At the end of August, there were only four major players competing over the dominance over the 3D motion sensor market which develops technology for capturing body motion and converting it into digital information for games, home appliances and cellular devices.
Three of the four contenders, which own leading patents in the industry, are well known giant corporations Microsoft, Apple and Qualcomm. The fourth is a small Israeli company named XTR otherwise known as Extreme Reality.
The Israeli company developed technology that can turn any digital or web camera into a state of the art 3D sensor.
XTR, however, is not the only Israeli company which deals in motion capturing technology. The most well known Israeli company in the field is PrimeSense which sells 3D motion sensors to Microsoft.
The company supplies Microsoft with millions of PCBs at $10 a piece and estimates are that it cut a $100 million coupon on the sales of 10 million unites of Kinect – Microsoft's motion sensor which is based on Primesense's technology.
Sunday Calcalist revealed that another Israeli company is joining the war between the technology giant over the 3D sensor market: Intel is negotiating with Invision for the $50 million acquisition of the small Israeli company. In the long run, Invision's technology will enable Intel to launch 3D vision chips and software and market them to television, game consol, smartphone and tablet manufacturers.
The three Israeli companies are not alone: a number of other Israeli companies deal in the development of image processing technologies that incorporate complex algorithms and electro-optics to produce 3D vision systems.
"Many of these technologies came out of the army", explains XTR founder David Geva in an interview with Calcalist. "Many military engineers migrated to the civil industry and it is only natural that the industry is developing in Israel".
PrimeSense CEO Inon Bracha has another take on the profusion of companies in the digital imaging industry – the success of his own company. "When Ceragon Communications was established, many companies were founded in an attempt to reproduce its success but there is only one Ceragon. Most companies in Israel were not able to raise funds until the Kinect became a success and now everyone wants a piece of the action."
Izhar Shay from Canaan Partners VC fund, a key investor in PrimeSense, believes that image processing expertise is not enough and attributes Israel's success to the required multidisciplinary know-how that the local market can offer.
"In order to develop a 3D vision controller, you need knowledge in video, signal development, electro-optics, ergonomics and cognitive psychology on top of expertise in all aspects of the program. It's hard to find such a combination of fields like Israel has", he says.
Shay was not surprised by Intel's intention to enter the content field and notes the giant's expansion strategy, acquiring, for example, McAfee security software developer for $7 billion and more recently its acquisition of two Israeli companies unrelated to the PCB industry – Graphtech which develops technology for the transfer of video and data from PCs to cell phones and Telmap which develops navigation applications.
However, Bracha still recalls Intel's last floundering attempt to penetrate the smart-home market when it acquired Israeli Oplus for $100 million. "Intel cannot change its skin and become a different company. Some things money can't buy".
Aside from PrimeSense, all the companies below are up for sale. As they develop small components for large systems which give the competitive edge to technology giants such as Microsoft and Intel, chances are high that the acquisition spree will continue. Calcalist marks the candidates for the next exits.
Product: 3D motion controller that captures body motion and detects facial features
Founded in 2006 by Aviad Maizels, Alex Shafonet Dima Reis, Ofir Sharon and Tamir Berliner
CEO: Inon Bracha
Location and employees: Tel-Aviv, 200
Capital raised: $80 million
Investors: Silverlake, Canaan, Genesis, Gemini
Clients: Microfost, Asus, Lenovo
Estimated earnings for 2010: $80 million
In 2009, Microsoft's hardware division execs had to make a decision which sensor technology to incorporate into the Kinect system, the popular Xbox 360 motion sensor.
They deliberated between two Israeli companies, 3DV and PrimeSense and eventually decided to go with both and acquired the 3DV employees and a license to use PrimeSense's technology as the latter turned down the acquisition offer.
However, Microsoft was more impressed by PrimeSense's technology – its chip met the high performance standards and could capture body movements of more people from greater distances and under various light conditions. 3DV was dumped at a loss and its employees stayed on to support PrimeSense's technology.
The rest is history: since Kinect's launch in the beginning of the year, over 10 million devices have been sold – 8 million within the first two months – a Guinness world record for the sales of a single electronic device.
PrimeSense is not stopping at computer games though. The company is examining smart house technologies for hands-free operation of consumer electronics.
In the meantime, PrimeSense has launched pilots with megs manufacturers such as Asus, Lenovo and Chinese giants Haiel and Hisense. However, entering new markets is no mean feat. Bracha notes that global slowdown effects consumer indices and considerably impedes the introduction of 3D into other areas of life.
Product: Vehicles impact detection sensors
Founded in 1999, by Professor Amnon Shashua and Ziv Aviram
Location and employees: Jerusalem, 200
Capital raised: $157 million
Investors: Glenrock, Leumi Partners, Goldman Sachs, UMI, Yacov Shahar. Ari Steimatzky, Israel Kaz
Clients: Clal Insurance, Eldan, Hertz, Avis, BNP Paribas
Mobileye was founded by one of Israel's leading specialists in image processing, Professor Amnon Shasua from the Hebrew University and colleague Ziv Aviram who is the company CEO.
