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AI & API Accelerating Digital Transformation Across Verticals

  • The hype surrounding digital twins is undoubtedly real, with many IoT players actively seeking to leverage the unique benefits of digital twin technology to gain a competitive edge in the market.
  • Connectivity, a key component of digital transformation, was at center stage with a significant focus on satellite and 5G.
  • Partnerships, collaborations, and API will fight the fragmentation in IoT and digital transformation.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – May 15, 2023

Counterpoint Research analysts recently attended three of the most prominent tech events of 2023 – Consumer Electronics Show, Mobile World Congress, and Industrial Transformation at Hannover Messe. After a hiatus of three years, these events saw a remarkable return of in-person attendance, indicating a promising comeback of the tech industry. During their visits, Counterpoint analysts delved deep into the latest trends and advancements in IoT and digital transformation, and have now identified seven key takeaways or focus areas. The findings are expected to have far-reaching implications for businesses and organizations looking to stay ahead in the rapidly evolving tech landscape.

Commenting on the key takeaways, Associate Director Mohit Agrawal said, “As we attended the tech events of 2023, it became increasingly clear that the rise of digital twins was the single biggest takeaway, particularly in Hannover. We saw how digital twins have energized the industrial IoT players, and are likely to become a critical component of digital transformation in the coming years. Connectivity plays a crucial role in enabling digital transformation and the events had a significant focus on satellite, private networks, eSIM, 5G, and connectivity management platforms. Finally, we were impressed with the companies’ incorporation of AI in various processes, especially in analytics, visual inspection, and robotics. It is exciting to see how these technological advancements will shape the future of industries, and we are eager to keep a close watch on these developments.”

Key Take aways from tech events
Source: Counterpoint Research

Each of the events was attended by over 100,000 visitors and had exhibitors across the long value chain of IoT and digital transformation. Many of the takeaways amplified Counterpoint Research’s top trends prediction for 2023 released earlier this year, noted Research Vice President Neil Shah. “IoT is an incredibly vast and fragmented value chain, and it is becoming increasingly clear that industry consolidation is necessary. Efforts like the Qualcomm Aware platform are a step in the right direction to reduce fragmentation and improve the overall IoT landscape. It is essential to see more of these kinds of partnerships between players in the industry to reduce adoption friction points and fully realize the potential of IoT. APIs are increasingly becoming important in seamless collaborations. As we move forward, we remain optimistic about the future of IoT and the role that industry collaboration will play in driving innovation and growth,” Shah added.

The comprehensive and in-depth ‘IoT and Digital Transformation Trends from CES, MWC and Hannover Mess’ report is now available for purchase at report.counterpointresearch.com.

 Feel free to reach us at press@counterpointresearch.com for questions regarding our latest research and insights.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the technology, media and telecom (TMT) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Mohit Agrawal

Neil Shah

Counterpoint Research

press@counterpointresearch.com

Related reports

Analysis of the AR/VR Value Chain in China: Is China at the forefront of the industry?

The AR/VR (Augmented Reality/Virtual Reality) hype in China has gone through two waves of growth, despite the current relatively small market size. The market and investment hype in China has waned and returned to a more rational level since the beginning of 2023. This can be attributed to the dismal profitability of internet giants under macroeconomic pressure and the underwhelming sales performance of VR devices.

Exhibit 1: Development stage of the AR/VR Industry in China

China AR/VR hypeSource: Counterpoint Analysis

Nonetheless, China’s national government has recognized the long-term potential of XR (eXtended Reality) technologies, with the XR industry prioritized as one of the top seven key industries to constitute the digital economy of China in the country’s 14th Five-Year Plan.  Recently, CAICT (China Academy of Information and Communications Technology) has also introduced action plans to foster the integration of virtual reality technologies (including augmented reality and mixed reality technologies) and vertical applications from 2022 to 2026.

The development of VR glasses took off in China in 2016, with standalone devices becoming mainstream in 2019. As of 2023, we are seeing the market frenzy for VR devices subsiding, with the industry waiting for the introduction of Apple’s first MR headset. Meanwhile, the development of AR glasses is still at an early stage, with only limited products available in China prior to 2022. However, since 2022/2023, we are seeing more products being commercialized.

