I’ve been following the development of Augmented Reality (AR), Virtual Reality (VR), and Mixed Reality (MR) for some time now. Finally, it looks like the ‘garage bands’ of enhanced reality are ready to take over The Fillmore, on their way to Levi Stadium. After years of mixed success for specialty enterprises, niche design and development firms are being acquired by – or drawing heavy investment from – the technology giants in the field. 2018 promises to be a turning point and we’re claiming a front seat.
Historically, there has been a deep division between the very expensive custom solutions providing realistic conditions for large enterprises and affordable technology for consumers. Airline pilots have been trained in multi-million dollar flight simulators that require massive computers, many screens, and hydraulics to move the virtual cockpits. Heads-up technology has been used by military aircraft for years, and more recently by some luxury auto manufacturers. 3D movies have seen improvement over time in production and theater acceptance, and even televisions are jumping in.
We’re all familiar with the false starts in the consumer space, especially around video gaming. Clunky headsets, low-resolution video, poor motion detection, and even nausea have been typical in this area. 3D televisions have yet to prove exciting enough to truly make a dent. However, a few years ago, Oculus generated a great deal of excitement with a revolution in technology that made huge strides in solving many of these problems. The Oculus Rift VR headset was so exciting, Facebook invested $2.1B to purchase the company. Since 2014, the largest technology players, including Apple, Google, Samsung, and Microsoft, are making significant investments in enhanced reality.
These investments in hardware and software are driving a maturation in the development community that will yield a broad array of applications. The attention from video and computer game creators is expected, but we think that enterprises will fuel the greatest industry growth. A recent report titled AR to Hit 900M Users as Facebook Stumbles on VR Adoption forecasts the acceleration of growth in the marketplace. Digi-Capital has expanded their analysis and forecasts, while International Data Corporation (IDC) expects total AR / VR spending to “soar from $11.4 billion in 2017 to nearly $215 billion [in] 2021, at a compound annual growth rate (CAGR) of 113.2%.” Largely based on the exploitation of the smartphone user base, “the three top AR initiatives (Apple ARKit, Google ARCore, and Facebook’s Camera Effects Platform) are expected to have a whopping 900 million users by the end of 2018,” and over 3 billion users by 2021. The same IDC report also forecasts the growth of 100 million for the VR platforms that include headsets, smart glasses, and premium mobile peripherals.
The VR Summit in October included a significant segment dedicated to enterprise applications. We’re Not Playing Games: Enterprise VR Summit cites a recent Deloitte study, indicating that “more than 150 companies across multiple industries, including 52 of the Fortune 500, are testing or have implemented AR / VR solutions.” Enterprise functions that take advantage of VR solutions include those that “augment and improve training, design, manufacturing, communications, sales, field service, data visualization, and more.” In Enterprise AR & VR: Don’t Forget About the ‘Enterprise’ Part, Mike Boland predicts that a more clear Return on Investment (ROI) around business procedures and operations will lead to enterprise applications outpacing consumer markets.
Harrison Lloyd also sheds light on enterprise VR strategies in The Enterprise VR Strategy Guide I Couldn’t Find (With Examples and Use Cases). Lloyd sees MR as being the prominent version of enhanced reality in the enterprise arena. He makes the case that it will emerge as “Productive Reality,” a representation of the convergence of the various aspects of the technology into “virtual work.” He cites research firm Tractica’s projection that enterprise spending on VR / AR will be as much as 35 percent greater than consumer spending on VR / AR entertainment by 2020. Retail will take the lead, with Lowe’s and Ikea already using mobile AR to virtually model their products in customers’ homes. Manufacturing will follow, using the technology to assist in maintenance, design, and more.
The market is maturing rapidly and the market leaders will mostly be familiar names. Facebook ultimately released the Oculus Rift and continues to improve the technology. Microsoft’s dominance in the corporate world is not in jeopardy, either; they recently introduced Windows Mixed Reality (WMR) as an enhancement to the Windows 10 operating system. The Windows MR strategy provides the software / operating system (OS) component, while Acer, Dell, HP, Lenovo, and Samsung provide the headsets. Apple is working on smart glasses for AR, a headset for VR, and the ARKit developer tools to drive applications. The industry is also buzzing about a new product from startup Magic Leap utilizing their Light Field technology, impressive enough that Google has invested over $500M into the venture.
We’re impressed by all of this investment, but even more by the enterprises that are making commitments to the platforms. Lowe’s and Ikea are not the only early adopters in the field; Wal-Mart, General Electric, and Boeing are also investing in training applications around AR / VR for “customer service employees, factory workers, and even customers through immersive experiences.” Ford Motor Company uses VR to design cars and teach teens the hazards of distracted driving, and even introduced a new application as detailed in Ford Social in Introducing Ford VR: The Closest Thing to the Real Thing. Even IBM is in the fray, experimenting with the technology using Watson AI.
We’ll be watching the marketplace in 2018. The advent of AR / VR technology in mobile devices and Windows 10 will make the technology readily available for virtually everyone, and the enterprises that are able to leverage the benefits to improve training, reduce operating and maintenance costs, and provide a better customer experience will be the big disrupters in the field.