Over the past decade, the company raised $157 million and became a global leader in impact detection sensors. Mobileye technology does not translate body motion to VR data like the rest of the companies mentioned here but it uses body motion to detect nearby pedestrians or vehicles.
Product: 3D sensor PCB patent
Founded in 2011, by Sagi Ben Moshe, Professor Ron Kimmel and Lior Ben Hur
Location and employees: Yokneam, 10
Capital raised: $2-3 million
Investors: Olaf Roge, Nutcracker
Last Sunday Calcalist revealed that Intel is negotiating over the acquisition of Invision Biometrics – an upcoming company previously unpublicized which operates under a cloak of secrecy.
The company's products are based on patents developed in the laboratory of Professor Ron Kimmel's, a Technion image processing expert. The company's initial development was a 3D human model developed in Professor Kimmel's lab.
Only after PrimeSense's success, its founders conceived the idea to register their technology as a patent and sell it to technology giants. The Technion is on of the company's prime shareholders.
Intel will probably incorporate Invision's patent with other recently acquired patents by Israeli startup Omek Interactive which raised $7 million last summer. Invision's technology will constitute the "eyes" of the motion sensors.
It should be noted that while the market dubs Invision Intel's PrimeSense, Invision is a young company which has yet to develop an existing product and is surely not on equal financial footing as PrimeSense.
In fact, Invisions holds PCB design patents but has not yet produced one. The first chips based on the company's technology will probably be developed by Intel in the event that the acquisition comes to fruition.
Product: 3D capture software
Founded in 2005 by Dor Givon
Location and employees: Headquarters in Herzliya and sales office in Tokyo; 28
CEO: Elad Dubzinski
Capital raised: $4-5 million
Investors: Texas Instruments
Clients: Texas Instruments
Extreme Reality (XTR) is the developer of gesture control interface and motion capture software which can use input from 2D cameras. The technology aims to make high cost sensors such as the Kinect redundant. XTR's software can be installed on cell phones, computers, tablets and television sets with simple 2D cameras.
Since the company's technology can process a wide range of information and costs only several of dollars, it may to be a real alternative to Primesense's chip that sells for $10 a piece.
Similarly to PrimeSense, XTR's technology captures real time 3D full body motion and converts the information into player motion. XTR provides external developers with a software bundle to which they can tack on their own applications. Texas Instruments has already begun incorporating XTR's technology in its top box and cell phone boards.
Recently, the company has undergone expansion and reorganization which placed former executive at Modu and Next Technologies Elad Dubzinski at the helm.
Despite being a veteran company, XTR has yet to take a leading position on the market and it is PrimeSense that created a market niche with a successful product with sales in the tens of millions of dollars.
Product: Gesture recognition based software
Founded in 2004 by Zvika and Itay Katz
Location and employees: Tel-Aviv; 20
Capital raised: $4 million
Investors: Eli Talmor and Rami Lipman
Clients: Hisense and Huan TV
Eyesight delivers short range gesture recognition technology and deals in 2D motion analysis. Eyesight's technology enables touch free operation of cell pones and television sets.
In its former years, Eyesight focused on cell phone technology and developed hands-free interfaces for Nokia smartphones enabling users to operate their phone using hands gestures.
Recently, the company expanded its operations and as Chinese TV manufacturer Hisense has begun delivering the technology in its television sets. Eyesight had also signed a cooperation agreement with Chinese content company Huan TV which develops applications for digital TV.
Product: 3D sensor technology which maps image depth
Founded: 2007, by Janine and Gershom Kutliroff
Location and employees: Beit Shemesh; 55
Capital raised: $14.4 million
Investors: Intel, Zitlman, FF Assets, Everett, Chestnut
Clients: Lenovo, Panasonic
Whereas Inovision is considered Intel's future 3D sensor hardware supplier, startup company Omek Interactive is regarded as the "brains" behind the sensor. The company's software maps image depth and the company develops a software bundle which may be used by external developers to develop image depth based applications.
Omek's application operates on 3D cameras such as the Kinect but cannot operate by 2D cameras such as cell phones or web cams which makes the company's operations complementary to that of Primesense rather than posing competition.
The company planes to further develop the technology for digital top-boxes, mobiles and game consoles but depends on the incorporation of 3D cameras in such devices. So far, Omek Interactive has recruited several business partners among them Lenovo and Panasonic.
Product: 3D sensor-based games
Founded in 2010 by Gay Bendov, Asaf Sela and Tal Raviv
Location and employees: Bnei Nrak; 7
Capital raised: $600,000
Investors: Jasmine Group, Kima Ventures, Tevel and Wekix
Clients: Eedoo – A Lenovo subsidiary
Sidekick is a global 3D gaming pioneer – even before the Kinect stormed the markets last year, the company launched two of its games for the Chinese game console iSec produced by Lenovo's subsidiary, Eedoo.
Sidekick's technology can operate on any motion controller, especially Kinect which is installed in over 10 million Xbox devices.
Sidekick's founders are well seasoned game developers: Bendov founded prominent gaming companies in Israel such as Double Fusion; Raviv worked at US gaming company Eidos and Sela founded the animation lab at the JVP media compound in Jerusalem.
to read this report in Hebrew