Augmented Reality Hits the Accelerator

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IDC predicts that worldwide spending on augmented reality (AR) and virtual reality (VR) will hit $13.9 billion in 2017. $13.9 billion does not sound huge in the scheme of tech, but the market will grow to over $100 billion by 2021 (similar in size to the total digital games market today). TechCrunch and Digi-Capital project that the market will roughly double every year for the next several years.

While immersive VR (think wearing Samsung Gear goggles while life-like warriors from the Game of Thrones surround you) generated the buzz and the lion's share of the revenues in 2017, AR is poised to capture 70-80% of the combined AR/VR market by 2019.

Source: TechCrunch and Digi-Capital, team analysis

Source: TechCrunch and Digi-Capital, team analysis


For businesses, the biggest AR spend in 2017 was on retail showcasing ($461 million), product development ($267 million) and maintenance ($249 million). Retail is ripe for augmented reality as retailers try to create compelling and entertaining in-store environments and introduce more complex products (such as medical marijuana).

In the consumer space, games represent a compelling opportunity. The most well-known recent AR offering was, of course, Pokémon GO.  Pokémon GO hit $600 million in 90 days, making more revenue through the year than the entire VR games software market did in 2016. Why was Pokémon GO so successful? Because it used a mobile phone as its platform (and was therefore accessible to most of the population), and it was fun. Never mind that the tech was somewhat old school (camera, GPS, clock). It was fun.

Keep it simple, keep it accessible, make it fun. Watchwords for success in AR gaming.

On the consumer side, AR games will experience a CAGR of 287.4%, making it one of the fastest growing AR/VR categories over the forecast period.
— IDC, Worldwide Spending on Augmented and Virtual Reality, Feb 2017

Augmented reality typically creates a virtual overlay on a real-world environment. Examples include a doctor operating on a patient while seeing the virtual hands of a more experienced surgeon in his Google Glass, guiding him to the proper incision site. The more experienced surgeon sits in her office, thousands of miles away. It's not science fiction.  A surgeon at the University of Alabama performed shoulder surgery with the virtual assistance of a colleague in Atlanta over 4 years ago.

But Google Glass can be a bit clunky, raise questions of privacy and was, until recently, unaffordable. We predict that AR takes off like a rocket ship as AR app makers develop for that ubiquitous device, the smartphone. We all have one, and it's with us all the time. You can now download an AR app to your smartphone, point it at an object which the app is "trained" (coded, really) to recognize, and watch a 3D virtual overlay spring to life in your smartphone screen.

Examples include showing someone how to change the filter on a compressor or any other maintenance task (putting the furnace filter in facing the right direction, anyone?), providing helpful information about new products (such as marijuana grinders, coming soon to a pharmacy near you in Canada, we predict), and pure entertainment (Pokémon GO and Snapchat filters being the best examples of that). For an example of the power of augmented reality for maintenance/training tasks, download the Harvard Business Review Android app or iOS app, and point it at the article in the Nov/Dec 2017 issue.

Augmented reality springs to life in the pages of the Harvard Business Review

Everybody has a phone. We don't all have a VR headset. Yet. That's why usage of AR will take off as more AR app makers develop simple, useful AR apps for the smartphone. The tech is cool, but it's only useful to a business if it shrinks the sales cycle, lowers costs, engages the customer, or increases conversion.

Want to explore an AR or VR application for your business? Contact us today!