This article first appeared in The Edge Malaysia Weekly on August 30, 2021 - September 5, 2021

Remember the mobile phone game Pokémon Go? It was downloaded more than 500 million times a year at its peak, sending people roaming cities worldwide in search of virtual pets and friends. It was the first time that augmented reality (AR) took the world by storm. Together with virtual reality (VR), which creates simulated experiences completely different from the real world, it is expected to form an integral part of our future economy.

Jerome Kay, co-founder of home-grown AR and VR start-up Virtual X Sdn Bhd, believes that while gaming is the most promising area, AR and VR applications in the industrial sectors are gaining ground. Most people, he observes, tend to overlook their application in the industrial sectors for learning and training. In fact, local conglomerates in the energy and utility sectors are already adopting them for such purposes, says Kay. 

Technavio, a London-based market research company, expects the AR and VR market to grow by US$125.19 billion (RM530.23 billion) from 2020 to 2024 at a compound annual growth rate of more than 35%. In 2020, the market expanded 26.35%, with Asia-Pacific contributing 37% of the growth. 

In Malaysia, Petroliam Nasional Bhd (Petronas) wants to use VR technology to train its staff for technical and safety works. Without delving into details, Kay says the start-up is working on a project with Petronas to train its employees to operate the piping system in a simulated world with the help of a VR headset and other equipment. 

“The staff would follow commands from their instructors to turn on and off specific pipes in the virtual world to learn about the entire piping system. It is traditionally done in a classroom with a bunch of slides, which is less helpful. Learning by doing is usually five times more effective than all other learning methods,” he notes.

VR is beneficial in learning and training, especially for technical systems that come with safety procedures, as one simple mistake could cost money and even lives. The cost to recreate these highly controlled and high-risk environments for training purposes could go up to millions. But VR technology could drive the cost down significantly. 

Tenaga Nasional Bhd (TNB) is another company working with Virtual X to deploy AR technology. One of the potential solutions is similar to what is shown in the Iron Man movie, when Tony Stark, its protagonist, wrapped in his Iron Man suit, can identify at a glance various objects quickly with the details provided. 

“For instance, say, you are a TNB technician servicing a substation. You put on an AR headset, which is like a pair of specs, but bulkier, and walk into the plant. The AR headset would help you identify the number of machines in the substation and provide additional information on top of them. Perhaps it tells you that three out of the 50 machines need to be repaired and the essential steps to fix them.

“Technicians are usually seen as having a less desirable job as it can be tiring, and the working environment is not as comfortable. AR can make their work easier and provide them with a new and exciting working experience,” says Kay. 

However, AR and VR should not be deployed independently but combined with other technologies such as artificial intelligence, big data and cloud. The key is for industrial companies to adopt a data-centric approach to enhance work productivity and efficiency. 

In an ideal situation, for instance, electronic devices are installed on various machinery and equipment to collect real-time data before it is sent to the cloud to be analysed. The data would then be fed into AR and VR headsets for further decisions to be made and actions to be taken.

“Most companies locally do not have such a capability yet. But they can still key in and update data from machines and equipment manually to the cloud. It is just less efficient,” says Kay. 

Founded in 2019, Virtual X started out in 2018 as Aviasense. Today, it is establishing itself as a key VR/AR player in the industry, chalking up a seven-figure revenue this year from just about a hundred thousand ringgit over two years ago. Its workforce has grown to eight people today from just two at the beginning.

“From last year to this year, we saw a growth of five to seven times. It is good. And we will not be defeated by the pandemic,” says Kay, who is 29.

Before launching the start-up, Kay and his friend Lau Yoke Wee (co-founder of Virtual X) first set up Aviasense with an initial capital outlay of RM4,000, which was the cost to buy a gaming computer to produce VR content for property companies. The idea came up when the duo were complaining about their jobs during a tea session. 

“I was a salesman for a software company, and he was an engineer. We were complaining about our work and went through a list of things we could do [if we were to start our own business]. AR and VR came up as something interesting we could work on.

“The next day, Lau, 32, resigned from his job. He is that gung-ho. Whereas for me, I told him I was not going to make any impulsive decision yet, and waited for six months before quitting my job,” Kay remembers.

The duo’s earlier projects were mainly with property companies looking to establish their online presence by having virtual showrooms. The company managed to stay afloat.

However, projects from the property sector dwindled and the two partners went through a hard time until they were invited by Pos Aviation, a subsidiary of Pos Malaysia Bhd that offers a range of ground handling services, to join its hackathon. 

“We pulled in another game developer friend to join the competition. We developed a training module for them in 23 hours and won second place. Through conversations with the other participants, we realised that there is a huge industrial market for AR and VR technology,” Kay says. 

Subsequently, the duo and friends joined an accelerator programme organised by Petronas and launched their first VR product specifically for industrial companies. That was when they decided to set up Virtual X. And they slowly built their presence from there and started working with other big corporates, including TNB, the following year. 

It wasn’t always smooth sailing, though, says Kay. Before rolling out the subscription-based product for industrial companies, Kay and Lau produced VR content for property companies on a project basis. It was a stressful period as they were left with no income some months as job flow was erratic.

“There were periods in which we worked for 16 hours a day and there were also days when we had no work. After launching our product in 2019, both of us were more confident and not as stressed, even though the workload was similar. The subscription-based model is more stable and sustainable. We can also focus much better on product enhancement,” Kay says. 

The duo had to bootstrap during the first two years of the start-up to keep it going. They did not take any salary during that period. “It was the so-called ‘dark period’ for us. It was only in late 2019 that we started paying ourselves a salary,” says Kay. 

Despite the fact that Malaysia has been hit by not only the Covid-19 pandemic but also political uncertainties, Kay believes that it is not all doom and gloom even as the country marks National Day on Aug 31. He says Malaysia’s economy is evolving and the building blocks are being put in place.

For one, the current situation has forced business owners to be more open-minded about technology adoption. Companies that successfully digitalise their businesses are likely to emerge stronger post-pandemic. 

“I would say digitalisation is not as hard as many have imagined. And there are many resources and support out there provided by government-related agencies and big corporations to help businesses transform themselves. 

“Based on my understanding, MDEC (Malaysia Digital Economy Corporation) is giving out grants [to businesses]. Maxis is helping small and medium enterprises embark on their digitalisation journey too, with its own money. Axiata is doing the same. There are options available. 

“The older generation may think they are not tech-savvy enough to do so. But honestly, you don’t have to be tech-savvy. What is required is a few days of learning. And then you will realise it is not that hard.”

Kay expects businesses that survive this period will benefit from the huge pent-up demand in the post-pandemic world. And they are very likely to emerge stronger in the market, he adds. “I would say just bear with it for now. It’s very hard, even for us. But if we can ride out this pandemic, the growth prospects are very good when it is over.”

Kay is also cognisant that the pandemic is expected to last until 2023, which is why digitalisation of businesses is essential, he says. He adds that the government plays an important role in helping the country recover from the devastating impact of the pandemic and that it is important to have a clear and defined long-term plan for the country to carve out its niche in the global market. 

“I hope the younger generation of entrepreneurs, including me, will think more about how to make the world a better place by coming up with innovative solutions. We shouldn’t be following and chasing trends with the thought of making money. 

“If you are chasing money all the time, it will outrun you at some point. Instead, think about what you can do to create a positive impact on the world. And money will come to you.”

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