Israeli augmented reality (AR) lens maker Lumus has closed a $6 million venture investment from Chinese e-commerce major Alibaba Group. Initially reported by the Israeli daily Calcalist, this latest investment follows a $30 million Series C in December 2016 from HTC and Quanta Computer. It raised $15 million in a Series B round in June 2016. This brings its aggregate equity financing raised to date to $57 million, according to date compiled by Crunchbase.
Founded by Yaakov Amitai in 2000, the company currently supplies lenses for the B2B AR market, producing optical engines. These are a crucial component of AR glasses and headsets and consists of a micro projector and an embedded waveguide. These are essential to the functionality of AR glasses; the projector sending the image to the lens, and the waveguide then directs it back to the eye. While a minor investment for Alibaba, it fits into the Chinese giant’s longer term strategy of building up its capabilities in technologies that will impact e-commerce in the future. It also opens the possibility for deals with companies linked to the Alibaba corporate ecosystem, as well as the licensing and integration of Lumus products.
In a 2015 letter to its shareholders, executive chairman and Alibaba founder Jack Ma stated: “Many people confuse us with other e‑commerce retailers and therefore assess our business model solely on the basis of the growth rate of our gross merchandise volume (GMV). In fact, this narrow definition of e‑commerce is only a fraction of the Alibaba Group strategy. What we are building is an open, transparent and collaborative infrastructure for commerce.”
A report by VRrOOm (http://www.vrroom.buzz/vr-news/business/alibaba-reveals-strategy-robotics-vr-ar-ai), which highlighted elements of Alibaba’s strategy, notes that Cainiao, Alibaba Group’s logistics affiliate, was testing an AR sorting system using the Microsoft Hololense AR headset; the solution navigates workers to walk in the fastest route to a package located on a designated shelf.
Increasingly, e-businesses and other e-commerce players will be implementing sales & marketing strategies that integrate AR to boost sales and market share, given how it facilitates a more immersive customer experience. Additionally, it allows businesses to build connections with customers through tying them into their platforms, product and service ecosystems. Through engaging peoples’ visual sense, AR can foster greater customer attachment and trust in products, leading to higher conversion rates.
However, given the array of devices that people will use, ranging from smartphones to smart watches and other personal computing devices, there will be a trend towards developing natural interaction methods that are optimised for AR devices. A PWC report notes: “Although eye tracking doesn’t yet have the adoption of gesture tracking, it is a natural fit for the VR and AR market. Adoption of the technology likely will occur in VR headsets first, as VR is a more controlled environment without any issues related to ambient light or brightness.”
When accounting for Alibaba’s $150 million investment in e-sports through a strategic partnership with the International Esports Federation (IeSF) in 2016 and a closer look at its growth strategy, the investment ties in with a narrative of Alibaba seeking to develop offerings that connect business partners and consumers to its retail ecosystem.