Paul Stenhouse: Surprising winners in the AI race and the appeal of virtual reality

Maybe virtual reality isn't as appetizing as the tech companies want it to be 

Meta has decided to call it quits on making a high-end mixed reality headset to compete with the Apple Vision Pro. They started working on it back in November, but reportedly told staff this week to stop. The goal was to keep the price under $1000 which is getting harder and harder with the price of the micro-OLED displays needed. 

Apple's Vision Pro has struggled to get interest from consumers and developers. Estimates suggest Apple won't sell more than 500,000 of them. Analysts think they're too expensive and consumers might need a cheaper model. 

There are some surprising winners in the AI race 

Mitsubishi Electric, known to many for heat pumps and air conditioning, are also makers of optical components used in data centers and with the rise of AI they're in mega demand. They're about to ramp production capacity to 50% more than last year, which they still don't think will be enough. They think they'll need to get to double that new production capacity.   

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Episode Transcript

Speaker 1 (00:07):
You're listening to the Saturday Morning with Jack team podcast
from Newstalk SEDB.

Speaker 2 (00:13):
Twenty three to eleven on news Talk said be maybe
virtual reality isn't quite as appetizing as the tech companies
want it to be. Meta has announced this week it's
going to be calling it quits on making a really
fancy virtual reality or mixed reality headset. This would be
Meta or Facebook's answer to the Apple Vision pro, which

(00:36):
is the product that Apple sells. A text at Paul
Steinhouse is here with the details.

Speaker 3 (00:40):
Gilder Paul, Good morning, Jack.

Speaker 4 (00:43):
Yeah, I watched the Democratic National Convention too, and the
thing that I took away from it was how much
fun people were having together in celebrating.

Speaker 3 (00:52):
And then I see this headline.

Speaker 4 (00:54):
It's like, yeah, well that makes sense, doesn't it, because
you know we had that time in COVID we were
by ourselves and it wasn't fun.

Speaker 2 (01:01):
It's a very good I'd never thought about that. That's
a very astute piece of analysis. So you reckon that
actually instead of having virtual reality, No I shouldn't sound
so surprised, but instead of having instead of having a
virtual world, actually maybe people want to hang out in
the flesh. You know, like we always have, you know, like.

Speaker 4 (01:20):
Experience things together and have you know, tens of thousands
of balloons fall on you and turn an arena into
what looked like a ballpit.

Speaker 2 (01:28):
Yeah, no, I mean like it is.

Speaker 3 (01:29):
People like getting together.

Speaker 4 (01:30):
And Look, this technology is also really hard because it
not only needs to feel great for the user and
feel because some of the problems at the moment is
it feels.

Speaker 3 (01:40):
Quite heavy, it can feel quite hot.

Speaker 4 (01:42):
Yeah, it's and it uses quite expensive technology, and so
you also need the content to go with it. It's
like a chicken and egg scenario, right, Like people don't
want to do virtual reality until there's something fun to
do in virtual reality, but they don't want to make.

Speaker 3 (01:55):
It until people have head set.

Speaker 4 (01:56):
So Meta was trying, and they've been trying since November
to do this headset that was going to try to
compete with Apples three and a half thousand US dollar
Vision Pro.

Speaker 3 (02:05):
Yeah, they were going to try to keep it undred
one thousand dollars.

Speaker 4 (02:08):
Apparently it was becoming harder and harder, so they've just
called it quits. Right, But there's another interesting piece there
that Apple's Vision Pro has also really struggled to get
interest from.

Speaker 3 (02:18):
Buyers and also developers.

Speaker 4 (02:21):
And some of the estimates actually suggest that Apple probably
won't sell more than half.

Speaker 3 (02:25):
A million of them this year, which I know.

Speaker 4 (02:28):
If you take the word Apple away, you'd be like
half a million dollars is actually pretty decent. But this
is Apple, right, This is something Tim Cook was kind
of like, this is the next frontier of computing and
really has kind of put his name to it, and
so the fact that it hasn't been very successful in
Apple's eyes is also maybe probably signaling some alarm back.

Speaker 2 (02:46):
Okay, so can I just ask a really simple question here,
just you know, I'm sure I'm not the only one.
What do people actually do with these Apple Vision pro headsets?
Can you do game with them?

Speaker 4 (02:57):
Yeah, there's a lot of gaming, right, so you can
really put yourself into that world if you're seen on
TikTok and reels and things. There's some funny videos of
people trying to run and virtual reality.

Speaker 3 (03:07):
And end up running into walls and things like that.

Speaker 4 (03:10):
But they're also trying to really promote it meta, especially
in the workplace, so to really take the idea of
instead of just video conferencing to kind of like avatar conference.
If you will and be able to instead of having
a twenty seven inch screen at your desk, you can
put your headset on and have a one hundred inch
screen and make your spreadsheets really big.

Speaker 3 (03:31):
But I think people want to be together.

Speaker 2 (03:34):
Yeah, I think so too. Yeah, it's interesting, Like you say,
this might be a bit of a sign of the times. Hey,
it's funny. In the AI race, as various companies compete
to have the right component tree that can make really
supercharged AI systems, there have been some potentially unlikely winners.
And Video is probably top of the list, right, and
that's the company that was predominantly a gaming company but

(03:58):
was making these chips that can be used for AI
and is now worth gazillions of dollars. But there is
another surprising winner.

Speaker 3 (04:07):
Midst of this year.

Speaker 4 (04:07):
Electric Can you believe the people who usually make heat
pumps and air conditioning, they also make the optical components
used in the data centers to enable the really high
speed connections between the servers.

Speaker 3 (04:21):
That's required for AI.

Speaker 4 (04:23):
And they these optical components jack are in mega demand,
so they are about to ramp up their production capacity
to basically fifty percent more than what it was last
year and they think that even when they do that,
it still won't be enough and they're probably going to
have to double that new figure.

Speaker 3 (04:42):
Wow, I'm not great at.

Speaker 4 (04:43):
Math, but that's kind of like three hundred percent or so, right,
Like that's a yig number and they still don't even
know if that's going to be able to do it.
Because they're such a unique provider in this space and
if you want to do a data center, you kind
of need them.

Speaker 3 (04:55):
And look, the.

Speaker 4 (04:57):
Heat pump and air conditioning business is probably not doing
too bad either, because think of all the different things
that need to go into a data center, security, heat,
and cooling, you know, the people staffing it, of course,
but there must be so many players in there who
are just seeing their businesses take off thanks to this
AI tech.

Speaker 2 (05:16):
Yeah, that's amazing. Hey, thanks Paul let Us Paul stine Us.
He is our texpert on Saturday Mornings.

Speaker 1 (05:21):
For more from Saturday Morning with Jack Tame, listen live
to News Talks ed B from nine am Saturday, or
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