Not long ago, the future of Microsoft Corp. (NASDAQ: MSFT) was slipping through its grasp.
Then it introduced Kinect.
Today, the tech giant is using Kinect to win big on a breakthrough that will literally touch millions of lives.
It is one of the reasons why Microsoft's stock has gained more than 20% this year.
What is Kinect?
You may recognize it as the best-selling add-on to the Xbox 360 video game. But it's much more than that.
It represents a revolution in how we will communicate with our computers, our TVs, and our smartphones.
For Microsoft, Kinect is literally a game changer. They lead the world in the technology behind it, and it promises to be big.
But not just for Microsoft…not by a long shot.
The Promise Behind Microsoft Kinect
The magic behind Kinect is that it responds to body gestures.
And while Kinect did debut to rave reviews, Microsoft executives really didn't understand how Kinect could change the world — and rack up new sales.
But since its introduction in 2010, hackers have found dozens of very cool uses for Kinect– none of which did much for Microsoft's bottom line.
This got the software giant to thinking that maybe they were sitting on a potential gold mine.
That's why Microsoft is now tapping the genius of young entrepreneurs (You know, the type of guys who live and breathe cutting-edge high tech) to better monetize the technology behind Kinect.
In fact, Microsoft recently picked 11 startups to work at its Kinect development offices in suburban Seattle. It's a savvy move.
After all, these guys get out of bed every day looking to create the Next Big Thing.
Already, the program shows great promise. Here are some of the slick high-tech ideas these young turks are already tackling:
- Styku only hopes to reinvent how people shop online. The startup's idea is to provide you with a personal avatar that lets you "try on" clothes virtually before you buy them.
- Jintronix uses Kinect and 3D gaming to improve rehabilitative therapies for patients suffering from a motor disability. Virtual reality could be a godsend for stroke victims who want to rehabilitate from their homes.
- GestSure Technologies targets surgeons and hospitals. It wants to bring touchless interfaces into the operating room. Doctors could access computer data during surgery without compromising cleanliness.
- Ikkos uses algorithms to teach movements. Parents will love this one. It's designed to help people develop the body mechanics of an Olympian.
It's too soon to tell if any of these startups will ever go public and give savvy investors the kind of big gains that have been pushing the Nasdaq to new heights lately.
But don't worry. Kinect is bound to provide its share of breakouts.
First of all, Microsoft recently released a version of Kinect for Windows and is now pushing a version with developer software.
In fact, I predict we will see hundreds of applications using Kinect by the end of this decade. And many of them will be practical for everyday use.
"Kinected" Carts Follow Shoppers
Take the case of Whole Foods Market Inc. (NASDAQ: WFM). The upscale food store is working on a smart shopping cart equipped with Kinect.
How cool is this? The Kinect cart can automatically follow a shopper through the store. Not only that, it can import a shopping list.
But it gets better — the system can direct a customer to items on store shelves. It can even scan goods as they are placed in the cart.
My gut tells me they will come up with an app that accepts wireless payments as you roll past a digital register.
And that's just the start. Turns out Microsoft is working with roughly 300 companies to develop more Kinect uses with Windows.
The list includes big-cap leaders like American Express (NYSE: AXP), Boeing (NYSE: BA) , Mattel (Nasdaq: MAT) , Toyota (Nasdaq: TM) and UnitedHealth Group (NYSE:UNH), to develop Kinect for Windows applications.
In the near term, Kinect likely will have its biggest impact on businesses that can make good use of large screens.
But it won't be long before Kinect becomes a mainstay of PCs, smartphones and tablet computers.
Let me close by saying it's impossible to predict just how much Microsoft can earn from stand-alone sales of Kinect.
That's going to depend on how many applications emerge and how popular they become with the public.
But this much is clear.
Less than a decade ago, operating a computer with the wave of your hand was the stuff of science fiction – remember the movie Minority Report? Now it's becoming reality.
That's what makes Kinect part of the Era of Radical Change, and it won't be long before we find a way for investors to profit from it.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.