Mark Gomes, a SA contributor, posted an article about Himax Technologies (NASDAQ:HIMX). The article talked about Google (NASDAQ:GOOG) Glass and the likelihood that Himax could be a major supplier. The stock shot up more than 30% and it seems it was mainly due to the article. Gomes quoted Karl Guttag, a highly regarded expert in the field of integrated circuits. Gomes mentions that Karl's blog may have been referring to Himax. However, Karl responded to the article by saying it was unlikely that Google is using a Himax LCOS panel. Karl mentioned that there are other players in the space that are more likely to be the supplier for Google Glass.
Regardless of the blog posting, Mark Gomes makes a very strong case for Himax. Gomes also has an exceptional track record with picking small-cap stocks that essentially generate significant returns. I personally follow him and I encourage readers to do the same.
I found this topic very interesting given the amount of hype behind Google Glass. If Google is able to open a market for eye-wear technology, we could potential witness a shift on how we see the world. I had the pleasure of sitting down with Karl Guttag himself to discuss the future of Google Glass and potential suppliers in the space.
Mr. Guttag has over 34 years of experience in the integrated circuit field. He has been named an inventor on a 145 patents. Many of these patents are for essential elements such as image and graphics processing. I could go on about Mr. Guttag's experience, but I think my hands would eventually cramp. The following is my interview with Karl Guttag.
Mr. Guttag, thank you for taking time out to speak to us. It means a lot to our readers that you could join us. I want to go ahead and delve right into the topic if that's okay with you. Google Glass seems like it could be a game changer for wearable technology.
Q) Do you consider Google Glass to essentially change the way we look at things or is this technology we have seen before?
A) Certainly, the technology for small light weight near eye displays has been around since the late 1990's (I helped build a 1024x768 color near eye display in 1998) and the "wearable computing" concept has been around even longer. So from my perspective, I see it as being more evolutionary, a different take on an old concept.
And from what I have seen so far, it still has many of the same issues that limited wide spread adoption in the past. The least of the problems is the display itself, as the display technology has existed for a long time and in many ways what I have seen of the Google Glasses the display itself is a step backwards. The biggest issues are all related to human factors. Issues like how you wear them and do they fit (people's faces are very different); how do you input to them; do you look like a total geek wearing them; do you look shifty eye talking to people? Even little things like what do you do with them when you are not using them but have them with you; generally a headset takes up more room than a smart phone in your pocket and will get broken if it is not in a case. Frankly, I can't see people giving up so much of the functionality of their smart phones for something like Google Glass, so you have to start thinking of it like it is a bulky peripheral.
Another factor is that the current Google Glass is monocular (only seen in one eye). This takes some getting used to using. This works best if you have it in your dominant eye (one of your two eyes will dominate over the other). Additionally, from all the demonstrations I have seen, you constantly have to look up and to the corner to see the image and I wonder how your eyes will feel after doing this for long periods of time.
By the way, going binocular (a display for each eye) just brings in a different set of problems. Then you have issues of whether the display is see-through or not. See through is good for augmented reality but lousy for looking at details and image quality. With "see through" you can only reliably display low resolution high contrast content. I want to emphasis that there is no perfect solution, just different solutions with different problems with a head mount display. Each type monocular, binocular, see-through or opaque has its own drawbacks. Google Glass chose one option which has its well known drawbacks.
One other big human factors issue Google Glass seems to have given up on is working for a person with glasses. This is no small problem of optical physics and packaging. If they want it to work with different faces (key is the distance between the bridge of the nose and the eye) and different glasses can result it bigger and bulkier optics. A sleeker design is much easier when you ignore people with glasses which Google Glass, at least for the moment, is doing. Their saying to "bolt it on the side of your glasses" doesn't work in practice.
Sorry for rambling on, but from what I see, Google Glass leaves me/us with more questions than answers. And the more I think about it, the more problems I see with it. Honestly, I'm not trying to trash Google Glass, it is just that I seen many huge unsolved problems with it.
Q) Based on your blog, we know that Google Glass will only be putting frames on the upper corner of the eye. You mentioned initially that the panel in the Google Glass prototype was a match to Himax. Even the 320x240 pixel display was something Himax would make. Why is Himax NOT likely to be the supplier?
A) What Google is showing in their latest demonstration videos is putting the image on the upper corner of the field of view. This is consistent with the low resolution display device of the Himax panel in the early prototypes. Also if the device is only to be a see-through display device, a high resolution, high quality display is a waste as you can only reliably display simple basic information. You will note in the latest Google Glass demo videos, they are showing simple text and not web or even mobile web pages.
The reason I wrote that Himax is not the likely supplier is that the Himax panel in the early prototypes is reflective LCOS and this requires an optical engine with a beam splitter with the panel on one side, an LED light source on another side, and third side (of a square) for the light to come out. This configuration is kind of bulky and not consistent with the newer Google Glass prototype. A transparent display device (one there the light passes through the display rather than being reflective off it) with its straight through optical path would much more easily fit in the later prototypes that Google is now showing.
My point about it not being LCOS is based on size, shape and function. Without getting into all the technical reasons, LCOS's advantages come over transmissive display devices when the image it going to be high resolution and/or brighter.
