Vuzix logo

Vuzix Corporation, (VUZI), is a leading supplier of video eyewear products in the consumer, commercial and entertainment markets. The company recently uplisted to the NasdaqCM and received a large investment from Intel Corporation (INTC). We believe VUZI shares will strongly outperform the market as both institutions and individual investors discover the company’s market-leading products and strong sales growth.


In addition to winning four CES 2015 Innovation Awards, Vuzix has won 20 Consumer Electronics Show Awards over 11 consecutive years and has 49 patents issued or pending. Founded in 1997, Vuzix has offices in Rochester, NY, Oxford, UK, and Tokyo, Japan.

Shares Outstanding: ~23 million fully diluted

Float: ~12.3 million

Insider Ownership: 22%


Intel Investment

In January 2015, Intel invested $24.8 million in 4,962,600 Vuzix preferred shares at $5 per share representing approximately 30% of the company and giving Intel the right to appoint two of the company’s seven board members. Intel’s investment validates Vuzix’s strength in design and production and underscores Intel’s goal of accelerating the market for wearable computing with Vuzix being the main beneficiary. The Intel deal gives Vuzix sufficient cash for a number of years, a strategic partner with enormous street credibility, and a massive sales channel.


Augmented Reality Eyewear

Vuzix Augmented Reality (AR) eyewear provides a first-person view of the real world, overlaid with computer-generated data and content. Both digital and optical see-through models provide 2D and 3D support of real world and computer content. Integrated camera systems capture AR markers and targets, enabling a host computer or mobile device to merge the real and virtual worlds. AR technology is catching on quickly in a vast array of applications from hands-free maintenance assistance, virtual engineering/product demonstrations, gaming, simulation, and more.

Vuzix main AR product is the M100 Smart Glasses. In 2013, Vuzix began shipments of its highly anticipated M100 Smart Glasses, the world’s first commercially available smart glasses. The M100 is a fully-functioning Android based wearable computer with WiFi, Bluetooth, GPS, motion sensors, HD camera, voice recognition and wearable display allowing the user to work hands-free and enhance the user’s real world with geospatially accurate information from either the M100’s onboard memory or from the cloud. The M100 can be connected to and controlled through almost any computing device including both Android and iOS platforms.

In August 2014, Vuzix CEO Peter Travers was on Fox Business Channel demonstrating the company’s enterprise solution and consumer market prototype. The video can be seen here.

AugmentedReality.Org expects shipments to reach 1 million by fall 2015 – mostly for enterprises, followed by an increase to 10 million by 2016, 50-100 million shipments by 2018, and eventually capture the mainstream consumer space and cross 1 billion shipments at the turn of the decade. The table below illustrates the technology adoption curve for AR also known as Smart Glasses. The market is currently in its nascent stage where early adopters are testing the product to see if it provides sufficient benefit.

vuzix - 1’s forecasts are confirmed by other analysts. ABR Research forecasts the wearable computing device market will grow to 0.5 billion unit shipments by 2018 with more than 75 million of those being smart glasses leading to a $15 billion opportunity.


Augment Reality- Enterprise Market

Last week Investor’s Business Daily featured an article on the growth of wearables and smart glasses, (Wearables will gain ground in workplace).

The article notes:

“Wearables are also headed to warehouses, manufacturing shop floors and field maintenance sites in a variety of industries, including oil and gas, mining, aerospace, warehouse, engineering services, transport/logistics, field maintenance, and mobile workforce management.”

The Enterprise Market is adopting AR technologies at a faster pace than the Consumer Market. Information technology firm Gartner projects the adoption rate of smart glasses used in work places to increase from less than 1% to 10% over the next five years with offsite worker adoption driving the increases in the industrial market. Gartner has also forecasted that smart glasses could save the field service industry alone up to $1 billion per year by 2017.  Deloitte Consulting also expects the enterprise market for wearable devices to surpass the consumer market over the long term.

The tremendous growth in the AR Enterprise Market stems from the multiple uses of the product, the cost savings potential, and the potential of early adopters to gain an advantage over competitors.

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The chart above illustrates Vuzix’s leadership within the AR space. It has close to the highest mind share and is one of the most advanced products as it is already shipping whereas the Google Glass “Explorer Program” closed January 19th and the new official launch date of Glass remains uncertain.



