Summary
Augmented reality(AR) is an interactive experience of a real-world environment where the real-world objects are enhanced by computer-generated perceptual information, sometimes across multiple sensory modalities, including visual, auditory, haptic, somatosensory and olfactory. AR is contrasted with Virtual Reality which entirely replaces the physical environment with a simulated one. Mixed Reality (MR) sits somewhere between the two on a spectrum incorporating simulated environments merging real and virtual worlds in real-time to create new environments.
Viability (4)
The first augmented reality experiences were developed in the 1990s by Virtual Fixtures for the US Air Force. Commercial augmented reality experiences such as virtual dressing rooms have been around since the early 2000s. However, the market has remained limited primarily because of hardware. Google Glass released in 2014 failed, not because of hardware limitations but because of privacy concerns. As glasses-based AR stalled, Pokemon Go was a breakout smartphone-based AR game in 2016 racking up 500 million users in less than a year. But the AR market is still waiting for more intuitive interfaces such as eyeglasses, but eyeglasses are still held back largely by battery performance and weight, which limits bandwidth and the power of the apps that they can run. There are also a host of optical engineering challenges such as optical foveation, pixel occlusion, peripheral displays and vergence accommodation conflict to solve to make eyeglasses comfortable for long sessions.
Drivers (3)
The AR market is driven by the need for a new computing platform to deliver growth for tech companies and the fact optical hardware is now cheap enough to build and sell consumer-level devices. An AR future has been described since the 1990s but it’s only the last few years where electronics has got small enough, fast enough and cheap enough to be put in eyeglasses. AR like Drones are the beneficiary of the smartphone dividend driving down the costs of processors, sensors and displays so far that a whole range of form factors become viable. However there are few demand-side drivers, although much of that is likely because
Novelty (4)
A digital overlay on the physical world can already be done with a smartphone or a smartwatch. AR glasses are a more natural interface and can in theory, battery-life dependant, be always-on and less distracting. Application developers have the opportunity to create experiences that are better than looking at a phone or a watch. To start, there are a range of experiences including health metrics, tours, and design for which glasses are a superior interface. Over time developers will create entirely new experiences not possible today which are entirely novel.
Diffusion (3)
As smartphone sales stall, there is pressure to find growth from somewhere and despite forays into cars and healthcare, almost every consumer tech company has a mixed reality project either in development or in-market. With billions of dollars in corporate R&D and venture capital, we can expect quick smartglasses adoption especially as companies like Apple create subscription bundles to make glasses more affordable. Even with R&D and marketing spend, there is a timing question related to battery and optics. The assumption is that like the smartphone, battery life, connectivity and performance will get better over time. But unlike electronics, optics doesn’t follow Moore’s Law. There will be learning curves and economies of scale to drive down costs, but there is nothing inevitable about price declines in optics or batteries meaning devices could stay expensive for longer than expected slowing growth. Additional concerns persist around privacy although we don’t anticipate concerns materially slowing adoption.
Impact (5) High certainty
It is inevitable that computing will continue to get smaller, faster and more wearable (and digestible). Ignoring the timeframe, there is a high probability that billions of people will wear smart glasses every day and augment and enhance their everyday experiences. Even with leaps forward in clean energy generation or disease treatments, whatever replaces the smartphone will have a larger impact on the averages persons day that any other technology. Notably, AR unlike VR or games consoles, will not replace other forms of entertainment or leisure, the best AR will add to an experience or event in a non-distracting way.
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