Amazon Plans To Jump Into The Virtual Reality Business

  •  Virtual reality is set to become a hot trend for 2016.
  • Amazon's patent filings show that they have plans to 'cash in'.
  • Amazon could use virtual reality tech as a 'trojan horse' to push sales of products and services.

Towards the latter part of 2015, virtual reality products are trending, and are likely to play a big role in 2016. For instance, Samsung had their Gear VR flying off the shelves, and Occulus Rift continues to delight. Microsoft (NASDAQ:MSFT) also gave us a glimpse with Holo Lens. However, as is usually the case with Microsoft, we are unlikely to see it being released in the near future.

Clearly, there is a market ready for virtual-reality - and one that Amazon (NASDAQ:AMZN) is keen to tap into.

Two recent patent filings showed that Amazon could have a rather innovative virtual reality product in the works.

One patent pertains to to enabling consumers to control devices using hand gestures. The patent details that the technology will use multiple cameras in order to make the experience seamless.

This gives us an indication that Amazon is trying to have its products and services become a more integral part of the home. Much like Amazon did with its Kindle line of products, we can anticipate that such a virtual reality product will act as a 'trojan horse' to boost revenue figures. Moreover, at this moment in time, there is certainly room for a product which allows for an almost sci-fi like control of the home, and makes our lives easier through automation.

Amazon is an innovative, growth-driven company, and it isn't far-fetched to think that they will want to explore this space. Nest has given us a peek of the future with their Nest thermostat.

Secondly, Amazon filed a patent titled "Reflector-based mapping of a scene". Reading into the filing, this technology will use projector technology to impose a virtual setting onto a room. Interestingly, while similar devices have had to use multiple light sources and peripherals, this will only use one. One can clearly see the potential for this product in the gaming, education, and corporate market. The opportunity to enjoy unique experiences could allow Amazon to open a whole new category of product, get a head start on the content ecosystem, and provide monetization opportunities.

Whether these patents become real mass market devices in the future is something we must wait and see. However, one thing is for sure: they would be a valuable addition to Amazon's march on becoming the company that serves everyone. There has been talk- rightfully or wrongly- that Amazon might have some monopolistic business practices.

Financial performance

These patent filings are getting investors excited because it allows Amazon to build on their growth.

For instance, Amazon's net income growth is up by an impressive 118.1%, which is significantly higher than that of the S&P 500 but falls short of the rest of the Internet & Catalog retail industry. It is worth noting that this is due to the fact that Amazon has an inclination towards reinvesting their profits.

Secondly, Amazon's powerful earnings growth (117.89%), coupled with their insatiable appetite for innovation has led to the stock shooting up by 116.5%. This has led investors to question whether Amazon stock has hit the ceiling. However, with drone delivery set to debut next year, and key metrics on the rise, there is still some fire left in Amazon stock.

Conclusion

In conclusion, Amazon's patent filings look promising. If released as a product, it should allow them to strengthen their stranglehold on the e-commerce industry. Moreover, it allows Amazon to enter lucrative markets such as gaming and education. As a result, this is likely to trigger a significant boost in revenue for Amazon, and drive the Amazon stock price, and land a good return for investors.

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  • I do not have any business relationship with the companies mentioned in this post.
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