Regarding the XR device value chain, Chinese companies dominate in certain technology aspects, such as the optic and display solutions, battery, and ODM & EMS (Original Device Manufacturer/Electronics Manufacturing Services), but still lag behind in the development of SoC (System on Chip), connectivity, memory, as well as some areas in the sensing and interaction technologies.

China AR/VR value chainSource: Counterpoint Analysis

In the following sections of this report, we will present an analysis of the development of China and key Chinese players in the core AR/VR technology domains.

  • SoC: Qualcomm clearly leads with the first-mover advantage

Before 2018, most AR/VR headsets in the market were supported by Qualcomm’s Snapdragon mobile platforms and its bundled XR SDKs. Following the launch of the Snapdragon XR1 Platform,  popular VR headsets both domestically and internationally were predominantly developed on Qualcomm’s dedicated XR platforms.

Compared to Chinese counterparts, Qualcomm’s XR chips offer distinct advantages in terms of computing power, GPU rendering capabilities, connectivity, and the overall hardware-software integration solutions. Chinese companies, including mainland China players Rockchip, Allwinner Technology, Hisilicon, and Taiwanese player MTK, have developed products for AR/VR headsets. However, only MTK’s VR SoC was adopted by leading player Sony, while solutions developed by mainland China companies were primarily utilized in lower-tier devices featuring VR videos.

Apart from MTK, China currently lacks a competitive AR/VR SoC provider capable of challenging the dominance of international players like Qualcomm and Samsung. While Chinese players such as Rockchip, GPT, and Rokid have announced their ambitions to develop more advanced AR/VR chips, it remains uncertain whether or when their efforts will pay off.

Development of players in the SoC technology of AR/VR

Source: Qualcomm, MTK, Hisilicon, Allwinner, Rockchip, Counterpoint Analysis

The following sections of the report will cover our analysis on various AR/VR technology domains, including optic technologies such as Fresnel lens, pancake solutions, birdbath/freeform optics/waveguides solutions, display technologies such as Fast-LCD, OLED, L-COS, Micro OLED, Micro LED, sensing & interaction technologies like rotational and transitional movements tracking of head and controllers, hands recognition, eyes tracking, video see-through, connectivity/memory/battery technologies, ODM/EMS services, as well as the global supply ecosystem and the latest development of Chinese companies in these domains. To access the full report, please click this link, or contact sales@counterpointresearch.com.

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Good Show in Vehicle Solution, B2B Segments Helps LG Fight Macro Headwinds

  • Q3 2022 revenue increased 8% YoY to reach ₩16.12 trillion helped by higher sales of vehicle solutions.
  • Vehicle solutions revenue jumped 46% YoY during the quarter, helped by the improved global semiconductor supply and increased auto production in China.
  • Operating profit increased 33% YoY to reach ₩0.79 trillion.

LG Electronics (LG) reported an 8% YoY growth in Q3 2022 revenue to reach ₩16.12 trillion despite considerable macro headwinds but helped by higher sales in its vehicle solutions and business-to-business segments. Quarterly gross profit rose 5% YoY to ₩5.05 trillion while operating profit grew sharply by 33% YoY to reach ₩0.79 trillion.

During the quarter, investor sentiment was weak due to a steep devaluation of the South Korean won against the US dollar, hurt by strong economic headwinds. The Korea Composite Stock Price Index (KOSPI) fell 6.5% in Q3 2022, which negatively affected LG’s performance.

