Think of Amazon...it's of the behemoth of e-commerce.
Now, just think of how quick and easy it is to open the app, and slide the one-click checkout option slider.
Then between 24 and 72 hours later it's sitting at your doorstep.
In late 2019, the company took this convenience to the streets. Or should we say took it to the brick and mortar. Yes, as companies were working hard to take their companies more digital, Amazon was going old school, but with a twist.
The Amazon Go store in New York City featured the concept of a cashierless store. Upon entering, all customers were required to open the Amazon Go app. The store uses overhead cameras and computer vision technology to track both items and shoppers throughout the store. The system can identify when a specific person has picked something off the shelf and placed it in their cart. It can even tell when the person decides to put something back.
When a customer is finished shopping, they simply walk out. Their receipt is sent through the app and no other waiting is required.
The concept seemed like it could work. And last year Amazon took the concept even bigger and tried it in a 10,400 square foot store. The company has now announced that it will open it’s fourteenth Amazon Fresh location.
The company then took the concept one step further. So that you would no longer even need your phone to shop. Instead of having to use the Amazon Go app, users can simply scan the palm of their hand.
This technology is similar to facial recognition software and analyzes the shape of our hand and unique configuration of veins under your skin. This palm scanning software could be so much more than just a way to pay for groceries.
In the future it could be used as an alternative to sporting event tickets or your office swipe card. But I’m not really here to justify palm recognition software, or advocate Amazon’s new stores. Instead, I’m using this as an example of a perfectly good technology company taking a break from their phone app working to blur the line between the digital and the physical.
Because this signifies the integral crossroads that we are currently standing at when it comes to technology and the internet. We are coming to a point where the internet is going to change, and they way we interact with the world won’t be far behind it.
The Metaverse is Coming, The Metaverse is Coming
The word metaverse is made up of the prefix meta meaning beyond and the stem verse, a form of the universe. This term is used to describe a collective virtual shared space created by the convergence of virtually enhance physical reality and physically persistent virtually space.
This concept of metaverse is a concept of a future iteration of the internet made of shared, 3D virtual spaces linked into a perceived virtual universe. Yes, essentially, I am talking about the blurring of the line between the physical and the digital. The integration of the Internet into the fabric of daily life.
Sure, it sounds like something from out of a comic book. But it’s really just the next logical step after the Internet of Things. In 2020, there were more than 8 billion physical objects embedded with sensors and software connected to create the IoT.
We are seeing the potential for smart homes, smart cars, and smart cities. We are seeing the integration of virtual reality and augmented reality. By uploading a picture of your living room, a furniture store will let you try out different furniture. The same is true for ordering a new pair of glasses. You can use your camera to see them sit right on your face.
As the internet continues to blur into the physical world, these IoT devices generate the data, edge computing shortens the gap between data processing machines and artificial intelligence quickly analyzes it all. And in the end, it will change the way that users engage with devices and more importantly content.
That’s the buzzword of the metaverse – engagement. Engagement has been at the core of business for years.
More time in an aisle at the grocery store means more likeliness of a sale. More engaged customers spend more money and become more valuable by the shear virtue of the engagement. More engagement on a streaming device means more ads serves and in turn more money.
Everything we do, especially with technology comes back to engagement.
As mentioned above ROKU and other streaming services measure engagement to sell that time to ad companies. Engagement on social media is measured as average time per session and engagement for ecommerce is measures as GMV.
The future of how we interact with our technology will continue to be influenced by this simple concept of engagement. There is a rush to continue to enhance content to encourage engagement.
This will be a true culmination of gaming, AR, VR, immersive technology, and content. And in order to reap the reward of the new internet, technology must address the casual, not necessarily immersive content.
The enablers of content enhancement will find a gigantic reward. And the company that I have for you today it ready to step up to the plate. Not only does it have the tools needed, but it has the compatibility to work with nearly every content platform that you can think of.
Making a Splash With Gaming…But That’s Not All
Unity is a cross platform game engine that was developed by Unity Technologies (NYSE: U). It was first released at Apple’s Worldwide Developers conference in six years ago and allows for game creation on virtually any platform.