Vuzix Building Early Mover Advantage

Vuzix is already building an early mover advantage by cementing relationships with some of the world’s largest companies. In the Enterprise Market, meaningful partnerships translate to product credibility and foster increased sales with new customers. With all its partnerships and current trials, Vuzix is increasing the competitive gap over peers in the Enterprise Market. As the competitive gap increases and more customers adopt Smart Glasses, it may become increasingly difficult for competition to enter the market. This may not only lead to an increase in market share for Vuzix, it may provide room for margin expansion down the road.

Additionally, given the technology is early in its lifecycle and a standard has not been adopted, the more customers and partners a company has the higher the probability the company’s technology will become the standard leading to an even greater competitive gap over competitors.


DHL and Ricoh recently collaborated with Vuzix and UBiMAX to pilot the Augmented Reality within DHL’s warehouse. Using Vuzix’s M100 smart, DHL wanted to test its human picking process to see if Smart Glasses could take the place of pen and paper. During the test, employees wearing Vuzix’s Smart Glasses picked over 24,000 packages and delivered a 25% improvement in efficiency for their customer Ricoh. As a result of this trial, it is anticipated that both DHL and Ricoh will be moving to more extensive implementation.

In July 2014, Vuzix announced a partnership with Lenovo to bring Smart Glasses to enterprise customers in China. Actual sales had a delayed start as acquiring Chinese certifications and getting Chinese government to understand smart glasses took time. Lenovo has now started shipping product and these sales will begin to show in the upcoming Q1 filing for Vuzix.

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SAP is also collaborating with Vuzix creating four different applications. Two applications are available that utilize SAP’s augmented reality technology and are geared toward field technicians and warehouse workers, where hands-free computing can aid in data collection and operations.

The two applications launched are the SAP AR Warehouse Picker and the SAP AR Service Technician. Both apps utilize visualization and voice recognition to achieve hands-free usage.

With the SAP AR Warehouse Picker, users are able to scan bar codes and QR codes for handling units, locations, products, stations and any other required scans, as well as voice input for quantity confirmation.

As for the service technician app, users have access to 3D visual enterprise models of their workplace and the use of an expert calling feature allowing a remote expert to give directions to a colleague while streaming a visual from the head set.

Vuzix has shipped thousands of systems resulting in many trial programs. The company says there are over 50 currently running programs that have gone from early prototype to real world trials. As these trials move from the early tests into actual production programs, Vuzix has grown from single digit orders to bigger volumes and in some cases thousands of units.



40% of Fortune 100 Companies Now Testing Vuzix Products

In the Vuzix April 1 conference call, (which we strongly encourage investors to read), CEO Paul Travers made quite an amazing statement in the Q&A section:

“Approximately 40% of (Fortune 100) companies have purchased smart glasses from Vuzix. So it’s a lot of big guys that are using these devices. And the good thing about that is when they finally bring them out to market, the market opportunity is significant.

These partnerships create credibility for Vuzix’s products and are crucial for further adoption and creating an early competitive gap over peers that will be very difficult to overcome. Vuzix also has a superior product on the market. Google Glass is built for the consumer market and does not have the processing power required for enterprise applications.



Augmented Reality- Consumer Market

The AR Consumer Market adoption is well behind the AR Enterprise Market. The best known attempt to penetrate the market is Google Glass, which is undergoing a period of consolidation. Vuzix CEO Peter Travers believes the pain point in consumer adoption is the Smart Glasses’ form factor. Vuzix believes they have solved the problem with its Waveguide base optics engine.

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Waveguide is barely noticeable, eliminating the form factor issue while retaining the functionality of Smart Glasses and Smartphones, which it has the potentially replace. Vuzix plans to release this patented and potentially game-changing technology later this year. Waveguide is superior to Google Glass due in both form and processing power.

In the company’s April conference call, Vuzix CEO, Paul Travers stated:

“We think it will open up the mass market to the real value proposition of wearable displays when they really finally look like fashion glasses.”

 And in the Q&A section of the call, CEO Paul Travers expands on Google Glass launch failure, explaining:

“They (Google) designed that product for the consumer market place. I can understand why, they did that. When you try to use Google glass in an enterprise set of conditions where the processor has to be pretty heavily loaded, what happens is it overheats, because it can’t keep up with — imagine you’re in a warehouse and you’re using the camera as a barcode scanner. So the processor’s running constantly at 30 frames a second bringing in this video data, looking for bar code information, scanning it and trying to decode what the barcodes are. Well that’s pretty processor intensive and Google glass was not designed for that. So it fails pretty badly often.

