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The next trillion-dollar tech business: Altucher

By James Altucher, editor at the Altucher Report

Back in the '90s, my dream was to go to graduate school to learn about virtual reality. 

Virtual reality was just beginning then. My dream job: to build an AI-based model of emotions so that the characters you find in a virtual reality could respond to you with "real" emotions. 

Whatever. I was thrown out of graduate school, so that didn't happen. But I never stopped keeping track. I've watched AI build bit by bit over the past two decades. 

Now it's here. And we have to pay attention. 

First there was the Internet. This was a trillion-dollar opportunity that is ongoing. 

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The app store was the second trillion-dollar opportunity. The entire ecosystem of smartphones and tablets and the cloud and applications moved computing into our hands. 

And now the third trillion-dollar opportunity has finally arrived. This year for virtual reality is like 1994 for the Internet. The first commercial AI headsets will be launched. The chips are being developed. The storage is getting prepared. The entire infrastructure for the third trillion-dollar opportunity has been created in the past 20 years. 

Many of the companies are private still. But some are public. Here are a few of them: 

Facebook (FB): Facebook just announced details for the Oculus Rift headset, which will go on sale March 28 for $600. Credit Suisse is predicting they'll sell 5 million units this year, while Piper Jaffray says less than 4 million. Either way, the company is looking at at least $2 billion in sales this year, but it won't be profitable for Facebook until 2021 at the earliest. It might be interesting in the same way that Amazon (AMZN) is interesting—it doesn't make money, but it is the platform of the future, so the stock rises (until today).

Alphabet (GOOGL): Alphabet is there too, with something called Google Cardboard, which is a simple cardboard viewer that wraps around a smartphone and costs around $20. Rumor is they're using it as an entry for a $200-$400 version that will launch in the next year. For what it's worth, the app that you use with Google Cardboard has been downloaded 15 million times. Google has also invested in Magic Leap, a start-up that's developing augmented reality technology (AR). Unlike VR, AR projects holographic images over their current surroundings. It's an interesting twist, like a heads-up display for regular life.

Sony (SNE): Sony is apparently working on a VR headset for the PlayStation, and it's interesting because it has an established user base to sell to (PlayStation owners). The company's is on track to sell 120 million PlayStation 4s during the device's lifetime. Piper Jaffray thinks Sony can sell 1.4 million headsets in 2016.

Apple (AAPL): This is largely speculation, but Apple did acquire a software company called Metaio last spring for $32 million and it holds several VR patents. It also recently bought PrimeSense for $345 million. The company's engineers are best known for designing the first motion sensors for Microsoft’s Xbox Kinect. I can't imagine Apple won't get in on this somehow, and the stock is beaten down, so it's a good time.

Microsoft (MSFT): Microsoft is going the same route as Google, with the HoloLens augmented reality device that overlays high-definition holograms in your field of vision. Its focus is new ways to teach, create, and collaborate. HoloLens devices will become available to developers in the United States and Canada in the first quarter of 2016.

And here are some back-end plays ...

Qualcomm (QCOM): Qualcomm is building the smartphone processors that are going into these wireless VR headsets. Qualcomm also participated in the $542 million investment in Magic Leap that was led by Google.

Disney (DIS): Disney is working with Evolution Media Partners and China Media Capital (CMC) to fund Jaunt, a cinematic VR startup that has tech to create and distribute live-action VR films.

Nvidia (NVDA): Nvidia makes the gaming graphics processing units which power VR & AR headsets, including Oculus Rift.