Lessons Learned from DAQRI’s Shutdown

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4Q 2019 | IN-5622

DAQRI, the Los Angeles, California-based Augmented Reality (AR) company that was founded in 2010 and well known for its DAQRI Smart Glasses, which launched in 2016, recently announced its shutdown at the end of September 2019. DAQRI’s headset was accompanied by the Worksense cloud solution, which provided AR remote assistance, access to documentation, integration with IoT systems and 3D scanning. In addition, DAQRI managed to build a strong partnership ecosystem, including companies such as SAP, IBM, and Autodesk.

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DAQRI, a Pioneer in AR, Is Shutting Down

NEWS


DAQRI, the Los Angeles, California-based Augmented Reality (AR) company that was founded in 2010 and well known for its DAQRI Smart Glasses, which launched in 2016, recently announced its shutdown at the end of September 2019. DAQRI’s headset was accompanied by its Worksense cloud solution, which provided AR remote assistance, access to documentation, integration with Internet of Things (IoT) systems, and 3D scanning. In addition, DAQRI managed to build a strong partnership ecosystem, including companies such as SAP, IBM, and Autodesk.

Apart from DAQRI, in the last year both Meta and ODG announced shutdowns as well, while some new players like Nreal and Focals entered the market. Despite the collapse of these prominent AR companies, the demand for AR smart glasses and solutions is still flourishing and these new device launches join a market that is becoming both more technically advanced and more affordable.

Pricing and Improved Competition Challenge Incumbents

IMPACT


DAQRI’s headset was an innovative and highly capable device at the time it was launched, with a comparatively wide field of view (44°), decent battery life, competitive processing capabilities, and a real Mixed Reality (MR) offering in a very nascent MR market. However, DAQRI Glasses was one of the most expensive devices in the market as a result, costing US$4,995 even though it was already an effort to reduce total costs around DAQRI’s original smart helmet product. While it may be simplistic, much of DAQRI’s competitive struggle came down to Microsoft and HoloLens. DAQRI obviously wouldn’t be able to compete with Microsoft on the platform side, but HoloLens also beat DAQRI on price. Consequently, DAQRI needed to update its product to align with the HoloLens 2’s specifications and price. DAQRI’s specialization in only industrial verticals may have limited potential sales opportunities and profits, but this strategic position didn’t necessarily lead to the shutdown because AR solutions are strong in industrial business.

Today, the AR smart glasses landscape is more mature. Hardware manufactures have acquired a better understanding of customers’ business needs and are able to steadily overcome challenges that limited massive adoption earlier on. Manufacturers have been gradually reducing prices, or at least improving the technical capabilities at similar prices, in order to compete not only against other smart glasses players, but also against increasingly capable AR-enabled smartphones/tablets; higher accuracy, better immersion, and hands-free capabilities are go-to value adds in the smart glasses field.

What Determines the Likelihood of Success for an AR Device?

RECOMMENDATIONS


There is no doubt that the absence of DAQRI, Meta, and ODG from the market will provide new sales opportunities to other manufacturers. These opportunities do not necessarily arise from the absence of these players, however, but are generated from the more competitive and valuable products that providers offer. A technically capable AR device cannot succeed by itself; it requires a combination of features such as affordable price, flexibility in application development, and integration with existing systems and other devices. Cellular compatibility, especially with 5G, is steadily becoming a more important criteria as well, providing long-term value flexibility in use case. In addition, marketing and communication and Go-to-Market (GTM) strategies play a catalytic role in the success of an AR device; customers need case studies, Proof of Concepts (PoCs), and Return on Investment (ROI) confirmation. Moreover, in order to achieve massive adoption, manufacturers should be approachable to Small and Medium-sized Enterprises (SMEs) instead of focusing their case studies mainly on multinational organizations.

Having a solid understanding of what is actually required from a device, and how that differs depending on customer, vertical, market, and use case, is imperative. Less technically capable devices, like those from RealWear, can still be market leaders thanks to a succinct target audience and well-understood value proposition. At the same time, high-end devices like Microsoft’s HoloLens are more universally applicable, but are also more difficult to market, implement, and, ultimately, use. 

The AR market is quickly moving into next generation devices and investments. AR smart glasses continue to hit the market and, while some incumbents have fallen, this can be seen as a sign of market maturity with more competitive and promising devices. Finally, the efforts from some of these fallen entities aren't entirely lost. Patents, research, and general knowledge can remain in the market depending on the outcome.

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