Meet Osterhout and its $2,700 AR glasses

Corrections & Clarifications: An earlier version of this story misstated Google's investment in Magic Leap. It led a $542 million round of funding in the company. 

SAN FRANCISCO — Tech companies are famous for their office flair. Google has a bowling alley on its Silicon Valley campus, while Apple is busy building a new ovoid-shaped headquarters that looks like it could take flight.

No thanks, say the folks at the Osterhout Design Group.

The door to ODG’s 34,000-square-foot office space near this city’s baseball stadium is as plain as a janitor’s closet. Inside, you’ll see no ping-pong tables or bean bag chairs — just 80 employees working on cutting-edge augmented reality glasses.

“The next generation (computing) platform is head worn,” says Ralph Osterhout, 69, the serial inventor at the helm of ODG, whose credits include the auto-submarine in the 1977 James Bond film The Spy Who Loved Me and the night-vision goggles worn by troops in Desert Storm. “Done right, augmented-reality glasses give you the power of a tablet with ridiculous image quality, and all hands free.”

Founded in 1999 and funded entirely by its maverick leader, ODG has been in steady business with military and enterprise customers. But its profile with consumers is growing.

In April, ODG was identified as the company responsible for making prototype AR glasses for BMW’s Mini Cooper that give drivers an augmented driving experience. And in November, ODG will begin selling the R-7, the $2,700 glasses — complete with apps for email, movies and Web browsing — that project the equivalent of a 65-inch screen in front of the wearer, while preserving peripheral vision. This is so-called augmented reality as compared to virtual reality like Oculus Rift, where the user is cut off from the real world.

AR/VR A BOOMING MARKET BY 2020

Despite the initially limited consumer scope of the R-7, the money-making potential of such eyewear is big. By 2020, VR/AR will represent a $150 billion market that will impact mobile sales, according to Digi-Capital’s Augmented/Virtual Reality Report 2015.

Tim Merel, Digi-Capital managing director, points to the growing high-stakes deal-making underway for AR/VR companies — Facebook buying Oculus for $2 billion, a $542 million round of funding in Magic Leap that was led by Google, Apple’s purchase of AR software company Metaio — as proof that ODG is poised to take advantage of a coming tech tsunami.

“What (ODG) has planned for the coming 12 to 18 months is even more impressive, so they’re positioned to drive the market,” he says, adding that over time AR/VR hardware will price similar to smartphones and tablets at under $1,000.

As for whether ODG could be an acquisition target, Merel says that while the company has the management and manufacturing capability to thrive on its own, being added to an existing tech giant’s portfolio “would enable (the buyer) to leapfrog the competition.”

Osterhout says he enjoys running a small, secretive shop whose development time is in weeks and not months. He says he’s put nearly $80 million of his own money into ODG. But, he adds, "at some point, someone might make me an offer I can’t refuse. We’ll just see. There’s a time for everything.”

Osterhout has a big corner office that looks out on AT&T Park, where the San Francisco Giants play.

But what’s even more impressive is the rest of the office, which has rooms dedicated to optics, electrical engineering, 3-D printing and manufacturing. There’s even a Class 100 Clean Room for assembly, and a few locked top-secret rooms where military-grade devices are put through their paces.

In one demo area, ODG COO Pete Jameson shows off the various enterprise uses of R-7. Most impressive is a display that shows how doctors can see detailed, 3D images of organs and other materials while performing surgery.

“If you have many doctors with the same headset on, they’ll all be able to see a cancer cell and walk around the object,” Jameson says. “Our focus is on redefining how work gets done.”

SURGEON TESTS ODG R-7

Oliver Aalami, a vascular surgeon in Silicon Valley who has been testing the R-7 for AR software company Vital Medicals, says wearing the device eliminates the distracting and often neck-straining practice of glancing from a patient to on-screen data.

“It’s all right there with great resolution in my field of view,” Aalami says.

Vital Medicals CEO Ash Eldritch says he believes consumer use of such tech is still a ways off: “There are no killer (consumer) apps for this stuff yet, but right now for specific use cases, AR is incredibly valuable.”

For ODG, those use cases include helping military maintenance workers fix machines, NASA astronauts train underwater to repair satellites and oil rig workers doing costly triage on gear.

Osterhout has high praise for competitors in the AR/VR space. He thanks Google for bringing Glass to the public, even if its form factor and look ultimately sent the project back to the drawing board. And he raves about the immersive experience Oculus can provide.

But ultimately, he’s convinced the future will be glimpsed through ODG glasses.

“It’s not like I’m on a mission from God here,” he says with a laugh. “But I do love coming to work with nice, loyal people who are focused on a way to make the world a better place.”

Follow USA TODAY tech reporter Marco della Cava on Twitter: @marcodellacava