The company now has 3 billion monthly active users all over the world. Earlier this year 94 of the top 100 global game development companies are Unity customers. And more than half of the top 1,000 mobile games in Apple’s App Store and Google Play were generated on the Unity platform.
Last year alone the video game market was a $159.3 billion industry. Out of that $75.9 billion were smartphone games, $51.2 billion console games and $34.2 boxed or downloaded PC games. Smartphone games accounted for 43% of the global gaming market. And Unity has a great hold on the market. More importantly is that the video game market is expected to hit $200.8 billion by 2023. And we suspect Unity will still be behind a great deal of that industry.
The company’s success comes from the fact that it’s the world’s leading platform for creating and operating interactive, real-time 3D content. And also, from the fact that Unity can deploy its applications across 20 other platforms including Nintendo, Android, PlayStation, and iOS.
But gamers aren’t the only content creators here. Sure, they still make up the bulk of the users, but other content creators include artists, architects, filmmakers, and automotive designers. Essentially anyone can use Unity to make their creative vision come to life in 3D.
In the most recent earnings call, John Riccitiello, President and CEO noted “We believe that real-time 3D will continue to grow at an accelerated pace and achieve massive scale.” And with this Unity is aspiring to be a platform for engagement which has not yet been seen in the tech world.
I can’t help but continue to reiterate, the company is more than just gaming, which seems to be its bread and butter right now. The company has helped Volkswagen bring its website up to par with Tesla by creating 3D renderings. Customer VirtaMed will use the Unity platform to develop virtual environments and simulations for surgeons and physicians to train in.
Just a few months ago, Unity announced a partnership with HERE Technologies. The companies are collaborating to build the next generation of in-car experiences through embedded, automotive human machine interfaces with real time 3D graphic capabilities.
And even a company as seemingly non-tech related as Lowe’s is a Unity customer. Each week over 300,000 employees serve over 20 million customers in Lowe’s locations all over the US and Canada. The company’s Innovation Labs unit recently used Unity’s Accelerate Solutions group to test the ability of real-time 3D to optimize workflows and processed for their associates. Because we all know that time is money.
The timetable to scale the 3D world will depend on ease of use. What good is a product that can save your company time and money, if it takes up the same amount of time and money.
That’s why Unity continues to spend money on R&D and integrations with standard coding languages. These are the aspects that allow real time 3D rendering to be useful beyond video games and plug directly into other software and uses.
This integration of 3D rendering into everything around us is not going to take as long as investors think. In fact, I think this trend is so far under the radar for most investors, they haven’t even notice.
Leaving Expectations in the Dust
Like any tech company, or investment at all, it pays to get in on the ground floor. In the case of Unity, that’s now. Shares have only been traded on the market since the middle of September.
Many investors still see this company as a video game development company. Sure, it’s the current story, but it’s not the whole story. Since we see the bigger picture, we can get in now before other investors run up the share prices.
Last month, the company announced its first quarter 2021 financial results. And it exceeded expectations across the board. And still shares didn’t move like I thought they would.
Shares were just coming off of the initial IPO run-up, that investors didn’t seem to notice the good number released.
Revenue for the quarter came in at $234.8 million. This was an increase of 41% over the first quarter of 2020. Seventy million dollars of that came from Create Solutions, $146 million from Operate Solutions and the remaining $17.8 from Strategic Partnerships and Other.
Adjusted EPS came in at a loss of 10 cents when analyst expectations were expecting 12 cents.
On top of this the management announced that the first quarter brought in many new customer in household appliances, automotive, healthcare, aerospace, and government. This is just more proof that Unity’s platform offers something for anyone and everyone that wants to add 3D rendering into their design.
The best part of the earnings release in my opinion were the guidance numbers for 2021.
The midpoint of revenue for the next quarter is expected to come in at $242.5 million. And for the full year, the company expects to see revenue of at least $1 billion. If Unity does hit $1 billion, I can guarantee that other investors will notice.
But that doesn’t really matter to us because we’re going to get in right now and enjoy this ride to solid gain.
Action to take: Buy shares of Unity Technologies (NYSE: U) at the market