Saturday, December 19, 2009

Microvision: Oppenheimer Initiates Coverage with Report

On December 11th, Oppenheimer initiated coverage of Microvision with a “Perform” rating and also published an analyst’s report. Oppenheimer defines their “Perform” rating as...

“Stock expected to perform in line with S&P 500 within the next 12 – 18 months.”

Here’s the link to the report...
http://f1.grp.yahoofs.com/v1/EESNSzcJ8uD09D9dXZ4dbkj52EazTqVw1puiVQ_2lTWsMdWNb1sanl73dfHwBN5t_2ecNiDX5C-N-OrS2QsH0_KtCCXb/MVIS_OPP_1209.pdf

Oppenheimer Report is Comprehensive and an Excellent Source of Raw Information:
I just went through this 27 page report on Microvision. It is full of facts, figures, assumptions, estimates and projections and is an excellent read. The report is very comprehensive and provides, in detail, the kind of information we have know for a while; but have been looking for validation all these months. The overall tone of this report is very conservative and that is to be expected from a tier one Institutional Broker/Investment Banker.

Oppenheimer Relationship with Microvision:
First, let’s look at Oppenheimer and their relationship with Microvision...

Oppenheimer is one of the Investment Bankers that assisted Microvision with secondary public financing and raised over $31 million dollars just a few days ago. I doubt they would have kept MVIS on their “potential investment candidates list” if they were not certain that MVIS has future potential. Let’s face it... there are hundreds of small cap companies out there that have zero revenues but with huge future potential. Just because Oppenheimer did the secondary funding, for a fee, it does not obligate them to provide analyst coverage... unless they were certain that the clouds [of green lasers] would clear soon and the Sun would shine upon Microvision in the next few months.

Oppenheimer Report is Based on Very Conservative Assumptions, Estimates and Projections:
Over the last few years, most analysts have gone very conservative; when it comes to small cap companies with essentially no revenues and zero income streams to work with. Analyst projections assume varying degrees of errors and look many years ahead into the future to develop their “Valuation and DCF Analysis Model”. Most analysts specialize in certain sectors and over the years they develop sector expertise and also establish working relationships with the management of companies they follow.

Oppenheimer Report is very conservative for basically two reasons...

• Pico projection market did not exist a year ago, but it is growing so rapidly that it has finally attracted analyst coverage. Obviously, it is clear that these two young analysts have no experience or expertise in the pico projection market... because it did not exist until a year ago and it is only now that companies have started to ship product in this emerging market. After reading the report, it is also obvious that Oppenheimer analysts are using their “consumer electronics” business knowledge and expertise to develop assumptions, estimates and projections for the pico projection market. This approach to analysis is not only conservative─ because consumer electronics is a mature industry─ but it is also erroneous; because it wrongly assumes that future pico projection business will model after the consumer electronics business model. This sort of thinking is naive and shows-off the shallowness of Oppenheimer analysis.

• It seems that Oppenheimer Report was developed in vacuum; as it seems to completely ignore any input from other industry experts, as well as, input from the CEO of Microvision and others. In my opinion, any estimate/projection that completely ignores the input from those that are close to pico projection industry are just one man’s opinion as against the other... like Oppenheimer analyst vs. you or me. What good are the estimates and projections that are pulled from the thin air and without any input from industry player and experts?

Microvision investors could be accused of having blind faith in their investment... but thanks to Oppenheimer analysts, now we got another blind leading the blind.

Granted, that the input from Microvision CEO and other industry player could be considered biased. And in case of Microvision, I would even go a step further and say: “Data may not be so reliable considering Alex Tokman’s recent history of waffling the green laser question(s) and the muted SHOWwx product launch.” I can also understand that the pico projection industry is so new that it is hard for the analyst community to start trusting assumptions, estimates and projections provided by others. However, developing an analysis that is based on your own consumer electronics industry background, experience and pre-conceived ideas is no better or worse than that provided by you or by me at the blog: http://www.mirro7.blogspot.com/

Given the choice, and I do have a choice, I would rather stick to my analysis based on my own assumptions, estimates and projections that are more plausible... since I have been following the pico projection industry for over four years. Some of us are invested in Microvision for over ten years. Yes, our assumptions and estimates could be considered as biased because we are so heavily invested in Microvision. However, that is just the point? Our assumptions and estimates form the basis of our DD that has resulted in investing millions of dollars in Microvision stock. We have put-up our hard earned money on the line... like putting our money where our mouth is. Talk is cheap and that’s what Oppenheimer analysts are doing... but are they willing to walk the walk or just talk the talk.

