With the recent announcements surrounding Apple ARKit and Google ARCore, 2018 is poised to witness a mainstream tipping point for augmented reality (AR) technology. It’s now become accepted wisdom that “VR will be big, but AR will be bigger and take longer”. A recent report published by Digi-Capital suggests that AR technology may become a mainstream concern faster than anticipated, and there is now enough data relating to AR to understand with some predictability how the market is likely to evolve. The report focuses heavily on the role mobile devices will play in bringing AR technology to the masses and sets a baseline expectation that the market for mobile AR will be worth an astonishing $108 billion by 2021 (underperform $94 billion and overperform $122 billion). When compared to Virtual Reality technology, AR vastly outstrips it’s fully-immersive counterpart by over 300% in terms of revenue generating potential. Today we’re exploring the top Augmented Reality trends for 2018.
1.) AR will continue to outperform VR
The market for Virtual Reality technology has evolved less quickly than some analysts originally forecasted. There have been a number of reasons why VR has struggled to meet analyst expectations, partly due to the fact that shipments have taken longer than expected and as a result of numerous order cancellations. One of the biggest barriers to VR adoption has been the fact that heads up display (HUD) devices such as Occulus and HTC Vive require an expensive, high powered desktop PC counterpart to run games and applications. Samsung has also had trouble with the roll-out of the Gear VR device, as its mobile counterpart the Galaxy S7 suffered from a variety of technical faults that in some cases caused the device to catch fire and/or explode.
It’s worth noting that when compared to AR, VR has really struggled in terms of fulfilling analyst expectations. It’s estimated that Pokemon Go delivered in excess of $600 million of mobile AR revenue in its first three months alone.
“The revenue generated by Pokemon Go in its first three months was greater than the value of the entire VR software market in 2016“
Although Pokemon Go is liable to skew these numbers to an extent (it’s argued that Pokemon Go isn’t really an AR app and that most serious players actually turn off the AR component within the game), the application has successfully helped to transform AR technology into a mainstream concern and brands and businesses have been quick to catch on and develop mobile AR strategies for 2018 and beyond as the market continues to accelerate.
There have been some positive success stories for VR technology. Sony successfully launched its Playstation VR product and Google launched it’s Daydream VR mobile VR controller/headset and the first fully AR-ready Tango enabled device. In some ways, the overall performance of AR and VR was not as important as how it impacted the trajectory of the market. Not only has the trajectory of the market changed, but brands and businesses seeking to develop new AR/VR products and services possess a clearer idea of what’s required and where the value is. At the start of 2016, analysts predicted that the VR industry would account for $4.4 billion in terms of revenue generation. The technology underperformed relative to analyst expectations and generated less than $2.7 billion in revenue. As mainstream awareness of AR starts to explode in 2018, expect to see a plethora of new mobile AR apps for ARKit and ARCore.
2.) Brands will go big on AR technology
In recent months Ikea launched its flagship augmented reality app that enables consumers to engage with furniture in an entirely new way. The Ikea Place app enables consumers to drop 3D furniture objects within the home by using the camera of a smartphone or tablet. Users simply hold up a mobile device and scan the surrounding room, the Ikea Place app then enables the user to position 3D furniture objects around the room in a contextually relevant manner. This represents an entirely new way for brands such as Ikea to engage mobile users within a contextually aware ecommerce experience. Users can reposition furniture, change its colour and add a multitude of different 3D furniture pieces to the surrounding room, finally offering them the opportunity to add items to the basket and purchase online.
The launch of the Ikea Place app is a game changer for AR technology and how it’s perceived from a commercial perspective. Whilst the performance of the app in terms of revenue generation is still unknown, it’s clear that this type of ARKit app has the potential to completely alter the way in which consumers shop for new items online and using mobile devices. Now that Ikea has set the standard in terms of how emerging technologies can be used to accelerate consumer buying processes, expect to see a multitude of retailers extending their software offering into AR.
It’s not just retailers that will invest heavily in mobile AR technology in 2018, AR will continue to transform all aspects of the commercial landscape, from oil and gas, construction and energy, to financial services, digital healthcare and beyond. One of the biggest announcements to impact the ongoing evolution and mass-proliferation of AR technology has been the launch of ARKit and ARCore. Prior to the launch of ARKit and ARCore, the technology was largely restricted by the fact that you needed a HUD device such as the Microsoft Hololens to experience its full capabilities. Apple and Google have now changed the game completely in terms of the commercialisation of AR, as brands and businesses can now develop highly immersive AR apps that can be deployed to hundreds of millions, if not billions of existing iOS and Android users. In terms of calculating augmented reality ROI, brands can now see the value of investing in the development of software for ARKit and ARCore due to its widespread usage and market penetration.
