Competitive Positioning of startup Mixed Reality company

Mixed Reality Analysis

Mixed Reality could be seen as a sub-type of Extended Reality. Extended reality is a large group of devices and applications, we could broadly classify them (with intersection) into Mixed Reality, Augmented Reality, and Virtual Realty as in Exhibit 1. Mixed Reality can be further categorized into Digital Screen-Based Mixed Reality and Lens-Based Mixed Reality as in Exhibit 2. This article will focus on Mixed Realty, and more effort is put into "Digital Screen-Based Mixed Reality".

The Mixed Reality market is evolving rapidly, driven by technological advancements and increasing interest from both consumers and enterprises. The competitive landscape is dominated by large tech companies with significant investments in MR technologies, but there is room for niche players who can offer specialized solutions. The industrial structure is complex, involving a wide range of players from hardware manufacturers to content creators, with the enterprise segment currently leading in adoption. The future of MR will likely see greater consumer uptake as technologies mature and become more affordable.

Environmental Analysis

From “Global Mixed Reality Market Insights Forecasts to 2033 ¹” we have some key results. The global Mixed Reality (MR) market is projected to experience substantial growth in the coming years, with estimates suggesting a Compound Annual Growth Rate (CAGR) of over 40% between 2024 and 2036, potentially reaching a market value of over USD 58 billion by the end of the forecast period. This rapid expansion is attributed to the increasing adoption of MR technology across various sectors such as healthcare, education, entertainment, and aerospace, where it offers innovative solutions for training, design visualization, and immersive experiences.

From the “VR/AR Industry Sales Tracking Report: Q2 2024” ^{2 3 4}. In Q2 2024, global VR sales reached 1.35 million units, a 6% year-over-year decline. The primary reason for the decrease in sales was the Sony PS VR2, which had cumulative sales of only 80,000 units in Q2. Meta’s sales in Q2 were 1.02 million units, reflecting a 6% year-over-year increase and a stable base. Apple’s Vision Pro sold 80,000 units in Q2, contributing minimally to growth due to factors like price, comfort, and a lack of content ecosystem, which resulted in lower-than-expected sales. The forecast for 2024 has been adjusted, with global VR sales expected to reach 7.97 million units, a 6% increase from 2023.

The market is driven by factors like government approvals for healthcare applications, the growing use of MR in educational settings to enhance engagement and retention, and the demand for 3D visualization in construction and design. Despite challenges including safety concerns and high development costs, the MR industry is expected to see significant advancements, with regions like North America and the Asia Pacific leading in market share due to technological infrastructure and growing consumer acceptance. Key players in the market, including Microsoft Corporation and Meta Platforms, are continuously innovating and developing new products, further propelling the industry forward.

Industry Structure

With Porter’s Five Forces Analysis shown in Exhibit 3. The Mixed Reality (MR) industry is characterized by high barriers to entry due to the need for specialized components and technology, strong brand loyalty among established players like Meta and Apple. The threat of substitutes, such as traditional 2D displays, is relatively high, but switching costs between different ecosystems are also substantial. Buyer power is moderately high, with individual consumers concentrated and business buyers spread across various industries. Supplier power is strong due to the concentration of key components among a few suppliers. Intense competition exists among major players, with moderate product differentiation and limited coordination in maintaining proprietary ecosystems.

• Value Chain: The MR market’s value chain includes hardware manufacturers, software developers, content creators, and distribution platforms. Hardware manufacturers, such as those producing headsets, play a critical role, but they often collaborate closely with software and content providers to create integrated solutions. Content creation is a growing field within MR, with applications in training, simulation, entertainment, and more.
• Supply Chain Dynamics: The supply chain for MR involves complex components like high-resolution displays, sensors, and processors, which are sourced from various global suppliers. The supply chain’s complexity can lead to challenges in cost management and product availability, especially with the recent global semiconductor shortages.0
• Market Segmentation: The MR market is segmented into consumer, enterprise, and industrial applications. Consumer MR focuses on gaming and entertainment, while enterprise and industrial applications are more varied, including training, remote assistance, and design visualization. The enterprise segment is currently leading in terms of revenue, but consumer adoption is expected to drive future growth as technology becomes more affordable and accessible.
• Barriers to Entry: High R&D costs, intellectual property challenges, and the need for specialized technical expertise create significant barriers to entry. Additionally, established companies benefit from economies of scale and strong brand recognition, making it difficult for new entrants to compete.

Competitor Analysis

Exhibit 4 made a comparison of Meta Quest, Apple Vision Pro, and HoloLens ^{5 6 7}. They each cater to different segments of the VR/AR market. Meta Quest offers an affordable entry into VR with a broad content ecosystem and extensive user base. Apple Vision Pro, with a high price tag, delivers premium mixed reality experiences within the Apple ecosystem, though its MR content is currently limited. Magic Leap focuses on high-quality augmented reality applications for large companies and governments, featuring advanced optical displays and extensive industrial experience. Each product targets distinct audiences and uses, from general consumers to high-end tech enthusiasts and industrial clients.

Competitive Positioning

Through the comparison in Exhibit 4, we found a “Differentiation” target company is missing in Mixed Reality Industry. I found a proper strategic mission is to deliver high-quality mixed reality experiences accessible to everyone, by offering an advanced, affordable alternative to premium products (like the Apple Vision Pro) . The company will aim to democratize MR technology by combining exceptional performance, cutting-edge features, and user-friendly design at a competitive price point, making immersive MR experiences available to a broad audience, from everyday consumers to businesses.

