zSpace: The Ultimate Learning Experience
Virtual Reality Learning Experience – But at What Price?
Overview
zSpace makes a virtual reality system focused on the education sector. Their software applications serve the education market ranging from STEM education for K-12 schools to medical instruction and corporate training, research, and design. (https://www.crunchbase.com/organization/zspace/timeline#/timeline/index) zSpace’s hardware system includes 3 major components: a specialized all-in-one computer with a 24 inch HD LCD display (which looks similar to a traditional monitor), polarized eyewear with high definition stereopsis, and a precision interactive stylus. zSpace was launched in 2007 by zSpace Inc. and its operations are based in Sunnyvale, California. The company has raised $56.6M in venture funding over two rounds.
(https://www.crunchbase.com/organization/zspace#/entity) There is no public information on the number of units that zSpace has sold. However, according to a press release issued by zSpace in February 2017, “hundreds of thousands of students today in over 400 school districts, medical schools and universities are using zSpace Learning Labs across the globe.”
(http://www.prweb.com/releases/2017/02/prweb14093328.htm)
Value Creation
zSpace creates value by combining elements of VR and AR on all-in-one computers to create learning experiences that are immersive, interactive, and lifelike. The company claims to enable students to “learn by doing” in an environment where mistakes are reversible and there are no material costs or clean-up. For example, biology students can participate in a frog dissection virtually rather than with a real animal. (Editorial note: I would have much preferred that approach when I was in high school!) zSpace also claims to enable interaction and group collaboration more than other virtual reality systems that deliver content through head-mounted displays.
The zSpace system ships with all hardware components, several educational software programs, and the zSpace SDK for software developers, a development platform for creating new applications and integrating new input devices. (https://cdn.zspace.com/collateral/brochures/OverviewBrochure_0711.pdf)
To expand its software offerings, zSpace has partnered with several software developers who have developed applications for the platform. For example, in its medical offerings, the company partners with Gross Anatomy VR Lab to provide a program that allows users to explore over 13,000 anatomical objects by systems and regions using accurate Anatomica Termilogica. This creates value for medical or nursing schools by allowing them to augment or replace a cadaver lab, saving money for schools and expanding medical education to more users. The company also offers programs for medical center operations: EchoPixel True 3D creates medical visualization solutions to optimize clinical efficacy and workflow. (https://zspace.com/medical-learning) It is unclear from zSpace’s website how these applications are monetized; although several k-12 software programs seem to come with the education package that is delivered to schools, other software seems to be available for purchase through the software providers directly.
zSpace also creates value through its online professional development and community. The site offers trainings and resources for teachers which cover topics ranging from the basics of using VR in the classroom to advanced features. There is also a “Community Creations” library in which the community of zSpace teachers can create content and lesson plans and share them with the broader community. Yet, the community seems to be fairly inactive (only 55 lesson plans have been shared) given the scale that zSpace has claimed.
Value Capture
zSpace captures value through selling its VR system. Although there does not appear to be standardized pricing for the systems, online reports suggest a price point for each zSpace station between $5,000 to $7,000 each. The desktop workstations are optimized for 2:1 student pairings, which may help partially defray their high cost per unit.
http://www.educationdive.com/news/south-florida-schools-experiment-with-zspace-virtual-reality-labs/412437/
Analysis
Virtual reality technology offers a tremendous potential to transform the education market. Given the size of education spending globally, particularly when combined with corporate learning and development, there will certainly be big “winners” in the production of VR systems and applications.
Although the zSpace product seems intriguing for educational purposes, it is unclear how zSpace is fundamentally differentiated compared to other VR systems. At a significantly higher price point than many other systems, the company will need to distinguish itself on the learning opportunities that it offers to students in order to scale. The company could distinguish itself by offering superior software, yet most developers would find it advantageous to develop programs that are compatible with multiple VR systems. Several players such as Nearpod, which works on any smartphone, offer ready-to-teach VR lessons that are compatible with a range of operating systems and devices. Thus, they offer more flexibility and affordability that lets teachers use VR in a single classroom without a costly schoolwide investment. (http://www.edtechmagazine.com/k12/article/2016/10/virtual-reality-coming-soon-school-near-you)
Although there might be multiple funding sources available to schools to fund the investment, outfitting classrooms with multiple zSpace units would still be a significant outlay, particularly given the rapidly changing technology.
Moreover, in order to successfully sell to schools, zSpace will need to demonstrate a positive impact on teaching and learning. If the company isn’t able to demonstrate that its effectiveness exceeds that of other learning methods (adjusted for the cost), schools will have little reason to invest. zSpace might focus on finding evidence that their product has educational efficacy.
Finally, if zSpace is unable to lower the price point of its systems, the company could focus more on developing customized corporate training programs or working with graduate schools on customized solutions. Those types of customers might have more financial flexibility than K-12 customers.