LG Revenue By Segment, Q3 2021-Q3 2022

Financial highlights:

  • Revenue from the consumer electronics segment fell 1% YoY to ₩11.19 trillion due to increased logistics costs and lower demand for premium products like TVs. This segment contributed to 69% of total revenue during the quarter.
  • Among all the segments, vehicle solutions was the best performer. The segment’s revenue jumped 46% YoY to ₩2.35 trillion during the quarter helped by the relative improvement in the global semiconductor supply chain. The segment accounted for 15% of the company’s total revenue. China faced a lot of factory shutdowns in the preceding quarter due to regulations related to the COVID-19 pandemic. As factories reopened in Q3, there was an increase in production which helped meet the heightened demand for electronics components in the automotive industry. This, combined with an improved cost structure, helped LG achieve strong growth figures for the period.
  • Revenue from other businesses grew 23% YoY reaching ₩2.60 trillion. Despite an increase in sales, the profitability of this segment decreased 63% due to lower demand for IT products and higher raw material costs.
  • LG’s gross profit increased 5% YoY to reach ₩5.04 While the company’s operating profit grew sharply, gross profit growth was relatively muted because of increased market competition, low consumer demand, increased raw material prices, increased marketing expenses and the energy crisis.

Market outlook:

The current global business environment is quite difficult, burdened by rising inflation, supply chain disruptions, geo-political tensions, increased logistic costs and the energy crisis, which have weighed negatively on consumer sentiment across industries. LG plans to prioritize on the development of new software platforms and adjust its channel inventory to overcome the ongoing crisis. LG will focus on its premium consumer electronics products and will likely maintain maximum margins to secure high profits. The company will also apply cost-saving initiatives to reduce raw material costs.

The vehicle solutions segment has the highest potential to expand as the global semiconductor shortage is easing out and OEMs like Honda, GM and Stellantis are working to jointly produce battery cells. Moreover, LG has secured an order worth ₩1 trillion from Tesla to supply automotive camera modules for the Tesla Model 3, Model Y and Cybertruck. These new deals will drive LG’s vehicle solutions segment to a great future.

LG is also strengthening its focus on new technologies like metaverse and robotics. It recently partnered with KT Corporation to expand its AI robot service business. LG will also establish an R&D centre and develop robots for logistics, education and healthcare services. LG’s strategic partnership with TmaxMetaverse will boost development across metaverse solutions and web-based metaverse services. The company will have the opportunity to capitalize on these technologies by the time they mature at the end of the decade, which will help it boost revenue.

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Metaverse vs MMO Gaming: What will metaverse add to existing landscape

The metaverse has become a buzzword for many areas of the technology landscape. But many aspects of the metaverse are not new for the world of online gaming. It has been using the metaverse concepts of digital connectivity and interaction for years, going back to online chatrooms in the early 2000s, and more recently through massive multiplayer online games (MMOs). All this has created the starting point for Big Tech to take the metaverse to new areas through developing various software designs, but it needs to start from the hardware to access this new ‘world’. Meta – formerly known as Facebook – has been the most popular in marketing the concept of the metaverse and has had significant success in developing the initial hardware. Other companies are expected to jump on the metaverse hardware bandwagon, a highly anticipated entrant being Apple with their development of a VR headset.

What is MMO gaming?

MMO gaming often involves open-world games where your character can interact with many people globally within a set world to complete tasks and can communicate with others through audio or text-based communication. MMOs are not restricted to PC gaming. Microsoft and Sony have MMO games like Call of Duty available through their consoles. The first MMO, Neverwinter Nights, came out in 1991 using AOL for text-based communication with other players. MMO games have created mass followings, some of the most popular being RuneScape, World of Warcraft and The Elder Scrolls. The concept of MMO has become so popular that companies are now starting to incorporate successful authors and directors to help make these games as complex and riveting as possible. The newest and most popular game here is Elden Ring, which has George R. R. Martin (author of the global sensation Game of Thrones) writing the storyline.

What metaverse gaming offers and how the VR market will look because of it

MMOs follow a storyline and have set goals and tasks for players to work towards within the confines of the story even though they are open world. Metaverse gaming offers a more immersive experience where there are no confines of the typical gaming story progression. As the games themselves evolve, so does the hardware required to interact within these games in the most immersive way possible.

Metaverse gaming has been developed with the idea that VR headsets would be the prime mode of interaction. Meta developed its standalone Quest VR headset series to drive Metaverse gaming outside of the existing hardware confines of gaming – PCs, consoles and smartphones. In Q4 2021, standalone VR headsets contributed to over 90% of total VR headset shipments globally (mostly Quest 2). This disparity between shipments of tethered and standalone headsets will reduce in future as console hegemons Sony and Microsoft release tethered headsets for their existing consoles.