Is Oppenheimer a Double Talk Wall Street Wizard?
Well, you be the judge! I’ll just give you something to think about...

After reading Oppenheimer Report, not many would consider Microvision stock as a growth stock and worthy of speculative investment at this early stage. But only a few days ago, Oppenheimer helped to raise over $31 million dollars for Microvision in a secondary public offering. That’s interesting... don’t you think?

Some of us have been invested in MVIS stock for years and certainly have more firsthand knowledge of Microvision, pico projection technology and its potential consumer demand and adoption rates. We are not only investors but are also consumers that have tremendous interest in pico projection technology and understand the changes it will bring to infotainment, communications, collaboration, networking with friends, family and business associates.

On surface, Oppenheimer Report is ultra conservative and is based on unrealistic assumptions, estimates and projections... and displays total ignorance of the pico projection industry. If you have read my post this far, I’m sure you know the basis for my strong feelings and comments about Oppenheimer on this subject?

I agree that Microvision is no longer in the “Romance Phase” and is currently going through the “Transition Phase”. While a company, like Microvision, is going through the Transition Phase, no analyst is going to stick his neck out to risk a career or loose clients over it. The safest route for them to take is to put out a conservative report for the record... followed by informal communication with their institutional and retail clients.

Is this practice illegal or unethical?

Hell, no... It is done all the time as a standard practice. Over the last 25 years, I have traded over a billion dollars worth of stocks and options... and at one time I had Oppenheimer as my full service broker.

Keep an eye on the MVIS stock action for the next few months; while the company is still in Transition Phase. If the stock keeps moving up by a few cents here and there on very low volume... you have the confirmation that “you have been duped by the Wall Street Wizards again.”

Sooner or later, perhaps in the next four to six months, the company Microvision will get through the Transition Phase and start dealing with the reality of its fate that depends so much on the green lasers. Once the green laser issue is resolved, the company will enter the “Reality Phase” and will then start dealing with another set of issues.

These issues, like sales revenue and margins, are much easier to quantify and that’s when these analysts are expected to come-up with some realistic projections.

Oppenheimer Report Uses Erroneous Methodology for Pico Projection Market:
Pico projection market did not exist a year ago, but it is growing so rapidly that it is now starting to get analyst coverage. Obviously, it is clear that these two young analysts have no experience or expertise in the pico projection market... because it did not exist until a year ago and it is only now that companies have started to ship product in this emerging market. Oppenheimer analysts are using their “consumer electronics” business knowledge and expertise to develop assumptions, estimates and projections for the pico projection market. That is the fundamental flaw in their analysis and valuation methodology; which is modeled after an “accessory product in mature consumer electronics industry”. No wonder the assumptions, estimates and projections in their model are so absurdly conservative and have colossal margin of error... by their own admission.

The “Facts and Figures” quoted in the report are─ what they are, and I don’t have much argument with that. However, I don’t necessarily agree with many of their assumptions, estimates and projections... because they are not relevant to the pico projection industry.

My post may consists of several parts due to the very complex nature of Microvision being an investment opportunity of a lifetime with an emerging technology that will bring about a paradigm shift in the way we gather information, entertain, communicate, collaborate, and network with friends; family; and business associates. I don’t think Oppenheimer analysts have the full grasp over how the pico projection technology will evolve and the changes it is about to bring in our lives. Because, if these folks really understood the true impact and the rate of adoption of pico projection technology, they would have used more realistic numbers in their estimates and forecasts!

It is interesting that Oppenheimer analysts clearly admit the “colossal margin of error” in their assumptions, estimates and projections. It is, therefore, in my opinion, the so called facts and figures are subject to not only interpretation; but also have a monumental margin of error.

Here’s a direct quote from the report on page7...