Addendum

Exhibit 1 : Comparison of Mixed Reality (MR), Augmented Reality (AR), and Pure Virtual Reality (VR) in a table format, summarizing their connections and differences ⁸, (there might be intersections):

Feature	Mixed Reality (MR)	Augmented Reality (AR)	Pure Virtual Reality (VR)
Definition	A blend of physical and digital worlds, where real and virtual objects interact in real time.	Overlays digital content onto the real world without interaction between real and virtual elements.	A completely immersive digital environment where the physical world is entirely replaced by the virtual one.
Interaction with Real World	High – real and virtual elements coexist and interact seamlessly.	Moderate – digital elements are superimposed on the real world but don’t interact with it.	None – the user is entirely within the virtual world, with no view of the real world.
Hardware Examples	Microsoft HoloLens, Magic Leap One, Quest, Apple Vision Pro	ARKit (iOS), ARCore (Android), Google Glass	Oculus Rift, HTC Vive, PlayStation VR
User Experience	Users can interact with both real and virtual elements simultaneously.	Users see real-world surroundings with added digital information or objects.	Users are fully immersed in a virtual environment, disconnected from the real world.
Real-World Application	Industrial design, training simulations, collaborative workspaces.	Gaming, retail (virtual try-ons), navigation, education.	Gaming, virtual tours, simulations, training in fully controlled environments.
Immersion Level	Medium to High – allows blending of physical and digital elements.	Low to Medium – enhances reality without replacing it.	High – fully immersive experience, replacing reality.
Required Equipment	Advanced headsets with sensors to track physical space and virtual elements.	Smartphones, tablets, AR glasses – simpler devices that overlay digital content.	High-performance VR headsets, controllers, often with room sensors for full immersion.
Complexity	High – requires sophisticated technology to blend and interact with both realities.	Moderate – involves superimposing digital objects onto the real world.	High – requires creation and management of a fully digital environment.
Connection to Reality	Connects and integrates with reality, enhancing it by adding interactive virtual elements.	Supplements reality by adding information or objects, but doesn’t integrate with it deeply.	Replaces reality entirely with a simulated environment.

Exhibit 2 : Mixed Reality can be further categorized into Digital Screen-Based Mixed Reality (MR) and Lens-Based Mixed Reality (MR):

Feature	Digital Screen-Based MR	Lens-Based MR
Display Method	Uses screens to overlay digital content onto the real world.	Uses transparent lenses that overlay digital content directly onto the user’s field of view.
Real & Virtual Content Display	Both real world and virtual content will be shown with screens.	Real world will be obtained through lens, and virtual content be projected by optical devices.
Field of View (FOV)	Typically large. (~ 180 degree)	Limited by the technology of the optical projector. Typically small (< 60 degree)
Device Examples	Quest 3, Apple Vision Pro	HoloLens, Magic Leap
Cost	More affordable; relies on existing consumer devices.	Typically more expensive due to specialized optical technology.

Exhibit 3: Porter’s Five Forces Analysis

Forces	Mixed Realty
Threat of Entry	Barriers to Entry : high (relies on specialized components like sensors, processors, lens & technologies) Brand Loyalty: high (Established players like META and Apple have created strong brand loyalty) Sunk Cost : high (resource put into this field cannot be reused in other field)
Threat of Substitutes	Cross-Price Elasticity: relatively high (traditional 2D displays can fulfill some of the functions of MR, especially in less demanding applications.) Switching Costs: high (different provider made different eco-system, the applications are not shared)
Bargaining Power of Buyers	Buyer Concentration: moderately (individual buyers are high concentrated, while industrial buyers distributed in a wide range of fields) Switching Costs: high (different provider made different eco-system, the applications are not shared)
Bargaining Power of Suppliers	Supplier Concentration : high (sensors, processors, and lenses, often supplied by a few key players) Switching Costs: high Price information widely available through internet.
Intensity of Rivalry	Number of Competitors: a lot (Meta, Apple, Microsoft, Magic Leap, and numerous smaller startups) Product Differentiation: moderate (production divided into two groups - digital screen, and optical projection lens, difference within group is small) Coordination: feasible, but no one is doing it. (each company maintain their own application store)

Exhibit 4: Comparison of Meta Quest, Apple Vision Pro, and HoloLens ^{5 6 7}.

	Meta Quest	Apple Vision Pro	Magic Leap
Value Proposition	Low Price, Lots of application in its ecosystem, Hadpad tracking.	High quality, High resolution, Fit to Apple ecosystem (but few MR content).	High precision, High quality, Many experience in industrial applications.
Price Points	Relative Low ($499.99 USD for 128GB Quest 3)	Very High ($3499) (unacceptable for ordinary consumer)	Very High ($3,299) (but acceptable for industrial usage)
Target Market	Ordinary Consumer	Apple fins, Consumer with high requirement	Large company, Governments.
Economic Situation	Quarterly Revenue Over $1 Billion. 1.02 million units sold.	80,000 units sold.	annual revenue $750M
Capabilities	Very large Metaverse Ecosystem, increaing number of content available. Focused on Virtual reality experiences. With large user group. Leading company in Metaverse	Extremely high quality hardware, with the highest mixed reality quality available. Able to connect with other apple products. Lots of brand fins.	Focus on augmented Reality. High quality optical display, largest FOV in AR industry. Lots of experiences in industrial application.
Scope	Broad Scope	Narrow Scope	Narrow Scope
Source	Low Cost	Uniqueness	Uniqueness
Competitive Position	Cost Leadership	Niche	Niche

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