Sony plans to release its new headset PlayStation VR2 by the end of 2022 but with the ongoing supply chain issues the OEM is facing, it is unlikely to release the device until 2023. Sony has announced that 20 games will be released by both first- and third-party developers with the headset. The games Sony releases with this headset will determine its success, as customers interested only in VR headsets will be more inclined to opt for Meta’s products, which are already on the market. Potential customers for Sony’s PlayStation VR2 will be those who already have a PlayStation console as well as those interested in the game titles that they cannot get with Meta. Many games have not been included on the Meta gaming platform as it needs to be connected to a Facebook account. At Counterpoint, we believe that that the VR standalone will greatly overtake other XR and reach almost 40M by 2025.

XR forecast 2025

Metaverse gaming will not replace MMO and other existing forms

Even as metaverse gaming experiences an uptick with the release of new hardware and games, the popularity of MMOs will continue to see a wider fan base. PC MMO gaming is easily accessible through the existing platforms like STEAM, Xbox Game Pass, Google Stadia, Amazon Luna and other streaming-type platforms that have a wide variety of games that can reach anyone with a decent computer processor. MMOs on mobiles also create a new base of players who do not need to purchase a secondary device to access these games. At the same time, consoles continue to see record sales, with the PS5 and Xbox Series X still experiencing shortages two years after their release, thanks to the high demand combined with the lingering effects of the chipset shortages triggered by the COVID-19 pandemic.

Metaverse Reignites XR Interest in Chinese Markets

London, San Diego, New Delhi, Beijing, Buenos Aires, Seoul, Hong Kong – April 15, 2022

XR technologies experienced their first boom in China in 2016. However, this boom fizzled out in the following two years due to the immaturity of subsequent technologies and failure to fulfill public expectations. Five years later, with the rise of the Metaverse and Meta’s (formerly Facebook) commercial success of its consumer-level VR headset Oculus, China’s XR market has received its second wind with mobile giants like Huawei, Xiaomi, and OPPO entering the fray with their own releases of smart/AR products. Counterpoint Research has released a new report on the ‘Overview of China’s XR Market‘ which analyses the advancements in XR/AI technologies and the introduction of blockchain as cornerstones of a full-fledged Metaverse. It also measures whether a certain level of maturity has been achieved to reach mass-adoption levels in China’s XR market.

Current landscape

Currently, four major forces steer China’s XR industry, ranging from XR-focused start-ups to mobile giants. Three out of the top five smartphone manufacturers in China launched their own smart/AR glasses in the second half of 2021. Consequently, the smart/AR glasses category has become the most competitive in the Chinese XR industry with its relatively low entry barriers and potential to become the next leading device in smart wearables. Lagging in core AR/VR technologies, Chinese manufacturers are trying out other means of development, namely functionalities utilizing their own technological advancements, to pursue value-added and popular features like voice control, virtual assistant, and gesture control. Chinese manufacturers are also diversifying their product lines, shifting from B2C to B2B markets by providing products for industrial and service sectors. Rokid X-Craft and Rokid Glass are typical examples of obtaining value propositions in industrial/business applications.

Overview of Leading Players in China

Company Company Type Market Vertical XR Focus
Pico VR startup acquired by ByteDance VR Entertainment, gaming
Nreal XR startup (2017) AR Commerce, gaming, real estate
iQIYI China’s streaming giant Video streaming Movie streaming, gaming
Huawei Leading global ICT provider Telecom, AI Smart life
Rokid AI startup (2014) Robotics, AI Industrial inspection, public security, cultural tourism
OPPO Leading smartphone provider Smartphone Consumer-assisted reality

Technological landscape

According to Counterpoint’s Overview of China’s XR Market Landscape report, the market is currently moving towards a combination of Micro-LED with waveguide technology for augmented displays, setting a new standard for premium AR glasses. Xiaomi’s upcoming AR glasses have chosen such a combination. Micro-LED enables thinner display screens, lower power consumption and higher display resolutions. However, mass adoption will be less likely due to its high production costs, hence limiting its application to only premium models. Additionally, AR/smart glasses still depend on mobile phones for their computing power. However, China’s early adoption and development of 5G technology raises the prospects of AR/smart glasses becoming integrated devices independent from mobile phones.

