These slides use concepts from my (Jeff Funk) courses on Business Models at National University of Singapore to analyze the business model for Microsoft HoloLens. HoloLens is a form of Augmented Reality. AR adds useful information to a real-world image that is seen through head-mounted glasses or a tablet computer’s camera. For Microsoft HoloLens, it adds 3D images to head mounted goggles. It can be used for games, product development, and training. In product development, users can add 3D drawings to a real-world object in order to better understand the new design. Microsoft hope to obtain revenues from the sale of the product and perhaps also from the sales of games, as is currently done by console suppliers. The slides describe the value proposition, method of value capture, customers, scope of activities, and method of strategic control for HoloLens.
1. Microsoft HoloLens
Group Members:
Chen Xinyun (A0100351E)
Chong Jia Lin (A0100818N)
Glen Yovianto (A0100041M)
Jin Hao (A0119269W)
Tan Qing Wei (A0097466M)
Group Project for MT4002
National University of Singapore
2. 1.About Microsoft
2.Augmented Reality VS Virtual Reality Technology
3.Target Customers
4.Value Proposition of Microsoft HoloLens
5.Method of Value Capture
6.Competitors Comparison
7.Scope of Activities
8.Strategic Control of Microsoft HoloLens
Content
3. Firm: Microsoft
• Founded by Bill Gates and Paul Allen at 4th April 1975 at Albuquerque.
• First Customers: IBM and their first Product is MS-DOS.
• Their Business model evolve overtime
From selling operating system, to software, and extending to hardware (such as
Microsoft X-box and Surface). Now they are expanding towards AR industry.
Now, majority of the sales came through Microsoft Office business.
4. Technology: Augmented Reality and Virtual Reality
Both technology allows users to interact with the image/environment to a
certain extent. Each technology has its own advantages.
Augmented Reality Virtual Reality
A technology where computer generated image or
hologram is superimposed on user’s view of the
real world.
Example:HoloLens
A technology where three dimensional
environment or image is created such that it
separates users from the view of the real world.
Example:Oculus Rift
8. Value Proposition of Microsoft HoloLens
• For Enterprise
• HoloLens can be applied in corporate training, such that it is more
comprehensive since it is not limited to the screen.
• Example: Detailed instruction given through the device, easy direction and
inventory tracking.
9. • For Enterprise
• Untethered communication and real time conferences
Value Proposition of Microsoft HoloLens
10. • Designers and Researchers
• Allows users to create a virtual prototype enhancing efficiency of designing
and research
• Example: Visualizing new product instantly
Value Proposition of Microsoft HoloLens
11. • Designers and Researchers
• Cooperative Design/Research regardless of distance.
Value Proposition of Microsoft HoloLens
12. • Gamers and Entertainment
• More immersive experience in gaming
Value Proposition of Microsoft HoloLens
14. Current Strategy
• It is sold at 3000 USD.
• Target: Developers in America and Canada.
Microsoft is aiming to built a developers community
Reasons: Developers will create additional value for HoloLens.
More complementary products (software) for HoloLens will attract
more user base.
• Each party are limited to buy 2 devices.
Reason:
To prevent redistribution. Device is still not ready yet for public use.
15. Good move!
• The first target: Developers
Microsoft can improve its learning curve by involving external developers to
improve its product.
Less Labour Cost.
Learning Curve = the more technology is used, the more effective and
efficient Microsoft is able to create HoloLens.
16. Future Strategy - For Enterprise
• Microsoft HoloLens
• Sell the equipments at discounted
reasonable price
• Data can be stored on cloud service or
hard drive.
• In the case of cloud service, a
subscription fee will be implemented
• Ensure data protection and customized
interface for each company
• Since the training materials are made to
be compatible with HoloLens, it will not
be compatible with other devices -
switching cost.
• This result in increase of barrier of entry.
• Profit from sales of the device.
• Computer and Laptop (Dell, ASUS)
• Sell the equipments at reasonable
price
• Data can be stored on cloud service or
hard drive.
• Profit from sales of the device.
17. Future Strategy - For Designer and Researcher
• Microsoft HoloLens
• Sell the device at reasonable price
• Collaborate with other companies that
store design data such that the data is
compatible with Microsoft HoloLens.
• Microsoft benefits indirectly from
Network Effect enjoyed by these
design data storage company
• The bulk of the profit comes from the
sales of the device.
• AutoDesk ThinkerCAD
• Allow users to register for free
• User are taught to use the interface
and create design inside
• User creates content which increase
the value of ThinkerCAD
• The increase of content amount will
attract more user and thus creating a
Network Effect.
• Profit comes from Premium Content.
AutoDesk gets a certain percentage of
the design bought by users from
another designer.
19. Future Strategy - For Game and Entertainment
Microsoft HoloLens
1. Sell the device at reasonable price
2. Reasonable profit from the device
3. Profit from the game goes to the gaming
company completely.