“We take these estimates with a hefty pinch of salt, knowing that any prediction about the long-term growth trajectory of a newly emerging technology involves a colossal margin of error. That being said, the 2009 pico projector unit and growth figures provide a couple of simple but encouraging insights into the pico projector market: First, that it is already sizable and is becoming more sizeable (with retail sales approaching $43 million), and second, that it is growing very fast.”

In my opinion, their statement of “colossal margin of error” pretty much sums-it-up as the overall basis for the development of their “Exhibit 8: Summary Model”. I don’t have to read any further beyond past page 16, and waste my time evaluating their “Valuation” and “DCF Analysis”... for the simple reason; it is based on colossal margin of error.

The focus of my analysis and multi-part post will cover material only up to “Exhibit 8: Summary Model” on page 16.

Just look at Exhibit 8: Summary Model...

I honestly tell you, my ten year old son “Alan” could do a better job in coming up with more realistic estimates and projection for the picop market growth and adoption rates than these Oppenheimer analysts.

Recently, I helped Alan with his 4th grade school project report on “Cool Gadgets of Our Time”. He had 28 kids, from his class of 28, interested in buying a pico projector. To me that means huge market, exponential market growth with 100% adoption rates.

Let me be very clear...

I’m not suggesting that we use such extreme numbers like Alan’s as the basis for Oppenheimer Report by any means... but it does make the point when you look at their Summary Model projection of 875,000 SHOWwx units sold in year 2016.  How is that possible?  There are over 3.2 billion cell phone users and over 1 billion laptop owners in the world.  That's less than 0.02% adoption rate in an existing market in year 2016. Are they telling me that by 2016, only about 875,000 would buy a Microvision SHOWwx... and that’s including the high definition SHOWwx model that will be even brighter than it is today?

What are these guys [analysts] from Oppenheimer smoking?

After getting feedback from Alan on his class report, I felt guilty about giving this kid only $15 a week for his lunch money. Alan writes well, and with his analytical and presentation skills he could easily make a few hundred grand at Oppenheimer?

Having said that lets move on to the next absurdity...

Oppenheimer analyst estimates for ASP [average sale price] from FY 2010 thru FY 2016 are absurd; considering the fact that pico projection is not only a product [as in stand alone accessory unit] but it will also open-up new applications for the host, when embedded, that never existed before. Pico projectors, as standalone accessory, will drive new sales in the non-existent pico projector market and sell more of the host [and service contracts] when embedded to offer additional pico projection functionality. That’s the way most all of us expect the market for pico projection to develop... and not the other way around where the host decides “if and when” to offer embedded pico projectors. Do you really think the pico projection market is going to sit on its ass [et] and wait for the host to get-off its ass [et] to let the market have the opportunity to embrace and experience all that pico projection has to offer.

Oppenheimer Report is Shallow and Lacks Vision...

There are several paradigm shift(s) in progress and gaining momentum. Each one of these paradigm shift converges or embraces high quality pico projection in one form or the other. If you have the vision, you will see what I’m seeing already taking place...

• Wide screen HD Multi-media infotainment for one or many... in various settings; like living room, bedroom, boardroom, outdoors, and hotel room, airports, and cars and so on.

Research has shown that users prefer video communication over other forms of communication [text, sound, smell, touch] and video will continue to be the preferred means of all human communications. Research has also shown that users prefer wide screen, high definition, 2D/3D video with fast refresh [without motion blur] and always in focus images for all forms of video [static, streaming, and broadcast] communications.

• Planned one-on-one or one-to-many mobile infotainment, communications, collaboration, and networking. Mass adoption of Netbook computers, smartphones, and mobile TVs around the globe.

Users prefer mobility: The entire world [users and service providers] is getting into the instant gratification mode and going mobile in all forms of communications and entertainment across the globe.

• Impromptu one-on-one or one-to-many mobile infotainment, communications, collaboration and networking.

• Technological convergence is the tendency for different technological systems to evolve towards performing similar tasks. Today, we are surrounded by a multi-level convergent media world where all modes of communication and information are continually reforming to adapt to the enduring demands of technologies, “changing the way we create, consume, entertain, learn and interact with each other”.

