Google Acquires Augmented Reality Glasses Vendor North, Continues M&A Trends in AR Space

Google is the latest to buy into the Augmented Reality (AR) market, this time by acquiring North. The Canada-based company, initially started as Thalmic Labs in 2012, launched its Focals smart glasses product in January 2019. Focals launched into the consumer market with a starting price of US$1,000, although the price dropped to US$600 soon after. The glasses had the unique requirement of an in-person fitting and purchase to ensure proper fit and compatibility. Despite the company’s original focus on the consumer space the next generation, Focals 2.0, targeted the enterprise market as well. Focals 2.0 has been shelved as a result of the acquisition, with Google instead focusing in on hardware and expertise to feed into other projects.

This acquisition will not only result in a technically capable, stylish, and user-friendly AR smart glass device, but will also be an opportunity for reinforcing consumer awareness and knowledge about AR, which is essential for driving adoption. Google’s brand name and expertise has the potential to capture consumers’ attention/interest and assist in the establishment of AR smartglasses as an upcoming valuable wearable.

With this acquisition, Google reaffirms its position in the AR space outside of the silent but notable Glass for Enterprise program, which is still ongoing. Google Glass is far from dead in the enterprise space, with plenty of active implementations and customers and a hardware refresh in May 2019 with the Enterprise Edition 2 bringing small improvements to its first design. ARCore, the Android Software Development Kit (SDK) equivalent of Apple’s ARKit, is also being iterated on; a depth-sensing Application Programming Interface (API) was just introduced. Google has also been slowly introducing AR into its indomitable search platform, where ARCore can power 3D AR content displays alongside search results.  

Google’s AR efforts fit within the company’s “ambient computing” efforts around natural and easy-to-use experiences that “fade into the background.” Most recognizably, this includes efforts in smart home and the Google Assistant, but ultimately the vision is broader and incorporates more and more device types and technologies, so long as something powered by Google is powering them. It’s easy to extrapolate an End-to-End (E2E) Google ecosystem with AR as a major component in the next few years—Google’s Pixel Buds headphones are already acting as a proxy “head-worn” device for Google ecosystem access through the Assistant. A new generation of that, adding a visual component, is a natural fit, and Android efforts in AR would persist as well for cross-platform interoperability. Some concerns about privacy remain for all consumer-targeted smart glasses—something Google is intimately familiar with from initial Google Glass efforts—although the world is quite different when it comes to social media, data sharing, and privacy, so only time in the market will dictate how impactful this ends up.

Comparisons to Apple are also easy, and accurate. Apple doesn’t have the search play that Google does, but it does have a wearable proxy in the Apple Watch, a mobile AR SDK in ARKit, content-focused services, and more rumors and acquisitions in the AR space than one can keep track of. Apple has been more active in the AR space so far though, with more direct active support through ARKit (compared to ARCore’s rate of expansion) and a longer list of acquisitions across areas.

The AR hardware market has thus far been a mix of of small companies fighting for a limited market share and larger companies searching for that same market. While the first ubiquitous smart glasses product will likely not carry the name of one of these smaller companies, it will carry hardware and expertise from them. Some promising names, like nReal or Magic Leap, present a compelling hardware story that is perhaps lacking elsewhere: marketing, design, content ecosystem, and manufacturing. Mergers and Acquisitions (M&A) can ease some of these barriers when executed and timed well. The heavy tech hitters have all the advantages here, and have showcased that in ongoing efforts. Leveraging AR as a novel display technology, most companies’ portfolios can benefit from an AR component.  

The next generation of consumer smart glass devices is becoming a bit more clear—if not outright replacements for smartphones, glasses are positioned to be the next smart watch, with far more capability and flexibility at the cost of ease of use (and, likely, price). So long as there is content supplied to them, and this content is valuable to users, there’s room for success. Google’s initial Glass effort was not poor, but poorly targeted. Microsoft entered with HoloLens in 2015 and actually faced a similar issue to Glass—consumer marketing for a product that was never realistically a consumer product due to price and lack of value for most consumers—but a quick pivot allowed HoloLens to become a dominant product in the market.

It's worth watching the consumer hardware space even for those solely interested in enterprise. These next-generation consumer-targeted products can be valuable for enterprise AR implementations as well. Some shared values in consumer products and enterprise needs—ease of use, lower cost, and higher comfort—are welcome everywhere. The push for more cross-platform content support generally, and browser-based content access more specifically, alleviates some of the integration concerns previously experienced with consumer devices in the enterprise. Also, the proxy example of wearables (and smartphone/tablets) showing value in enterprise again sets an example for smart glasses. While there are plenty of differences, there are similarities in both value to users and in device usage (e.g., hands free) as well.