4. Incentives to attract more game
developers. This in turns attract more
customer to buy HoloLens.
5. A Network effect is created.
Profit comes from the sales of device
Console Game (Sony Playstation 4
/Morpheus)
1. Sold the console at very cheap price
2. Profit from the device is very small
3. Earn money through royalty
Certain percentage of the profit game
maker earns goes to the console maker
4. Value of the device goes up as more
people using the device, bringing
complementary product (software
developer)
Profit comes from royalty
22. Microsoft VS Competitors
Microsoft HoloLens Facebook’s Oculus Rift Sony Morpheus
Augmented Reality Virtual Reality Virtual Reality
Uses holograms, places virtual
objects in the space around you.
Interacting with real world.
Untethered.
Image replaces the real world, no
transparencies.
Seated experiences.
Plugged into a computer.
Image replaces the real world.
Can’t be effectively used without
controllers.
$3000 $350 -
23. Microsoft VS Competitors
Microsoft HoloLens Meta Pro
(Spaceglasses)
Atheer One Glasses Google Glass
Augmented Reality Augmented Reality Augmented Reality Augmented Reality
Uses holograms, places
virtual objects in the space
around you.
Interacting with real world.
Untethered.
Uses holograms.
Untethered.
40 degree field of vision.
Precise gesture detection,
with virtually no lag.
Untethered, connects to
android-based computer.
65 degree field of vision.
Image on top of user’s
view.
Can be used at anywhere,
both indoor and outdoor.
$3000 $3650 $500 $1500
24. Microsoft VS Competitors (different technology)
Microsoft HoloLens Pandora’s Box by Wygwam Google Cardboard
Augmented Reality Nanotechnology “Virtual Reality”
Uses holograms, places virtual
objects in the space around you.
Interacting with real world.
Untethered.
Hidden video projectors for the video
mapping.
Kinects to calibrate the projections as
well as to trigger the users’ scenarios.
NFC (near field communication) to make
inert objects communicate with various
devices.
Uses simple materials such as
cardboard, magnet, lens to get
virtual reality effects.
Untethered.
25. Differentiation from Competitors
● Enhance experience with reality
○ Display the image together with the real world
○ More productive
○ Example: Virtual sticky notes on refrigerator
○ Organize notes virtually, greener environment
as it reduce the use of paper sticky notes
● Wireless
○ Freedom to walk around and use the device at
different areas
26. Differentiation from Competitors
● Wearable
○ Easier to carry around compared to pandora box as user can wear it
on their eyes
○ Plastic inner band to adjust the headset
○ Gesture controlled, no need for additional controller which is unlike
Sony Morpheus
● Good image quality
○ 720p 3D rendering
○ Not too close to the extent of seeing individual sub-pixels, which exists
in some VR headset
○ For instance, Google cardboard is more likely to cause vertigo, nausea,
and headache
28. R&D and Manufacturing
• Outsourced to Foxconn
• Reduce the manufacturing costs
• Focus on the hardware and software development
• Collaboration with various research institutes and business
corporations
29. Marketing
• Press Conferences and Hands-on Workshops
• makes use of reporters’ reviews to promote the product
• Exclusive Technique
• limited to two devices to one developer
• making the eligible subset of customers feel special. This creates a better
customer business relationship and is proven to increase brand loyalty.
30. Distribution
● Phased distribution strategy
• Sell HoloLens direct from Microsoft to developers and enterprise
• Estimated commercialization : 2020
• Distribute HoloLens to a selected number of hardware specialists
• Widen its distribution to all resellers after a few years
31. Vertical Disintegration - Hardware
Outsource
• Intel’s future generation of Atom processors
• RealSense gesture control
• Cherry Trail
Inhouse
• “Holographic Processing Unit”
• handles the integration and interaction of real environments
and virtual objects
• Kinect 2 Sensors
• Depth and 1080p colour cameras
• Infrared sensor
32. Vertical Disintegration- Software
Outsource
• Collaboration with 3D processing companies
• Autodesk, Unity Technologies, Dassault Systèmes
• Collaboration with Research Institutes such as NASA
Inhouse
• Compatibility of Universal Windows applications
• Game : Minecraft
34. Strategic Control
• It is more than a gaming device
Better able to handle the
prices of HoloLens than
personal consumers!
35. Strategic Control - Software
• Compatible with Windows 10
• HoloLens can hedge on the growing market
share of the Windows 10 software to market
the HoloLens as complementary product that
has high compatibility with the Windows
software.
36. Strategic Control - Economies of Scale
• Microsoft enjoys a huge reputation and market share in both the IT
software and hardware industry
• Can tap into other revenue sources to achieve economies of scale
37. Strategic Control - Intellectual Property
• Bought over patents needed to create HoloLens, as well as IP assets for
a) Augmented reality
b) Wearable computers
Creates Barriers to Entry!!