Convergence in this instance is defined as the interlinking of computing and other information technologies, media content and communication networks that have arisen as the result of the evolution and ubiquity of the Internet as well as the activities, products and services that have emerged in the digital media space.

• Flexible resource utilization and sharing... like one mobile TV/projector to replace many television sets in millions of households around the globe.

• Augmented reality and its applications will become common place, bridging the gap between the physical world and the digital world... and it will continue to be one of the main thrusts of new technology developments.

“How do you define real? If you’re talking about what you can feel, smell, taste and see, then real is simply those neuroelectric signals interpreted by your brain. However, that reality just got augmented as in “augmented reality”, when the live view of the physical real-world environment whose elements are merged with (or augmented by) virtual computer-generated imagary... creating a mixed reality. The augmentation is conventionally in real time and with the help of advanced AR technology (e.g. adding computer vision and object recognition) the information about the surrounding real world of the user becomes interactive and digitally usable.

• Peak Oil and Carbon Footprint phenomenon prompting renewed efforts to conserve energy around the globe. Low energy footprint of a pico projector will be a desirable alternative... without sacrificing HD widescreen viewing experience.

• The eventual death of multiple TVs per household and the replacement for energy guzzling LCD and Plasma TVs around the globe. Energy for food coming back to take precedent over energy for entertainment in the next five to ten years.

In addition to the above paradigm shifts, there are two mega business trends that are underway that could directly or indirectly effect on how the pico projectors come to the market and these trends would certainly impact picop adoption rates...

Free Product for Service Contract: Productization, or the ability to package a solution or process into a saleable product, was once the Holy Grail of businesses. Design a better mousetrap and the world would beat a path to your door. But more and more businesses today are realizing that it is better to offer pest control as a perpetual paid service instead of selling a mousetrap as a one-time transaction. Lock the customers into predictable and legal contracts which become more profitable over the life cycle of the product.

Almost all mobile phone carriers offer a free phone in exchange for a service contract that legally binds the subscriber for two or three year service. Razor companies like Gillette offer free Razors in the hopes of selling you the blades for the rest of your life. More and more companies are adopting this business model... if and when their product lends itself to a perpetual service contact.

As this business model grows in popularity, innovative financial models will evolve, as these companies will need to make upfront capital investments and recover it from customers over many years.  This business model will embrace PicoP projection like glove to hand and could be the game changer for the first adopter.  Partnering with Microvision will be more like the partnership of champions... rather than Microvison looking for a strong OEM champion for its technology.  Its not about technology... its about consumer experience and perception of quality and value.

Vertical Integration Growth Model: For years, the big multi-national corporations that operated in multiple industries weren’t supposed to be a good idea. Stock market investors valued these companies at less than the sum of their various business divisions, for reasons ranging from lack of deep expertise across businesses, less transparency in disclosing financial numbers and extra layers of management required to steer an unwieldy ship. GE offers a real life example of the pitfalls of running too many businesses. But as GE hacks off businesses not core to what it considers its strengths — Genpact, television network NBC Universal, GE Plastics — a bunch of other new global companies are trying to become the new multi-national conglomerates.

Google, for example is now making its own servers and solar panels, acquiring content from authors and media companies, creating operating systems and programming languages and digitizing satellite and space maps for consumers. The list of businesses owned by the Indian company Tata group (India’s largest IT services company, luxury hotels, DTH television services, steel manufacturing, water purification, automobiles) would put even GE to shame. Apple, originally just a computer maker, today makes all types of consumer electronic devices, runs the world’s most successful music app (iTunes) and mobile phone application services (iPhone App Store).

Oppenheimer analysts may not realize this, but HD pico projection market in 2011 will be huge. And it will impact so many industries in so many different ways around the world; that Microvision could be the target of an acquisition by one of the multi-nationals with a vision.  We can throw a few tickets in the hat to speculate, shall we...
  • Microsoft
  • Apple
  • Cisco
  • 3M
Oppenheimer analysts lack vision in their report, or the report is just too shallow and lacks depth.

Oppenheimer Report has Colossal Margin of Error:
If you are weak at heart, and are willing to pay much higher price for MVIS, then wait for confirmation [or affirmation] by the Wall Street Wizards... in this case Oppenheimer.

