A small U.S. company called Vuzix hopes a partnership with Lenovo will help it make a big splash in China's wearable technology market.
It wasn’t long after Google first revealed its Glass project in 2012 that technology companies reconsidered eyewear as a platform for wearable computing.
Lenovo, the Chinese computing giant, was one of them. The world’s largest PC vendor, known for an experimental hardware streak that brought the world numerous convertible laptops and a concentric mobile keyboard, knew it had the software and applications that could power such a device. So it set upon making one for its home market in China, where Glass failed to tread.
As the company marched toward a summer rollout, it realized it had a problem. Weeks away from presenting to investors and consumers that were hungry for a Glass alternative, the prototype was still not ready. It needed a Plan B, and quickly.
The Rochester, N.Y. company, best known for its line of head-mounted video eyewear favored by soldiers and gamers (as well as a 2009 cameo on The Oprah Winfrey Show), launched its own smart glasses at the end of 2013. The company had sold off its defense business the year before and was in search of new markets.
How about China?
“I met with them back in May and they said, ‘Look, we haven’t done so well and we have this major announcement we are planning for the summer. Is there any way we can strike a deal?’” said Dan Cui, Vuzix’s vice president of business development. “I said absolutely.”
In late July, the two companies announced a year-long partnership that allows a co-branded version of Vuzix’s M100 to be sold and marketed in China. Lenovo has already started taking orders for the headset, which with a touch of irony runs on Google’s Android operating system, and expects to start selling it for 8,000 Yuan (approx. $1,302) beginning this month. Prices are similar in the United States.
This week, Vuzix announced that it had begun shipping its M-100 smart glasses to Lenovo in China.
“We are very happy to partner with Vuzix. It’s a great start,” said Yuli Bai, Lenovo’s general manager of new business development. “Vuzix has a long history and the most advanced technology in smart glasses globally. Along with the M100, we are also considering other partnerships with Vuzix on future products. And we’re only not looking to market in China with Vuzix but also globally.”
The partnership allows Lenovo to move quickly to corner its lucrative home market, which this year supplanted North America as the world’s largest for consumer electronics, according to the Consumer Electronics Association. It also gives Vuzix entrance into what can often be a tricky place for foreign companies to operate and the support of a tech company that is many times larger than it. (Lenovo, a Fortune Global 500 company, counts more than 33,000 employees in 60 countries. Vuzix has just 35.)
Both companies seek to make a splash in the nascent wearable technology market, which IMS, the market research arm of IHS, predicts will be worth at least $6 billion by 2016. Taiwan-based Industrial Economics and Knowledge Center predicts the global wearables market will reach $20.6 billion by 2018. IDC, another market research firm, predicts China’s wearables market to grow from just 30,000 units this year to 1.38 million by 2018.
There are challenges: existing wearables, from watches to glasses, have been criticized as clunky, unattractive, and expensive. While Samsung, Google, and Apple battle it out for the hearts of consumers, Lenovo believes its chances are better in the enterprise market. Think BlackBerry, but for glasses.
“We’ve been at this for along time. We know the average guy walking down the street is not going to wear something that will make him look like he has a problem or came off the Starship enterprise,” said Paul Travers, the company’s energetic and fast-talking chief executive, in a recent visit to Fortune‘s New York offices. “It doesn’t fit in that marketplace. The number one question we get from customers is, ‘Can’t you hire a decent industrial design firm and make these things look sexy?’ I’m telling you, man—when you have 10 pounds of shit, it don’t fit in a sexy bag. It is what it is. As a tool, it works.”
Fortune 500 companies across industries can save millions by using the devices, Travers says. The savings, he claims, are found in the efficiencies that wearable computers bring to industries such as airline, field services, manufacturing, and health care. With the glasses, workers can read a bar code to fill orders in a warehouse, bring up a three-dimensional visual showing them how to repair a machine on a factory floor, or communicate by video link with other employees wherever they are—all with hands free.
Both companies are gambling that businesses’ focus on function and not fashion will be conducive to gaining traction in that market. The M100 can take photos, record and play video, connect to the Internet, and link to a phone. Its display, positioned in the wearer’s peripheral vision, is equivalent to a four-inch screen on a smartphone that is held about a foot away.
“Every company out there has people in the field. Imagine now if they are enabled with wearable technology and are immediately able to solve problems,” Cui said. “So, gee, I don’t understand how that works. Let me call the guy in the office and the technician sees what I am looking at and, in addition, when I’m wearing the glasses, they recognize that part and the relevant information comes up. Now you have provided peer-to-peer communication, machine-to-machine interfacing, and additional oversight in the field, all in one small, wearable device.”
Outside of China, the company has collaborated with several large tech companies including SAP, Nokia, and NTT Docomo to develop applications for the device.
“When you send a technician out to do anything, they walk into an environment and the only have certain tools available to them,” said Paul Boris, a global vice president for SAP, whose warehouse picking software will be on the device later this year. “What we are doing is we’re giving them a set of digital tools that overlay very nicely with the all the physical tools they have. So we don’t require them to do more. We require them to do less.”
Boris added that SAP chose Vuzix because its device was “a little better suited for industrial use” and was the only one that was “available in quantity.” Since its official launch eight months ago, Vuzix says it has sold “thousands” of M100 glasses. The co-branded version for the Chinese market began shipping this month. It expects the device to eventually account for 50% of its sales by the end of the year.
Analysts are bullish on the companies’ prospects. “They are in one of those precious and rare situations that its easier to go from enterprise to a consumer solutions instead of starting off as consumer solution,” said Ramon Llamas, a wearables analyst for IDC. “They need to build on this and there will be opportunities for expansion.”
For now, Vuzix is only getting started. “This is an important device for our future,” he said. “Wearable technology was just coming around the corner to mean something to people. We felt that if we didn’t get on the stick and move to these next generations products, we were going to get run over by the big guys.”