An employee of Japan’s Kawasaki Heavy Industries demonstrates a goat-like robot that can carry goods, in Tokyo, on March 9. By partnering with Microsoft for its industrial metaverse, the company plans to create a digital twin, or virtual replica, of its factories. Photo: Handout from Kawasaki Heavy Industries via Reuters
The View
by Colleen K. Howe
The View
by Colleen K. Howe

As the industrial metaverse grows, the platform must remain open and available

  • More companies are collaborating to explore how the technology can make operations more efficient, which could form the building blocks of the next-generation internet
  • Just as the internet allows information and innovations to be shared across borders, the world will benefit most from having an open metaverse
What happened to the metaverse? In 2021, we were all convinced we would be buying NFTs and digital Gucci bags in no time. While those business lines are still around, the average consumer is more focused on covering rising food and housing bills than on buying virtual possessions.

But behind the furore over NFTs, engineers and hardware developers have quietly been developing their own version of the metaverse, which could ultimately become one of the building blocks of the next-generation internet.

Talk of the metaverse has faded into the background in part because the early months of 2022 have looked less than rosy for both the broader economy and big tech, driven by a deepening gloom in China and the US. Amid a broader tech sell-off, metaverse stocks have slumped. Roblox, a gaming company, has seen its stock price drop to just one-fifth of its all-time high in November last year after profits fell short of expectations.

Even so, the metaverse could follow a path similar to the internet in the 1980s, which was built in bits and pieces, starting with connections between a few hundred government and research organisations. Like the early internet, the core technologies are there but don’t fully succeed at integrating the real and virtual worlds yet.

That is pulling some companies to a corner of the virtual world where prospects look more promising: the industrial metaverse. It is a mix of technologies, from the internet of things to digital twins that serve as a virtual replica of a real-world object, but broadly, the industrial metaverse aims to help industry function more efficiently by enabling key functions to be carried out digitally.

One of its proponents is Microsoft, which has been part of the metaverse pivot. Late last year, it was promoting its 3D avatar concept for Microsoft Teams.

At Davos, CEO Satya Nadella spoke about how the metaverse would transport people virtually to the Sahel region in Africa to understand the deforestation crisis. But in Microsoft’s most recent earnings call, he focused on what the company sees as the nearer-term bets of enterprise and industrial solutions.

Japanese robotics producer Kawasaki understands; Microsoft announced last month that the company would be a new partner for its industrial metaverse. The idea is for Kawasaki to create a digital twin, or virtual replica, of its factories. With the flick of a headset, managers could visit them virtually and deal with everything from repairs to managing supply chains in the metaverse.

The news follows an announcement by Hyundai that it would build a similar “meta-factory” for test runs in the metaverse. The pivot makes sense in what is shaping up to be a more conservative economic environment. Real productivity increases and supply chain improvements are needed, and it makes sense that the metaverse would be deployed to that end first.

While both Japan and South Korea will be keen on the technology as they look to boost manufacturing productivity and bring manufacturing back home, China might seem like a stronger case for development of the metaverse – it is much further along in terms of the idea of a consumer-oriented virtual reality.

Much of daily life is already mediated through smartphones and online social networks, which Shanghai residents used to great effect to procure supplies during recent lockdowns. So China might be faster to shift social and economic life to a virtual world, but it could become something of a walled garden as global supply chains decouple.
Delivery workers arrange lunch orders for pick up at a subway station in Shanghai on June 13. Much of daily life in China is already mediated through smartphones and online social networks. Photo: Bloomberg

It’s not yet clear what that means for Hong Kong, which straddles the divide between east and west. It would be a natural test bed for certain industrial metaverse applications in the buildings industry and property technology.

However, Beijing would certainly want to control the metaverse as closely as it does the internet. The central bank’s ban on cryptocurrencies would also make it difficult to link up with other metaverse frameworks outside China. That would benefit incumbent payment providers like WeChat Pay and Alipay.

But just as the internet allows information and innovations to be shared across borders, the world will benefit most from having an open metaverse. So far, hardware providers see value in that vision.

Nvidia said in January that it was making its Omniverse platform free for individual users. It’s an astute move aimed at bringing more creators onto the platform, which lets engineers, designers and architects test their creations in a simulated world and collaborate virtually.

HTC, in Taiwan, is also promoting interoperability between different hardware and software systems.

US technology company Nvidia’s headquarters in Santa Clara, California. The company is making its Omniverse platform free for individual users in an attempt to bring on board more creators. Photo: Getty Images / AFP

If developers of the industrial metaverse ensure their platforms are accessible to individuals and small businesses, many will benefit. If not, the digital gap will grow as small and medium-sized enterprises are shut out from critical technologies.

It’s even more critical when we consider that the industrial metaverse holds potential for energy savings. The use of a virtual world as a testing ground has helped the British consumer goods company Unilever streamline operations and reduce waste. It’s important that those technologies are available to small companies that often lack the resources to adequately track their environmental impact.

It’s possible to envision the metaverse developing into an oligopoly in the coming decades, as the tech industry came to be dominated by a handful of giants, which is why it’s a good time to consider how the metaverse should be structured and regulated.

While the idea is that the metaverse will one day grow into a wholesale merging of the physical and virtual environments, where we might actually visit the Sahel and ponder the baobab trees, the smaller industrial metaverse of today offers a starting point to consider those questions.

Colleen K. Howe is a programme associate at the Asia Business Council