If you feel comfortable and don’t mind volatility... pay some premium over the current prices and buy May 2010 Calls at 2.50 or 5 strikes.

No body said it was going to be a “cakewalk” investing in Microvision stock... especially with Oppenheimer lurking in the background.

Now, if it makes you feel any better, the Microvision story hasn’t changed... it still remains the opportunity of a lifetime. Here’s why...

• Virtually everything that needs validation has been validated and is ready to go. World’s first laser pico projector SHOWwx is in production─ even if in small quantities and some big name OEM customers have placed orders. Microvision has some big name partners that feel the laser PicoP technology and its future potential is worth their time, effort and investment to further the cause.

• The main issue currently is the green laser supply. But that will change soon... as Osram goes on-line with cheaper and simpler to manufacture SHG green laser. By mid 2010, the green laser production quantities will not be an issue and in all probability Corning will be out with its G-2000 enhanced green lasers with a time line for ramp-up to production.

After reading the Oppenheimer report, I went into the bathroom to look at my face in the mirror... just to make sure it turned red with anger and not turning blue from a heart attack. After counting to fifty and running some facts and figure in my head, I remembered that I had made a mental note to read top of page 7 again.

And that’s exactly what I did...

On top of page 7 in the Oppenheimer Report it says...

“We take these estimates with a hefty pinch of salt, knowing that any prediction about the long-term growth trajectory of a newly emerging technology involves a colossal margin of error. That being said, the 2009 pico projector unit and growth figures provide a couple of simple but encouraging insights into the pico projector market: First, that it is already sizable and is becoming more sizeable (with retail sales approaching $43 million), and second, that it is growing very fast.”

In hindsight, I wish I had paid more attention to this very paragraph and read rest of the report for entertainment purpose only and not get all worked-up and almost get a heart attack.

I don’t necessarily agree with many of their assumptions, estimates and projections; and I fully intend on discussing them in my blog.  Oppenheimer analysts clearly admit the colossal margin of error in their estimates and projections... and therefore their so called facts and figures are subject to not only interpretation... but also have a monumental margin of error.

There two observations that I would make from reading these comments about “colossal margin of error” from the Oppenheimer Report...

• Oppenheimer analysts seem to be taking a dig at Alex Tokman, Microvision CEO, and also trying to send a message by publishing such deflated projections since Alex avoided discussing the quantities of SHOWwx in any detail during the 3rd Qtr conference call. These analysts contradict and ignore AT in a couple of areas... like the initial embedded pico display engine quantities runs to be in the 1M to 5M range, guidance on profitability to come 2 Qtrs. after embedded picop launch, and embedded picop launch to come 9 to 12 months after SHOWwx launch.

Many analysts will take a very conservative posture when initiating coverage on a small cap company like Microvision. This approach gives them time to get comfortable with the management; learn the business and market opportunity; and save some ammunition for future upgrades when the next catalyst comes along. This strategy keeps them gainfully employed and in such a scenario, when they do upgrade, it will be more meaningful.

• I also think this blurb regarding Oppenheimer analyst projections from the report is very telling...

"We take these estimates with a hefty pinch of salt, knowing that any prediction about the long-term growth trajectory of a newly emerging technology involves a colossal margin of error.”

Don’t you find it interesting; the analyst statement about “colossal margin of error?”

To me it looks like they are saying...

“Take our projections with a pinch of salt because our estimates could be off by a "colossal" margin.”

Yep, you are right... I said with a smile.

Oppenheimer Makes Mockery of Companies in the Pico Projection Market:
There are may be 50 to 100 companies involved in the pico projection market. These companies have invested hundreds of millions of dollars in capital expenditures, R&D and operating costs based on their own estimates and projections over the last few years.

In the Oppenheimer Report, the estimates and projections for the picop market size and adoption rates are summarized in Exhibit 8: Summary Model. In the year 2016, they are projecting the entire SA market for 8.75 million units at $75 ASP each and the embedded market for 250 million units at $15 ASP each. I have no questions about the market size and Microvision’s market share numbers. What baffles me, however, are the unit price projections for high definition SHOWwx and embedded pico projectors... all the way from FY 2010 thru FY 2016. Projecting $75 ASP for a high definition SHOWwx and $15 ASP for a high definition embedded unit in FY 2016 is absurd... and reflects how ignorant and naive these two analysts at Oppenheimer really are.