Mark Gomes of Seeking Alpha wrote that Himax in his research has spent the R&D money to develop transparent panels although Himax has not publicized it. If this is true, then Himax could be supplying a transparent panel to the new design.
Q) There seems to be a concern that the display could disrupt the wearer's line of sight. Given that the pixels are 320x240, would that size obstruct the line of sight. I saw the picture of Glass using navigation, but wouldn't checking items such as email require a bigger display?
A) There are all just all kinds of trade-offs. If the display is outside your line of sight then there can be eye strain from having to look up and out. The amount of obstruction would be based on how big they optically enlarge the image. Based on the newer demonstration videos they are not making it the image very big but rather filling up only a portion of the field of view. Making the image fill up a larger field of view would tend to make the optics bigger.
Definitely there are limitations with having a small and/or low resolution display. Reading anything more than simple images will be very difficult and forget about browsing today's web pages. Furthermore having a transparent display device means that the contrast will be low so high resolution content would be unreadable any way. To see contrast to details you have to block out the light to both eyes (I can't see people carrying a black card to put in front of their face when they want to read something).
Q) You mentioned LCOS display would not be a good option due to a simpler transmissive panel made by Kopin (NYSE:KOP). Can you please clarify why Kopin's transmissive panel is better suited and is more likely to be in the Google Glass?
A) It is the simpler optical path afforded by a transmissive display that is the big size advantage. I named Kopin because they were well known for making such transmissive devices. Sony and Epson also make small transmissive displays used in camera viewfinders. I would expect there are other companies (perhaps including Himax) that make transmissive displays.
Q) Based on your comments, you said Himax failed with LCOS due to an issue in an analog design. What was the exact failure in the design?
What I wrote is that Himax failed with high resolution color sequential LCOS. Back around 2010 they appears to disappear from the market for high resolution devices. I don't know of any significant products in which they were used. Also in 2010 they bought Spatial Photonics which has a MEMs mirror array technology very similar to TI's DLP which seemed to signal that they have given up on field sequential LCOS. The market they seem to have was for their low resolution color filter devices that the sold primarily in China and India.
Himax's LCOS used analog drive technology that was a variation of the technology developed for LCD panels. For a number of technical reasons there are advantages of the digital drive particularly for field sequential LCOS at higher resolutions.
Q) We know Kopin has already made similar products such as the Golden-i, which is mainly used for industrial and military applications. Kopin has already been developing eye-wear technology with Motorola Solutions. Do you believe there are agreements that would prevent Kopin from providing transmissive panels to Google?
A) I have no way of knowing what agreements may or may not be in place today but I doubt there would be a prohibition. I would expect that no good business person would give an exclusive to a low volume application that would preclude pursuing a high volume application. I think a bigger issue is whether it was a profitable business to both parties.
Q) On the profitability side of things, what are the average selling prices for these panels? What's the cost to produce them? Does Kopin have the resources to actually mass produce these products?
A) I would think that the market value for a low resolution color filter panel would be in the $10 range, but Mark Gomes has reported that it may be more like $15. According to Mr. Gomes, Himax would also be making something on the optical engine as well and if what he says is true then Himax would be getting about $25 per unit. But Mr. Gomes didn't have this tied to any volume. The big question would be what would the optical engine including a low resolution display device cost in volume and I would think it would be closer to $15. Then you have to ask yourself what is the potential ramp up in volume for these products. I'm having a hard time getting a very big final number by multiplying the price of the engine by any rational volume I would expect out of Google Glass in the next several years. If I multiply even $25 by 1 million units which I think are both on the high side for the next two years I only get $25M which would be OK for a small startup, but not earth shattering for a large business.
Kopin, Epson, and Sony would certainly have no problems manufacturing the number of panels. They have already been doing these kinds of numbers for electronic viewfinders in cameras.
Q) Do you have an ending remarks you would like to add for our readers? Anything related to Google Glass, Kopin, or Himax?
A) Unfortunately, I don't see there being a huge business opportunity with Google Glass for at least the next several years. I think Google is going to be feeling their way around all the issues with human interfaces using a wearable display. There are big well known (to people in the field) problems that Google Glass does has not solve that will greatly limit its wide spread adoption.
I'm not a "flat earth" person that does not believe in progress and new technology, heck I was involved in early video games (in the late 1970's), early home computers, some of the first graphics accelerators, multimedia processors.
Perhaps I know too much of the problems with near to eye displays, but based on what I don't see solved in Google Glass, I think it is still just a work in progress experiment and not ready for "prime time" in the consumer market. At best, I see devices like Google Glass as being a peripheral product that would plug into say a smart phone and this drops the potential volumes significantly.
This means that the volumes are likely to be small while the price of components that are somewhat mature will be relatively low which does not add up to a great business opportunity in terms of revenue and profit.
Mr. Guttag, thank you for taking time to speak with us. We often hear about analysts with major banks discussing potential technology shifts, but I prefer to speak to an industry specialist such as yourself to provide insight. It was a pleasure having you here. I would also like to encourage our readers to ask questions in the comments section below. Mr. Guttag will do his best to respond to any questions you may have.
Readers should follow Mr. Guttag on his blog, which is found here. He offers valuable information on the integrated circuit market that you can't find anywhere else.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.