I’m not talking about economic realities or political realities… I’m talking about two of the most transformative technologies that are beginning to flow into our markets as we speak: virtual reality (VR) and augmented reality (AR).
These are not just for gamers, young hipsters or spoiled millennials. AR and VR are already involved in some very real world efforts that illustrate the value underneath these whiz bang technologies.

What’s the difference?

VR is a computer generated simulation of a 3D environment where you can interact in real time, using VR headsets, gloves, suits, etc.
AR superimposes a computer generated view on top of what you are seeing in real life.
The difference is, VR tends to be completely immersive. Facebook’s Oculus Rift is a VR headset. If you have it on and you’re moving in a room to get a drink from the refrigerator, you may be moving in the game but you have no idea where you are in the room. You’re locked into the reality in your headset.
AR is different. One example of AR is if you had on a headset, you could walk down the street in London and it could give you a walking tour of where you are walking in WW II or during the time of King George II. Or, it could show you where the closest Indian restaurants are in real time, as you walk. Microsoft’s HoloLens headset is using AR for it reality.

Value beyond gaming already

Both these technologies were born and are already gaining significant ground in the gaming community. And there’s a reason they started there. Gamers are the early adapters of new technology.
For tech companies, that is a great place to test new products as well, because gamers, while they have high expectations, they also are willing to allow products to improve and provide tons of feedback.
Broader consumer markets expect something plug and play that is flawless and they’re far less forgiving of “works in progress.”
There’s also a new group that is adopting these technologies — the military and hospitals.
According to Bloomberg Businessweek, about 20 percent of the 2.7 million veterans of Operation Iraqi Freedom and Operation Enduring Freedom remain psychologically scarred from their service in theater.
As far back as 2003, Albert “Skip” Rizzo developed an VR program he called Bravemind to help vets with their PTSD from Iraq. Since then, it has grown and is used on more than 100 military bases as well as hospitals and other care facilities.
And it’s getting results — after 10 sessions, a significant number of soldiers are reporting up to 80 percent relief from anxiety, stress and depression symptoms. Recently, after looking at the results in the U.S., Canada’s military has bought in and Denmark is also interested.
And Case Western Reserve School of Medicine, along with the world famous Cleveland Clinic, has adopted the HoloLens to examine and autopsy bodies instead of using real cadavers. Apparently, dissection labs are getting very crowded and there are too few cadavers for too many students.
Now med students can “work” on virtual cadavers and get an augmented look at a body’s various systems and organs.
Also, Facebook’s founder and CEO Mark Zuckerberg also envisions VR to create an entire new space for social networking.

Winners, winners, chicken dinners

As usual, in this fast moving technology, you can either buy into the end products and hope your company wins the day or you can buy the companies that sell equipment to the companies that sell to end users.
I like the latter approach.
That said, some of the top plays are the chip makers. And right now, I like Intel, Micron Technology and Western Digital.
The latter two firms specialize in data storage, which is essential to modern tech equipment, whether you’re talking mobile phones or data farm servers. NAND and DRAM memory technologies are in a long-term demand upcycle and these players have a lot of headroom at this point.
Intel has been shuffling along due to concerns over its ability to transition from its large share of the desktop and last generation computer market to the new sectors that are showing the next generation of growth.
Intel is a big ship to turn, as the largest chip maker on Earth, but this is a good management team and they’re deploying resources to key strategic areas that should help the company in transition. It’s still a long-term gem.
If I had to pick between VR and AR, I would say that AR is more attractive to me because you can do more with it — for now. It will be interesting to see what happens once Microsoft releases its HoloLens. Either way, both Facebook and Microsoft are great long-term picks in this space as well
— GS Early