The Best Way to Profit From the Growth of Virtual Reality

Betting on the turnaround of companies can prove to be fruitful. However, it is necessary for investors to differentiate between value traps and companies that actually have the potential to turn itself around. My favourite turnaround candidate for the year is Qualcomm (QCOM) and the reasons for the same are described below.

Why virtual reality matters

Qualcomm is putting efforts toward making its presence strong in the rapidly emerging virtual reality market, as the company is setting its Snapdragon 820 processor to be the platform of choice for standalone virtual reality systems.

Major companies such as HTC, Facebook, and Sony are about to launch their most-awaited virtual reality systems, and therefore, Qualcomm has declared to launch a software development kit projected to enable use of its latest Snapdragon 820 mobile processor for virtual reality systems.

Devices such as Oculus Rift, HTC Vive require high-end PCs for their functionality, but Samsung Gear VR, may well take over the VR smartphone market, mainly due to their cost advantage.

Recently, Qualcomm confirmed that its new Snapdragon 820 processor will power Samsung’s flagship smartphones Galaxy S7 and S7 Edge, and the company will also provide SDK for software developers, a set of tools to utilize the hardware proficiencies of the 820 to best gain in order to build VR experiences.
With the help of SDK, Android apps can be developed that would run on smartphones powered by Snapdragon 820 processor, or for individual untethered systems that might be developed in the forthcoming time that put to use the Snapdragon 820 processor.

As per the reports issued by Qualcomm, its Snapdragon 820 can support a screen resolution far superior to the existing resolution of tethered systems even at a belligerent 90 Hz frame rate.

One of the problems starting to arise with existing tethered virtual reality systems is “screen door” effect. In the HTC Vive and Oculus Rift, each eye views a separate 1080 x 1200 screen, where Qualcomm promises that the Snapdragon 820 processor can support a remarkable resolution of 1600 x 1800 pixels, at a belligerent frame rate of 90 Hz. If Qualcomm successfully manages to keep its promise, this would be twice the pixels of Vive or Rift and could give it the early mover’s advantage in the booming space of VR.

Conclusion

Qualcomm has struggled due to several reasons. However, it seems like the company’s struggles are about to end. The virtual reality space presents a big opportunity and as explained above, Qualcomm has a great chance to gain an advantage. At current levels, Qualcomm has limited downside, which is what makes it my favourite turnaround pick.
Published on Apr 1, 2016
By Prudent Investor

Copyrighted 2016. Content published with author's permission.

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