In terms of VR headsets, leading players in China such as Pico, iQIYI, and ShadowCreator are adopting Qualcomm’s Snapdragon XR2 SoC processors, part of the Snapdragon product line designed primarily for AR and VR devices for optimal performance, benchmarking against Meta’s Oculus Quest 2 as the standard.

Competitive landscape

Even with big players testing the waters of the Chinese XR market, the AR market remains to be cultivated to its full potential with a dominant headset yet to be seen. This, however, may change soon with Pico (acquired by ByteDance), the leader in China’s VR market, seeing success with its Neo 3 model. Multiple AR/smart glass models are expected to be launched this year (2022), including the Nreal Air, Huawei Eyewear 3, OPPO Air Glass, Rokid Vision and possibly the Xiaomi AR glasses.

OPPO Air Glass 3 With Half-frame in Silver

Source: OPPO

For more details, read our report Overview of China’s XR Market Landscape. Feel free to contact us at press@counterpointresearch.com for questions regarding our latest research and insights, and for press enquiries.

Analyst Contacts:

Counterpoint Research

Related Reports:

XR (VR/AR) Headset Shipments to Grow 10 Times to Cross 100 Million Units by 2025

London, San Diego, New Delhi, Beijing, Buenos Aires, Seoul, Hong Kong – January 5, 2022

Extended Reality (XR) headset shipments are projected to grow about 10 times from 11 million units in 2021 to 105 million in 2025, according to the latest Counterpoint Global XR (VR/AR) Forecast. The adoption of Virtual Reality (VR) headsets gained pace in 2020 and 2021, thanks primarily to the good performance of the Oculus Quest 2 in the consumer segment and DPVR and Pico in the enterprise segment. We believe XR headset volumes will start picking up significantly in 2022, as it will be the biggest year for new XR product launches, with offerings from the Oculus Quest series, Sony PlayStation VR2 and the most awaited Apple AR glasses. Oculus and Sony have created a strong demand for their devices and built a good user base for upgrades, while Apple has a strong history of gaining volumes in a new category.

Commenting on the market dynamics, Senior Analyst Karn Chauhan said, “VR Standalone has become the device type of choice in the gaming segment primarily due to the success of Oculus’s Quest 2. The wireless form factor is the future for XR headsets. VR Standalone devices are being favored over VR Tethered devices by OEMs and consumers, making the latter a relatively slow-growing form factor. Augmented Reality (AR) has been a small segment since 2016, mainly serving the enterprise segment with high-spec and high-price products. This is unlikely to change in the immediate future. However, with Apple expected to enter the AR Tethered segment, we expect it to become the fastest growing and the second biggest form factor by 2025. This will catalyze the participation of many other brands, especially smartphone OEMs.”

Commenting on the regional performance, Senior Analyst Harmeet Singh Walia said, “North America will remain the biggest XR market, given the size and advancement of its consumer and enterprise users. This demand will be fulfilled by the biggest XR brands of the day such as Oculus and highly anticipated new entrants like Apple. On the other hand, Europe, despite being a major XR market at the moment given the size of its middle class, is expected to see relatively slow growth due to content limitations that are exacerbated by a lack of common language. The fastest growth, therefore, is expected in China, which will benefit from having adopted 5G early and having a common language that makes content creation easy. Some of its demand will be fulfilled by existing OEMs like DPVR and Pico and by major Chinese smartphone OEMs that will follow Apple into the XR segment within the first half of this decade.”

Metaverse, recently the most hyped term on the internet, made industry players interested in it and pushed them to start developing something around it. Metaverse can be a catalyst for the increase in XR volumes in the coming years, as XR devices are the main interface for Metaverse.

 

Background:

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

 

Analyst Contacts:

Peter Richardson

Karn Chauhan

Harmeet Singh Walia

Follow Counterpoint Research
press(at)counterpointresearch.com     
 

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