3.) Mobile AR will go mainstream
Pokemon Go was hailed as an early AR success story by Tim Cook (Apple), Mark Zuckerberg (Facebook) and Satya Nadella (Microsoft). Tim Cook has also expressed his belief in AR and its overall importance in terms of Apple’s wider commercial strategy. However, at present, there are some major constraints that will need to be overcome for AR to tip into the mainstream: 1.) the availability of a ‘hero’ device (this needs to be an Apple quality device, irrespective of whether it’s produced by Apple or another manufacturer), 2.) All-day battery life, 3.) Mobile connectivity capability, 4.) An app-store ecosystem and 5.) telco cross subsidisation. Much of the focus in overcoming these challenges has centred around the availability of a hero device, but it’s some of the other challenges that are particularly hard to solve. In order for a hero device to conquer the market, such as an Apple developed pair of AR glasses, the biggest challenge is overcoming the constraints associated with battery life. This is where mobile AR will come into play and help to overcome some of these challenges.
Mark Zuckerberg suggested that, “the phone is probably going to be the mainstream consumer platform where a lot of these AR features become mainstream, rather than a glasses form factor that people will wear on their face.” The smartphone is capable of solving four of the five challenges discussed above: battery-life, mobile connectivity, app-store ecosystem and telco cross-subsidisation. The chances are that you’re reading this article on a hero device, it’s just that mobile devices aren’t yet entirely equipped with all of the sensors and software required to create a fully ‘AR ready’ device. Pokemon Go only offered a slight glimpse into the full capabilities of AR technology, the first real-step towards mobile AR was by Google who recently introduced AR focused handsets such as the Lenovo AR phone powered by Tango and the ZenFone AR. Whilst these devices are impressive, they’re not necessarily the hero-device that AR requires to hit the mass-market. However, what’s telling is the fact that these product launches indicate a wider trend in terms of how the big companies such as Apple, Google and Microsoft intend to counteract slowing smartphone sales and revitalise innovation.
4.) Replacement cycles will be AR’s secret weapon
Most developed economies have hit saturation point in terms of smartphone sales. The fact is that most consumers regularly replace their smartphones even if they don’t need to. One of the major challenges faced by Apple and Google is the fact that the time associated with each replacement cycle is getting longer. Historically consumers would replace an existing smartphone every 18 months, but in some cases now the replacement cycles are approaching nearly three years as consumers settle for devices they already have. After nearly ten years of consistently outperforming analyst expectations, Apple has finally started to experience declining iPhone revenue and sales. This is why AR has a pivotal role to play in terms of revitalising stagnant device sales and providing an innovative lever by which to stimulate growth.
Apple is probably the best placed company to take advantage of the mobile AR opportunity. The company already possess a fully integrated technology ecosystem of software, hardware, app-store, developers and retail outlets. The reason Apple is so well positioned in AR is the fact that there will be no additional cost to consumers seeking to purchase an AR enabled smartphone or tablet. The reality is that consumers will buy the devices anyway. The fact that the devices are equipped for AR is merely a bonus and an innovative USP. Apple already has a great track record when it comes to nurturing a growing ecosystem of apps and developers. Launch details of the iPhone 10 also point towards the future of Apple’s plans for AR, in that smart glasses might become a logical next step. It’s highly unlikely that Apple will disrupt its market position just yet by launching AR enabled smart glasses, but the chances are this will happen sooner or later.
5.) AR will overcome the ‘novelty app’ stereotype
In many ways the success of Pokemon Go has become a curse for AR in terms of enterprise adoption. There is still a widespread perception that AR technology is a novelty and that apps such as Pokemon Go and Snapchat filters represent the full capabilities of AR. This could not be further from the truth. As ARKit and and ARCore apps come to prominence in 2018, there will be numerous case studies to highlight the industrial capabilities of AR technology. In 2018 AR will transcend novelty status and become a serious technology consideration for software development managers and CTO’s. As AR technology starts to proliferate the mainstream consciousness, its novelty is likely to wither away and businesses will need to consider how best to extend their existing software offerings into AR and understand its commercial capabilities and potential ROI. Right now, many businesses see AR as a means of ‘ticking an innovation box’, in 2018 this is liable to change as brands begin to view AR software development as a long-term investment. With a rapidly growing ecosystem of SDK’s and platforms, AR technology offers a relatively inexpensive way to enhance an existing software offering, or form the basis of an entirely new suite of apps.
As with all great software projects, the key is to always start with the end in mind. Brands and businesses need to create a robust set of AR objectives and measurable KPI’s that can be used to establish if AR implementation has proved to be successful. AR technology can be used to stimulate a wide variety of commercial benefits such as enhancing the efficiency of existing processes, cost reduction and the ability to generate lucrative new revenue streams. Finding the right way to measure the success of an AR project will enable the technology to graduate beyond the realms of novelty apps and find its place in the enterprise.
With the recent launches of ARKit and ARCore, 2018 is set to be a momentous year for AR technology and represent a commercial tipping point whereby AR becomes part of mainstream consumer consciousness. Here at Mozenix, we’re obsessed with the capabilities of AR and how the technology can be deployed to enhance process efficiency and solve real-world commercial problems. We’re already working with some of the UK’s best and most innovative businesses to develop high performance AR prototypes and apps. If you’re a business of brand considering how to extend your software offering into AR in 2018, we’d love to hear from you. Contact Mozenix today to kick-start the conversation.