• Microsoft (MSFT) is partnering with Autodesk (ADSK) to create virtual product development solutions for engineering and industrial design.
• The solution is centered on Microsoft's HoloLens VR/AR holographic headset and Autodesk's Fusion 360 cloud 3D design system.
• Microsoft wants to extend its software ecosystem into the projected $150 billion market of VR and AR.
• The move is likely to boost Microsoft's and - especially - Autodesk's stock in the mid term.

Microsoft's HoloLens, a stand-alone computer embedded in a Virtual Reality (VR) headset with Augmented Reality (AR) capabilities, brings high-definition holograms to life, floating in mid air and seamlessly integrating with the physical world in "mixed reality." The device, which resembles a pair of ski goggles, hints at sci-fi-like computing. Microsoft has reached out to the public to get ideas for their HoloLens augmented reality tech, and Microsoft's engineers will realize the best ideas.

Time Magazine picked the Hololens as number one tech gadget of 2015. "The headset is potentially useful for professionals from surgeons to space astronauts," notes Time's review. In fact, NASA scientists are using HoloLens applications to collaboratively explore Mars with data from the Curiosity rover, and NASA is sending a pair of HoloLens devices to space with “holographic instruction manuals" for hardware subsystems on the International Space Station.

Recently Microsoft, in partnership with car maker Volvo, released a spectacular demonstration of a virtual car showroom where customers can interactively explore high resolution 3D models of Volvo’s new S90 premium sedan. Customer can rotate the car, zoom on the engine and other internal parts, and take the car to a simulated road test. It's easy to see how a similar approach can be used by engineers and designers to bring to life product development models and modify them interactively.

Fusion 360 is Autodesk's cloud-based solution for integrated product development with 3D Computer Aided Design (CAD), Computer Aided Manufacturing (CAM), and Computer Aided Engineering (CAE).

"With HoloLens we can remove many of the barriers that exist today; accelerating product iteration, providing more intuitive cross-team communication, and setting new standards in collaboration," notes a Microsoft blog post written by Ben Sugden, Microsoft HoloLens Studio Manager. "Fusion 360 is the ultimate cloud-based 3D design collaboration tool for product designers and engineers. A natural partner for HoloLens - which we think is the best 3D content visualizer on the planet."

Autodesk developers explored how product developers could together by looking at the same holographic model and being able to walk around it and discuss various aspects of the design as if it were really sitting on their table. They "were blown away by the possibilities," and also explored the possibilities of creating and editing directly from a holographic model, as well as pitching a final design to an executive team or a customer.

"When we first saw HoloLens, we immediately sensed the possibilities for 3D engineering and industrial design," writes Autodesk Fusion 360 Business Development Manager Garin Gardiner in an Autodesk blog post. "And after spending a bit of time with HoloLens, I realized how limiting it is to view 3D objects on a relatively small, flat screen rather than being able to use my entire real-world workspace for 3D design projects."

The joint HoloLens and Fusion 360 project is still in development, but Microsoft and Autodesk have produced a video that illustrates how a mechanical engineer and an industrial designer can work together in holographic space to solve various tasks in a far more collaborative way than they could without it. "The future of holographic computing is likely closer than we all realize," said Gardner.

With Windows 10 -powered HoloLens, Microsoft wants to extend its software ecosystem into the projected $150 billion market of VR and AR. Though many top tech companies, including Alphabet Inc-A (NASDAQ:GOOGL) and Facebook (NASDAQ:FB) are aiming at the same market, Microsoft's strategy is differentiated by that of its competitors by its focus on marketing and industrial design - and, presumably, related areas like operator training in military and civilian sectors.

Excellence in these carefully chosen VR and AR niches is likely to boost Microsoft's image and stock. But, while computer-aided engineering and 3D product design is a relatively recent add-on for Microsoft, it represents the core business of Autodesk, and therefore the move is especially likely to boost Autodesk's stock in the mid term.