If I were a shareholder of a microdisplay company such as eMagin or Kopin, I'd be a little worried about where future growth is going to come from.
For years, the microdisplay pitch was something like this: we make microdisplays for specialized applications - such as military products - where high performance are required, sometimes coupled with the ability to withstand harsh environments. One day, there will be a consumer market for such products in the form of virtual reality goggles or high-quantity of camera viewfinders, and this will allow us to reduce the price of our products and expand our reach. While this is coming, we make money by selling our specialized markets and doing contract research work.
This pitch is starting to look problematic. The consumer market is waking up, but not necessarily to the displays made by eMagin and Kopin.
In immersive virtual reality (e.g. not a see-through system), smartphone displays are a much more economical solution. Because more than a hundred million smartphones are sold every year, the cost of a high-resolution smartphone display can easily be less than 5% the cost of a comparable microdisplay. Microdisplay pricing has always been a chicken-and-an-egg game: prices can go down if quantities increase, but quantities will increase only if prices go down AND enough capital is available for production line and tooling investments.
Other technologies are also good candidates: pico projectors might become very popular for heads-up displays in cars and once large quantities will be made, they can also replace the microdisplay as a technology of choice.
Pico projectors are physically small which might be attractive to see-through goggles similar to Google Glass. The current generation of see-through consumer products does not seek to be high resolution nor wide field of view, and thus low-cost LCOS displays (Google is reportedly using Hynix) can provide a good solution for a high-brightness display that can be used outdoors. Karl Guttag had an interesting article on why Kopin's transmissive displays are not a good fit for these kind of applications.
One more thing on the subject of microdisplay prices. Though the financial reports do not reveal that microdisplays are a terrifically-profitable business, I suspect prices are also kept at some level because of "most favored nation" clauses to key customers such as perhaps the US government. Such clauses might force a microdisplay company that reduces prices to offer these reduced price levels to these 'most favored' customers. Thus if - for example - the US government is responsible for a large portion of a company's revenue and has a most-favored nation clause, any reduction in pricing beyond what is offered to the government will immediately results in significant loss of revenue once the US government prices are also reduced.
There will always be specialized applications where a display like eMagin's can be a perfect fit. Perhaps ones that requires very small physical size (such as when installed in a simulated weapon), or ones that can withstand extreme temperature and shock, or ones where quality is paramount and cost is secondary, but these do not sound like high-volume consumer applications.
The financial reports of both eMagin and Kopin reflect this reality. Both companies are currently losing money as they seek to address this reality.
What can be done to expand the business? One option is vertical integration. An opto-electronic system using a display needs additional components such as driver boards and optics beyond the display. Today, these come from third-party vendors but one could imagine micro-display companies offering electronics and optics - or maybe even motion trackers - for small to medium-sized production runs. Another option which is currently pursued by Kopin is offering complete platforms and systems such as the Golden-i platform. Ostensibly, the margins on systems are much higher than the margin on individual components, especially as these become commodities. Over time, perhaps there is greater intellectual property there as well.
It will be interesting to see how this market shakes out in the upcoming months.
Full disclosure: I am not a shareholder of either company but my company uses eMagin microdisplays for several of our products.