Speak to any of the key players in the pico projection industry and you will find out first hand that these guys at Oppenheimer are pulling numbers from thin air and comparing the pico projection market [for pricing purposes] to the touch screen market for smartphones. In addition to the absurd ASP pricing model their projection methodology is also questioning the use case for embedded pico projector. By doing so, Oppenheimer is questioning the business case model of ALL the companies involved in pico projection business.

There are close to 100 companies in this space...

• MEMS mirror, DLP and LcoS panel makers
• LED and Laser light makers
• ASIC and other semiconductor makers
• Makers of beam combiners, lens makers, light engine makers etc.

How would you rate the probability that ALL these companies are wrong with their estimates and made their investments in vacuum; and that Oppenheimer analysts are right?

Not right!!!

But don’t get me wrong, we will see a lot of these companies go away in the next 2-3 years as the market will most likely consolidate... with leaders jostling for top position.

Oppenheimer Report is Grossly Wrong in their Estimates and Projection for ASPs:
First, I want you to do a side-by-side image comparison – SHOWwx vs. the Competition

That is one thing so far, what’s been missing is the side-by-side comparison of SHOWwx with what the competition has to offer?

Well, here it is finally... and ironically the source is Oppenheimer from their analyst report on Microvision...
http://myfotospace.my.funpic.de/Comparison-of-PicoP.png

When I looked at the image size and quality, my first reaction was...

• Pico projector from 3M, using LcoS technology, aroused the feelings that you would have towards a “sick dog” that needs to be put to sleep and put out of its misery. Half baked product like that gives bad name to pico projection technology. 3M is a multi-billion dollar company and I expected somewhat higher quality watermark than what you see. Rushing a product to the market before it’s time is not only bad judgment but poor marketing strategy... end of story.

• Pico projector from TI, using DLP technology, is decent and would be acceptable image quality for the right price. If TI/DLP had no competition from Microvision’s SHOWwx, then they would do just fine... like a dog that could hunt. There would still be issues of long throw ratio, limited image size, low resolution and need to re-focus every time there was a change in Image size or projector location.

• Pico projector from Microvision, using laser MEMS scanning technology, speaks for itself. It needs no words and all I’m going to say: “A picture speaks a thousand words”. To quote what Oppenheimer said in their report...

“The PicoP image has better color rendering; doesn’t require focusing; and is larger, sharper, and more uniform from center to edge.”

Microvision’s laser Pico projection technology is far superior to others out there, and has a bright future; once the green laser bottleneck issue is behind us.

When you look at the 3M/LCoS and TI/DLP pico projector images, you have to wonder that they do need a strong OEM champion for their technology. Without one, they may be left out as the stranded puppy that no one wants to own.

One the other hand, SHOWwx image size and quality, coming from such a tiny projector, arouses the sense of awe and will attract many OEMs that would want to be champions alongside of Microvision.

It’s not just about technology; it’s about what technology would eventually do for consumers... people like you and me. If Microvision SHOWwx technology arouses the sense of awe to-day, just wait another year and you will be delighted with the HD resolution of the image and the brightness of the light source.

While Microvision is all tangled-up with green laser supply issues, the two competitors can, and will, hog the feed at the trough. However, their party may not last too long... because sooner or later, the green lasers will be plentiful; and Microvision hound dog will have its muzzle removed and let go to hunt, to bully and to claim its rightful place at the head of the trough.

Now let’s talk about Oppenheimer estimates and projections for SHOWwx and embedded picop ASPs. In all honesty, if I was looking at just the 3M pico projection images, I would agree with Oppenheimer analysts wholeheartedly.

But, such is not the case.

Microvision’s laser based pico projector SHOWwx and the embedded display engine is in a class of its own.

If you were paying attention and listening to Alex Tokman, CEO of Microvision, you will remember him saying...

“Microvision Wants to be a Major Player in the Imaging Market Place”

He continued by saying...

