund segment of the technology industry: The Metaverse.
- Generative AI fits really well with The Metaverse as one can use AI to generate both the 3D environment as well as the scenarios and simulations that make digital twins so effective in reducing development and maintenance costs of large complex assets like factories.
- Here. once again, partnerships were crucial with Nvidia getting Siemens and SAP on board which are two of the world’s most important suppliers to industry.
- Nvidia will be powering Siemens Xcelerator giving it access to all of Siemens’ industrial ecosystem further cementing its position.
- Nvidia will also be powering SAP’s AI offerings again aimed at increasing its stickiness and helping it to become further entrenched.
Nvidia’s strategy is very simple which is to leverage the popularity of CUDA with developers to remain the go-to place to develop and run AI in the cloud.
Combine this with a product cadence that keeps it ahead in terms of pure hardware horsepower and performance and its competitors remain very far away from laying a glove on its market position.
Hence, I don’t see any threats to its profitability for some time, but its market share is now so high that growth is pretty much out of its control and will be determined by the market rather than anything that Nvidia can do.
Nvidia’s shares are expensive but compared to the valuations being given to the generative AI companies that are using its products, it is not hard to argue that it is cheap.
However, the easy money in Nvidia has been made and to go further from here requires the AI bubble to continue without check.
There are plenty of signs that this will be the case for a while but at some stage, there will be a reset and at that time there will be almost nothing that Nvidia will be able to do about it.
The good news is that for the moment, it looks like the run will continue.

The Metaverse – The halo effect

RICHARD WINDSOR — Wed, 06 Mar 2024 06:16:51 +0000

Meta is back on top as Apple reignites interest.

Meta has correctly positioned the Quest 3 for the market that is available today, but it has been greatly helped by Apple giving the market legitimacy and Pico bowing out.
It looks as if Q4 23 saw a good recovery for VR and AR with a big bounce YoY in shipments although overall, 2023 was a year where shipments fell by more than 20%.
I suspect that a lot of this was due to an increase in confidence in the Metaverse spurred by the launch of the Apple Vision Pro combined with the release of the greatly improved Meta Quest 3.
This was evident in Meta’s Q4 23 results where Reality Labs grew revenues by 47% YoY where Q4 made up 56% of the whole year’s revenue.
Critically it also looks like the Chinese have gotten into difficulty as its main Metaverse contender, the Pico cancelled its latest device which ensured that its older offering became uncompetitive, and its market share fell.
This is a result of being owned by ByteDance which has been traumatised by the fate of the rest of the large Chinese technology companies and appears to have turned its attention towards efficiency and profitability rather than investing for growth (see here).
As far as I can see, this is the only reason for not going ahead with the Pico 5 as the device had gained a lot of share and was popular with developers as it gives far more access to the hardware than Meta does.
Either way, Meta has benefitted significantly from both Apple and ByteDance where I suspect that its share is now well above 50% as opposed to just over 30% 12 months ago.
Meta remains the dominant force in the fledgling Metaverse as:
- First, value: The fact that it offers half of the Apple Vision Pro experience but does so at 1/5^th of the price means that its value proposition is superior to Apple’s for most potential users.
- Second, games: Thanks to Meta’s head start and it’s very high share of the installed base means that anyone who develops an app or service in the Metaverse will do so on Meta first.
- Games are by far the dominant use case for the Metaverse at the moment with Media Consumption coming in a distant second, and in games, volume is everything.
- The Apple Vision Pro may offer an amazing experience, but a developer is going to make more money by developing for Meta than it is for Apple as evidenced by Google and Netflix’s decision not to support the Vision Pro.
Consequently, I think that Apple is going to make only the smallest of ripples in the overall market, but it has rendered the segment legitimacy and created a quality bar that the others need to aspire to.
In that regard, Apple has galvanised the market.
Hence, Meta remains in a very strong position, but I am not convinced that one quarter is enough evidence that the Metaverse is taking off.
Instead, I think it is a normalisation of a niche market that still has a lot to prove before it has any hope of challenging the smartphone.
Consequently, 2024 is likely to see a bounce off the 2024 lows but in Q4 24 I would expect to see growth stall as a result of the difficult YoY comparison.
The Metaverse remains uninvestable at the moment as all of the cited players currently earn most of their revenues doing something else which is unlikely to change any time soon.
I am keeping an eye on Roblox and Unity as potential plays for the Metaverse, but both of them remain too expensive and their shares look set to stagnate or decline for a while yet.

Meta vs. Google – Spurned proposal

RICHARD WINDSOR — Mon, 04 Mar 2024 05:41:53 +0000

Meta jilts Google for good reasons.

Meta’s decision not to partner with Google to create a Metaverse platform makes complete sense confirming my view that Meta Platforms is determined to ensure that its business is never again hostage to a foreign platform.
The Information is reporting that Google approached Meta to jointly create a platform for the Metaverse and that Meta decided not to join Google.
This makes complete sense and given that Meta is far ahead of Google in addressing the Metaverse, there was far more in this partnership for Google than there was for Meta.
At a very high level, a partnership makes sense as Meta’s Metaverse is based on a customised spin of Android which is owned by Google and would give Meta better vertical access to all aspects of its platform.
However, I think that Meta will not regret this decision as:
- First, Control. Meta Platforms has suffered at the hands of Apple and Google as its key revenue-generating assets depend on iOS and Android to make money.
- Every time a decision has been taken by Apple or Google that adversely impacts Meta, it has had to scramble to contain the damage.
- The most prominent example of this was when Apple required apps to ask users if they wanted to be tracked hamstringing a major method by which Meta made money.
- Meta has found a way around this, but it has brought home with crystal clarity just how dangerous this kind of dependence can be and Meta is determined that there will be no repeat of this.
- This is why it is designing its version of the Metaverse from the ground up and why it has created foundation models and then let the open-source community use them.
- Letting Google partner on the platform cedes an element of control to Google that Meta would obviously like to retain.
- Second, Leading position. Meta Platforms is the leader in the Metaverse by a substantial margin and letting Google into the platform gives a competitor a leg up.
- Google will have to compete in the Metaverse eventually should it begin to take off, and this would help the Google ecosystem compete against Meta’s ecosystem in the Metaverse.
- Third, win-lose. I think that Google would be much better off with this partnership while Meta Platforms would be a net loser.
- This is because Google does not have much to offer Meta.
- Android is already in the open source and if things go sour, Meta can carry on developing on Android although it would have to take over all aspects of Android development not just the pieces that it currently customises.
- Google has billions of users that Meta could access but I suspect that the vast majority of these and all of the valuable ones already have a relationship with at least one Meta property.
- Hence, the benefit to Meta of getting access to Google’s users is likely to be worth very little meaning that there is not much here for Meta.
Hence, I think that this was the right decision for Meta as Google is miles behind when it comes to the Metaverse and there is very little benefit to Meta by giving it a leg up.
That being said if I had to choose between Google and Meta, I would take a position in Google.
This is because Google is already cheaper than all of its peers and is a leader in AI no matter how many times it shoots itself in the foot.
This tendency has been particularly strong when it comes to its AI products and the market is again panicking that it will lose market share in search to Open AI or one of the other upstarts.
I see no sign of this as Google’s AI is just as good as anyone else’s but Google remains awful at public relations.
This has ensured that it has received all the negative attention despite the fact that everyone else’s AI suffers from the same or similar biases that have caused the recent bad press.
The cheaper it gets, the more I want to own it.