By Jo McIntyre
Small Times Correspondent

PORTLAND, Ore., Aug. 13, 2001 — Now the provenance of military fighter pilots and high-powered surgeons, Microvision Inc.’s retinal scanning display technology may soon move to the arena of the vehicle mechanic.

The Nomad, Microvision’s first commercial product, was designed with mobile workers in mind — like linemen, mechanics and technicians working in fiber optic vaults.

These industrial applications will dwarf the others, said Tom Sanko, vice president of marketing for the Bothell, Wash.-based company, which develops microminiature optical scanning technology for display and imaging applications.

Using the “augmented vision” offered by the Nomad, the company says, mechanics can increase their efficiency, pilots can fly more safely and surgeons can operate more effectively.

The Nomad uses MEMS technology in a scanning chip that directs a tiny ray of light to write images and other information directly onto the wearer’s retina.

The scanner, which is attached to a device worn on the head like a miner’s helmet, is about the size of a one-inch chocolate square and drops down in front of one eye. The wearer can see through the scanner screen, which produces an image bright enough to be seen in full daylight.

“We’ll all be using these. Eventually it will be a fashion accessory!” Sanko said, after ticking off the medical, defense and aeronautical and industrial markets Microvision will be targeting.

Prices will have to come down a bit before most people will be wearing Nomads to the beach, though. All by itself, the device costs about $10,000. With its computer, it costs $15,000.

The technology was originally designed for fighter pilots, but its inventor, Dr. Tom Furness, a former U.S. Air Force officer, wanted to expand the application outside the military. He looked for somebody to license it to and Microvision was born.

The company originally expected to record some early Nomad sales by mid-2001, but now executives expect sales in the fourth quarter of this year. There will be a full launch in 2002, Sanko said.

Unlike other head-worn scanners, Microvision’s product does not block the normal view. Projectors are in the headset and information is transmitted via wearable or stationary computer, which is connected to the headset.

The primary competing technology is a small flat panel display that projects images on ultraminiaturized panels using a silicon chip and optics that project information into the eye through goggles. The drawback is that the darkened projection screen impedes vision.

Analyst Bill Relyea, of Bluestone Capital Corp. in New York, said that Microvision’s product is unique. “They seem to have all the intellectual property that is relevant for display technology,” he said.

The company has teamed up with Cree Inc. of Durham, N.C., which makes silicon carbide diodes and wafers to produce blue and green light-emitting diodes.

The company also works with a Cree competitor, Nichia Chemical Industries in Japan, which is doing work in lasers. Relyea issued a strong buy rating on Microvision just a week ago.


Microvision also works with companies that need its scanning technology for their products. For example, the Nomad is connected to a belt-worn computer made by Xybernaut, a Fairfax, Va., company with offices and subsidiaries in Germany and Japan.

Founded in 1990, Xybernaut makes wearable, voice-activated computers that use a Microsoft Windows operating system. Products are aimed at business, industry and government applications, but consumer applications for millionaire’s kids are possible, too.

They could connect to the Internet, run streaming video or play DVDs with the right accessories. But at a starting price of $15,000, you won’t find these products at the mall yet.

Even the head-mounted display is not yet for sale on a Xybernaut product, However, “shortly such displays will be available in all-light readable head-mount displays,” said Andres Rico, a Xybernaut product marketing executive. “We are working with other display makers, but not releasing names yet.”

Another partner is a Seattle start-up, Tangis Corp., which makes a voice-activated user interface specifically for wearable computers, Sanko said. In a partnership with Hitachi, Microvision is working on a consumer product that could retail at about $2,000.

Microvision doesn’t create software for the computers or develop information for reference via the Nomad scanner. Customers could buy this information as software or develop their own, then load whatever files their staff needed from their own computer database.

For example, the company just finished flight trial with private pilots, which projected critical flight information in the viewfinder, said Richard Duval, communications manager for the company.

“But we are most excited about a recent trial with American Medical Response,” a company that operates 150 ambulances to municipalities in the Seattle area. AMR’s maintenance team uses manuals supplied by Ford Motor Co. as they repair ambulance engines.

Mechanics plug testers into the vehicles’ computer systems to retrieve any vehicle fault codes. Then, the mechanic consults the manual to figure out what to do to repair the problem. Since manuals are kept in a central location in the shop, mechanics had to traipse back and forth between the ambulance and the manual.

But when the manual information was installed on the Nomad devices, tests showed efficiency increasing by up to 68.9 percent for novices and 38 percent for experienced mechanics.

“The guys used the system with very little training. I was surprised how quickly they adopted the system,” said Evan Miller, AMR’s lead mechanic.


The economic downturn that has so many high-tech executives hyperventilating is actually a good thing for Microvision, Sanko said. “It’s an opportunity to get qualified employees for us. We’re still hiring.”

Until recently, the company had been working off of cash generated by investors, grants and development contracts, mainly from the U.S. Department of Defense. Revenues from product sales will be a welcome change.

In 2000, Microvision, which went public in 1996, formed a subsidiary named Lumera Corp. to develop products that would contribute to the backbone of both Internet and telecommunications systems.

The subsidiary is an outgrowth of the company’s work on displaying and transmitting information in the form of light, called photonics, Sanko said. The switches are intended to facilitate communication in fiber optics networks.

Although a true optical switch has not been developed yet, despite billions of dollars of investment, Lumera researchers are working on optical polymer technology to make optical transistors for switches that could be faster and less costly than current technology.

In its recently released financial report for the six months ended June 30, 2001, the company reported a consolidated net loss of $18.8 million or $1.57 a share compared to a net loss of $12 million or $1.09 a share for the same period in 2000. The company has about 170 employees.

Revenue in the same period of 2001 was $4.1 million compared to $3.3 million for in 2000. Consolidated results include Microvision and Lumera. Revenue is primarily from development contracts from the Department of Defense and medical researchers.

The company, including Lumera, ended the second quarter with $42.8 million in cash, cash equivalents and investment securities and a contract backlog of $7.9 million.


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