“Laser steering projector is the bread and butter of Microvision for the foreseeable future and we are going to focus on the embedded PicoP to make the company profitable.” [Believed to be the words of Alex Tokman]

“Microvision is positioning itself thru patents and IP to be a major player in the image community. He (Alex) said: “Microvision is not going to be a small component provider that can be marginalized by bigger players.”

Alex sees the company as an INTEL type company. He is going to make the company a player in the image industry. That explains the “Image by PicoP” as the slogan chosen for the world’s first laser based PicoP projector SHOWwx.

Please read my post on…
Yes Virginia: “It’s Intel Inside… but Image by PicoP.”

Here’s the link…
http://mirro7.blogspot.com/2009/09/yes-virginia-its-intel-inside-but-image.html

Alex mentioned a few things as to why he believes the product [PicoP display engine] is going to be successful…

• Uniqueness: nobody has lasers… nobody is doing what we are doing.
• Thin Form Factor: nobody has our size and nobody can do HD images without getting bigger.
• Longer Battery life: up to 2 hours currently vs. 45 minutes for the competition.
• Infinite focus: nobody else has it.
• Larger screen experience: from 12” to 150” diagonal under certain ambient light conditions.
• Superior small font readability: we are the only one that has 8 pt readable font.
• Uniformity of brightness: Images are uniformly bright from edge to edge, unlike some other competitors.
• No rainbow effect.
• Twice the color gamut (range) of NTSC
• WVGA resolution with sharper image detail... and future Pathway to high definition and brighter laser lights.

Currently, the competition comes from two major players, TI with its DLP technology and 3M with its LcoS technology. The competition sells its second generation Pico projector for about $295 and the quality of the image from their projectors looks like the picture on the left side. Microvision’s PicoP projector SHOWwx, on the other hand, projects its image better than the one on the right side.

http://myfotospace.my.funpic.de/Comparison-of-PicoP.png

If $295 was assumed as the average price for the baseline model and functionality [in-line with what the competition is asking], then Microvision could [and should] charge $495 for not only the better quality and vivid images but also some very interesting and differentiating features…

• Always-in-focus on any projected surface [projecting on curved surfaces or from an angel on flat surfaces]
• Short throw ratio 1:1 [bigger picture from short distance]
• Stunningly colorful, bright, vivid and detailed images [200% NTSC]
• Large images size [from 20” to 200” diagonal ]
• Higher image resolution (848×480) with HD pathway in future models
• Unmatched small font readability [size 8 font]
• Wide aspect ratio 16:9 [for wide screen experience]
• Fast refresh [60 Hz] to prevent motion blur when watching sports or action videos and movies
• High contrast ratio 5000:1
• Easy and simple plug and play. Single connector for TV-out [composite], VGA [RGB] and 3.5mm stereo jack─ audio pass through
• Low power and longer battery life. Movie capable battery life when fully charged. Charges via Micro-USB
• Extended warranty service… why not with all that MEMS reliability and exceeding drop test performance
• Ready for in-bed watching videos and movies on the ceiling
• All cables and leather case included
• Trade-in offer [worth $100 in exchange value] for any future PicoP projector purchase.

All these features are inherent in the laser based PicoP projector SHOWwx and the pico display engine; and they don’t really cost anything extra but they allow you to monetize the superior product functionality that Microvision offers.

There is no reason for Microvision to give it away for free…

Oppenheimer analyst estimates and projections assume pico projection business to model like the consumer electronics business model [much like the touch screen accessory for the smartphones] and that is grossly wrong. It’s not going to happen that way... no matter how Oppenheimer analysts qualify their half baked numbers by stating “Colossal Margin of Error” on page 7 of the report.

If someone wants to believe Oppenheimer analyst estimates and projections for ASPs, then let them...

Because buying SA at $75 or embedded at $15 is not going to happen... now or later.

If it does happen, then in all probability the buyer is buying some Chinese crap... only cheaper.

In closing, I highly recommend that you read Oppenheimer Report from page to page.

When you are done reading... file it under “Entertainment” and wait for the next upgrade... because that Report will be more meaning full than this half baked cookie dough.

Anant Goel
http://www.wealthbyoptions.com/