PrimeSense was one of Israel’s most famous startup success stories. Now, after its well-publicized affair with Microsoft, i’m wondering what the future holds, PrimeSense says the sky’s the limit. Time will tell.
Waze? Get Taxi? The reality is we’re usually talking about small companies. The true giants of Israeli Hi-Tech, labeled numerous times as the next big thing, a company founded by five young entrepreneurs from Israel’s hi-tech hub in Ramat HaChayal; is a company called PrimeSense. You’ve likely heard of them, but if not, you’ve surely heard of their most notable clients, Microsoft’s Kinect, for which they developed the chip technology making the whole 3D gesture experience possible.
That’s correct. the three-dimensional sensor at the center of the Xbox was developed in Israel. But before you go and passing PrimeSense off as just one more Israeli wonder company, you should know that there might be trouble in paradise.
Don’t Say Goodbye
A year ago, rumors surfaced that Microsoft was not going to renew its contract with PrimeSense, or in other words – the next generation of consoles from the the Redmond giant will no longer be sporting blue and white tech. Whether as a result of these rumors or not, PrimeSense began massive layoffs around that time which included 50 of their 190 employees.
These rumors were started by an article in C Magazine, which reported that Microsoft was developing its own chip to replace the PrimeSense one they’ve been using in Kinect devices. However, not only was in not clear then if this rumor had any basis, it was also unclear how long it would take Microsoft to develop the chip in question, and yet nearly one third of PrimeSense’s labor force were let go – an unnerving thought.
A year passed and the new Xbox came out with sensor technology that is no longer based on that of PrimeSense, but rather by a Canadian company acquired by Microsoft called Canasta. It’s a harsh turn of events for PrimeSense. The company that, along with Microsoft, broke the Guinness world record for sales of a single product (No, it wasn’t the iPhone or iPad), now has to begin 2014 without its biggest customer.
“Kinect was a huge success, it’s now in over 24 million homes,” Tal Dagan, vice president of product marketing for PrimeSense told Geektime in an interview, “Our product has revolutionized the user experience. We are pleased that Microsoft has continued its commitment to the field, even though she has chosen a new partner and solution in place of our product. So, it’s not PrimeSense, but it shows that the three-dimensional sensor revolution is still alive and well.”
Seven good years
The history of PrimeSense and Microsoft can be traced back to 2006. PrimeSense, not long after its formation, managed to attract three leading gaming giants: Nintendo, Sony and Microsoft, offering all three the unique chip it was developing. Eventually it was Gate’s men who threw up the gauntlet and a deal was drawn up, but not before Microsoft pushed through its insistence that the deal be exclusive.
The two companies began to develop an interface together called Natal, a prototype to the Kinect – which was a three-dimensional sensor enabling the control of a computer through movement. After four years of hard work together, Microsoft and PrimeSense launched the Xbox with Kinect. Naturally, Microsoft was seen as the sole force behind this achievement, at least at first, but before long the world began to find out about PrimeSense, the Israeli genius behind the technology of the Xbox – PrimeSense was finally given her due.
It’s important to note that PrimeSense was the real magic behind the success of the Xbox. There were several competing products on the market but it was the Xbox that took off, largely due to the elegant simplicity of PrimeSens’s technology. Those times were the best days of the company. According to the agreement PrimeSense had signed with Microsoft, payment was received based on chip orders and this led to a near immediate state of profitability for the company as PrimeSense pulled in $200M within the first few months after their launch.
Their success was meteoric. Microsoft earned. PrimeSense earned. Everyone was happy. So why is the fairytale ending?
One reason may be purely technological. No doubt Microsoft intends to integrate the Kinect with everything it’s going to do in the future, from smart TVs and personal computers, all the way through to mobile devices. But PrimeSens’s camera is built for a very specific three – dimensional task, which may not be economic for the software giant. In terms of Microsoft, like any other company, the goal is to reduce manufacturing costs and increase revenue. Hence, they seek out a solution that allows for the use of cheaper hardware. PrimeSense’s camera technology doesn’t fit the bill.
Another fairly obvious reason is that Microsoft probably wants to develop its own products in-house. This way they can reduce costs, but it also gets to manage its own operations without being dependant on another company overseas. Beyond that, given the enormous criticism levied at large U.S. technology companies for transferring jobs overseas, it’s not inconceivable why Microsoft would want to keep its jobs close to home.
Back to PrimeSense. The big launch of Kinect was in November of 2010. According to rumors, Microsoft offered to buy PrimeSense then, but the Israeli company turned them down, thinking that they might break into other markets. At the same time, just one week before the launch, Microsoft acquired Canasta, and not only her, but also one of PrimSens’s Israeli competitors – 3DV.
As of this moment we do not know whether the technology of the new Kinect will involve 3DV technology, but what we do know is that Canasta technology will definitely be featured, and PrimeSens’s technology will definitely not. Microsoft has no intention of producing any more 1st generation Kinects, so PrimeSense is going to have to find a way to fill the large gap in its earnings left by the discontinuation of their most profitable product. On the other hand, as much as PrimeSense lost their golden goose, the new Xbox wont be out for at least another six months, giving the company a half year cushion of revenue which they can use to plan their next move.
We will not deny, as an Israeli based Techblog, that we have a personal affinity toward PrimeSense. The same emotional attachment that every blue and white blooded Israeli geek has and feels when they hear about a friend succeeding (or failing as was the case when we heard about Better Place, but that’s another story). Therefore, even though Microsoft is heavily invested in the Israel tech scene, it’s still important for us to see what will happen next to PrimeSense after Microsoft cut them loose.
“We have the most advanced three-dimensional technology ” Dagan said, “A few months ago we showed our latest generation of tech, the Capri, whose mission it is to penetrate more and more consumer devices. It’s very small, you can hold it in your hand, and you can operate it in any product that exists today; from TVs to smartphones. In addition, it get’s amazing performance, up to 3 times that of the average quality today.”
With regards to PrimeSens’s attempts to enter into new markets, PrimeSense’s technology can be found in medical robots, its sensor also sits at the center of the AVA iRobot, as well as on a device that uses wireless networks and system data in the cloud to collect medical data about patients and observe their vital signs using stethoscopes, ultrasounds and other equipment incorporated within the device.
Dagan also explained that there is actually a whole new product family based on the new chip, which has a far broader base of capabilities than the previous version found in the Kinect. These include a new camera, a new projector, and an entirely new system all revolving around their new chip.
So we shouldn’t shed any tears for PrimeSense? I asked. “Absolutely not,” he replied. “Even NASA examined the use of our sensors, to assess the weight of their astronauts in space. A teacher at a British school for autistic children sent us a letter in which they told us that a child who was not communicating, the first words he said were uttered when we asked him to give us back an application that was based on our technology. Our plans for the future are far more diverse and promising than they were a year ago – two years ago. We’re full of spirit, and looking forward for the opportunity to do some amazing things.”
“I’ll give you an example. I have a 12 year old girl, and once a month she stands by the wall, and we mark her height. That little ceremony is going to disappear soon, because smartphones using our system will enable the depth camera to determine the height of a child through photography. All measurements will be taken immediately. We’re talking about something completely new here. This is no longer just games and gestures, it’s a completely different understanding of the environment.”