Raptor smartglasses made by Everysight. / Source: Everysight
Elbit Systems Ltd., the Israeli drone maker, is gearing up to sell its first consumer product in nearly a quarter-century -- augmented reality smart glasses for bicycle riders, equipped with technology developed for fighter-pilot helmets.
Made by Everysight, an Elbit spinoff, the glasses have a map-projection overlay that helps riders navigate new terrain, gives real-time performance metrics and allows cyclists to receive notifications, calls and text messages. Chief Financial Officer Joseph Gaspar said the solution is similar to obstacle-avoidance technology for autonomous cars developed by Mobileye NV, an Israeli company that Intel Corp. bought in March for $14.7 billion.
“A part of our strategy is to take technologies from the defense market and look for applications in the commercial market, part of which is consumer,” Chief Executive Officer Bezhalel Machlis said in an interview.
Israel’s largest publicly traded defense company, Elbit sells air, land, naval and cyber security products, and saw its annual revenue grow nearly 5 percent last year. In the past six months the Haifa-based company’s shares have jumped 16 percent, more than the average of its global peers. Still, the company’s five-year average sales growth of 3 percent lags its peer average of more than 5 percent, and its three-year Ebitda margin is 12.7 percent, compared with its peer average of 13.4 percent, according to data compiled by Bloomberg.
Machlis said about 1/10 of Elbit’s annual revenue comes from civilian products -- mostly aviation systems -- and the company also has revamped military technology for the autonomous car industry.
“We’re trying to adapt to the commercial market, and in 2016 became a strong player in the automotive market,” Machlis said. “Our second area of commercial products is wearables, as seen in Everysight.”
The goggles’ heads up display. / Source: Everysight
Elbit forms strategic partnerships for its spinoffs, providing the technology and bringing in investors and partners with strength in relevant markets. Saban Capital Group, founded by billionaire Haim Saban, is one of the investors in Everysight, whose smart glasses are expected to hit the market by the end of the year. The cost will be comparable to smartphones and other devices, the company said, without elaborating.
“Do they need to create more revenue? If you already have a technology and you can put it to another use, then it makes sense to monetize it any way you can,” Citi analyst Michael Klahr said.
Gilad Alper, head of foreign equity research at Excellence Nessuah Brokerage Ltd. in Petach Tikva, Israel, said defense companies don’t always do a great job transforming military technologies into commercial products, as the markets are so different.
“There are a lot of reasons to be skeptical, but that doesn’t preclude them succeeding,” Alper said.
Everysight said in an e-mail that it expects its device to do better than Google Glass -- Google’s connected eyewear that struggled to attract customers -- in part because its smart glasses are based on decades of Elbit experience in vision systems and augmented reality.
A previous venture into consumer products didn’t last long for Elbit: In 1992, the company started making television sets but stopped just two years later, deciding that any future consumer products would stem from core technologies already in use on the military side.
These technologies, when developed and ultimately divested, created revenue for Elbit, as with MediGuide, an intrabody navigation system sold to St. Jude Medical Inc. in 2008 for $283 million.
Everysight could also be divested at the appropriate time, Machlis said.
“This is not the core activity of the company,” he said.