1. What is virtual reality?
The name says it all: it is about using computers to simulate a virtual reality which we perceive to be real. This is possible thanks to virtual reality glasses such as the Oculus Rift, which will soon go on sale. It enables gamers to experience their virtual worlds in 3D, be they the jungle, the Antarctic or a distant galaxy. Virtual reality is not just a game, however; it is also a business. Two years ago, Facebook forked out two billion dollars to acquire the start-up Oculus.
2. What is augmented reality?
If a dinosaur suddenly steps out of your living room wall, either you are having a nightmare or you are experiencing something called augmented reality. The aim is to use information technology to augment the real world with digital images. Reality and illusion blend into one. Google Glass, for example, is experimenting with a headset similar to a pair of glasses which supplements the real environment with digital information. But before augmented reality begins turning our worlds upside down, we still have time to become accustomed to virtual reality.
3. How can virtual reality benefit us?
Initially, virtual reality will introduce a new dimension to video games, enabling gamers to immerse themselves in artificial worlds. It is also conceivable that virtual reality will one day replace a broad range of real journeys, meetings and events. We will no longer go to the stadium to attend sporting events, but will watch them live with the help of virtual reality. Companies will be able to save money by organizing virtual meetings. Realistic simulations will improve training courses in areas such as driver, flight and military training.
4. What are the cons of virtual reality?
Do you get dizzy on a roller coaster? Then you are likely to have a similar experience with virtual reality. Headaches, dizziness and – in the worst-case scenario – vomiting can occur. Why? Because the brain is receiving conflicting signals. It is led to believe that you are climbing a rock face in the mountains, for example, when actually you are only moving around your bedroom.
5. Which are the most important virtual reality companies?
The pioneers include Facebook, HTC, Sony, Samsung Electronics and Alphabet, and Apple and Microsoft could also enter the industry. If virtual reality takes off, hardware traders and component suppliers such as display and memory technology manufacturers are also likely to benefit.
6. Can investors already earn money with virtual reality?
The industry is still in its infancy and sales figures to date have been modest. The question of how to price the expensive headsets and technical specifications in general present challenges. In the short term, therefore, virtual reality is likely to contribute little to the performance of the IT sector, says Sundeep Gantori, a UBS IT analyst. What is needed is a breakthrough like the launch of the iPhone in 2007, which revolutionized the smartphone industry. Over the longer term, virtual reality has the potential to transform the way we access digital content such as videos, games and shopping services. The games market will probably be the easiest one to conquer.
7. Will virtual reality turn into a kind of El Dorado over the long term?
The market offers extremely attractive growth potential. According to Sundeep Gantori’s calculations, sales could well rise from the current figure of 500 million dollars to some 9 billion dollars by 2020. Assuming that each virtual reality device will fetch a sales price of 400 dollars, the market could even generate revenues of around 20 billion a year in a bullish scenario. The key beneficiaries of this will be content providers and display and memory technology manufacturers.
Technology remains on trend
UBS CIO continues to regard the technology sector as attractive. Although its growth has slowed, the earnings growth of 6 to 8 percent remains higher than that of the market as a whole. One way to participate in the potential growth of the virtual reality sector is with an investment fund which includes the technology sector.