The other thing is it doesn’t have autofocus cameras in it and the likes. So when you’re trying to read a barcode you’ve got to move the barcode in and out until you get it just in the right position to where it will finally scan. Vuzix doesn’t have any of those problems. Again, we didn’t design it for the consumer space on purpose. It’s not one of those things that you’d see people wearing down the street in New York City, but we never said it was to begin with. The fact that you’re in a warehouse and you’ve got a hard hat on and you’ve got all kinds of other gear just makes it fit in really well. So in enterprise we designed it specifically for that marketplace and it’s meeting with great results there because of it. Whereas Google, they’re back to the drawing board, and when they finally work their way through this, I think they should have learned by now that if you don’t look like something that’s fashionable, you’re not going to have great results in the consumer side. It has to look pretty.”

In addition to its product quality, Waveguide has proprietary nano-imprinting process for low cost manufacturing. As the market matures and a technological standard is selected, prices will decrease and low cost manufacturing will be required for strong profitability.


Gaming and Video Eyewear

Vuzix’s high-resolution Video Eyewear Family of consumer products solves the main challenge in viewing video and digital information via portable and mobile devices – the small screen. Vuzix iWear and Wrap Video Eyewear are worn like regular glasses providing the effect of a big screen experience, ranging from 44” to 75”, as seen from 10 feet (~ 3m). They are ideal for use with media players, portable DVD players, gaming consoles, and mobile phones. The company is focused on making its video eyewear the standard mobile equipment for watching news, sports, music videos and movies, and for playing video games on the go.

iWear 720 was named as a 2015 CES Innovation Awards Honoree.


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The IWear 720 has been in development for a number of years. IWear 720 can be plugged into an iPhone, Xbox, and it runs standard 3D HDMI content and supports virtual reality software.


Virtual Reality Eyewear

Vuzix is a leading name in Virtual Reality (VR), immersing users in computer-generated worlds. Vuzix VR eyewear enables users to view the world outside their flight simulation cockpit and look around like sitting in the real plane. Look down and to the left to see your landing approach and your view changes automatically. VR software and Vuzix VR eyewear are used in a variety of applications ranging from game and flight simulations to medical applications such as pain and phobia management.



Vuzix reported $3 million in revenues in 2014, an increase from $2.4 million in 2013. The increase in product sales was attributable to growing sales of the company’s Smart Glass and Waveguide products, which saw an increase in sales of 312% illustrating the strength of the company’s operations. Older product lines were coming to the end of their life depressing overall sales growth.

In 2015, management stated that “a 300% or so increase in revenues from 2014 would not be unrealistic.” Many of the over 50 trials in Vuzix’s M100 Smart Glass in the Enterprise Market should turn to rollouts and more purchases, particularly taking into account the efficiency gains that can be obtained by companies using the product. The Lenovo partnership in China is starting to reach monetization after a delayed startup period and the company’s iWear 720 will launch later this year. As a result, revenue expansion is expected to quickly ramp throughout this year and next.



There are several recent transactions within Vuzix’s industry to benchmark.

  • In November 2013, Microsoft paid $150 million for Osterhout. Osterhout has no revenues, 6 patents, and 75 patents pending. The company’s intellectual property is in wearable devices particularly augmented reality head borne devices where Vuzix is the leader.
  • In March 2014, Facebook bought Oculus for $2.3 billion. Oculus is a virtual reality company with no revenue, no product on the market, and unproven technology.
  • In October 2014, Google invested $542 million in Magic Leap valuing the company at $2 billion. Magic Leap also has a focus on Virtual Reality, no revenues and is in the technology development phase.

Given Vuzix’s technological lead, financial strength and revenue producing products, it is amazing that it is trading below any of the valuations of the acquisitions listed above.

If the company were to receive a similar valuation to Oculus and Magic Leap, the company would be trading at $2 billion or 21 times its current valuation. Clearly, Vuzix is extremely undervalued relative to recent transactions within the industry.



Vuzix is the leader in the Augmented Reality and Virtual Reality markets and that leadership is both technological and commercial. The company’s products are shipping and are currently gaining an early mover advantage over competitors. Based on the above and the valuations assigned to Osterhout, Magic Leap, and Oculus, we believe shares in Vuzix Corp. (VUZI) are STRONG BUY and that $12/share is a conservative price target for end of 2015. Gary Anderson


Disclosure: The publishers of are long shares of VUZI purchased in the open market.
Receipt of $20,000 from an unrelated third party.

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