Next Steps for Augmented Reality: The Danger of Hype and Mismanaged Expectations in a Nascent Market

The first public demo of Magic Leap’s upcoming mixed reality (MR) hardware did not live up to the lofty expectations set over the past year. Meanwhile, glimpses into this generation of Augmented Reality (AR) on mobile devices continue to bubble up; the anticipation is usually complemented with excitement from the public. On the surface it seems to be a clear case of mismanaged expectations across these markets, but the reality is much more complex. While expectation certainly factors into it, an increasingly knowledgeable public—whether enterprise customers or the general consumer populace—raises the bar for those playing in the market. There is an obvious contrast between Magic Leap’s public showings and the investments backing the platform totaling over US$2 billion, but it represents an inherent value in what the company’s offering can provide. While it may be underwhelming today, the potential recognized by investors over the past few years just needs to be fully realized, and that comes when both the market and the platform itself is more mature.

Magic Leap’s initial public demo was received poorly, due at least partially to the current state of mobile device–based AR. Anyone who is waiting to see a killer app for mobile AR may be disappointed, but the building blocks for a relevant, useful, and ultimately successful AR space on mobile are being developed. Retail experiences from companies such as Amazon and Ikea are a first step for consumer mobile AR, but expanding the tech to gaming, education, sports/fitness, and more is a natural course.

In the more established enterprise AR space there is a preference for lower-cost AR glasses, with a focus on a few key use cases, most predominantly in remote expertise. An idea exists for an experience being “good enough” for target Return on Investment (ROI). This idea is continuing for head-worn devices, with monocular devices showing more staying power in ABI Research’s AR hardware forecast than in the past. However, this idea is spilling over into the mobile market, now that mobile devices are close to parity with AR glasses in terms of capability.

If an AR implementer wants to capitalize on remote expertise and the benefits it brings—reduced downtime, travel costs, etc.—then a mobile device with AR capabilities may be all that is needed to hit the threshold of usefulness and ROI. Previously, any AR discussion would have started with head-worn devices. However, head-worn devices have the inexorable benefit of being hands free, which can be immensely beneficial on its own; but when that is not required, mobile devices offer a compelling ground level to some of the often-discussed AR returns.

This positions mobile Virtual Reality (VR) platforms favorably across 100% of the potential market, which includes both the consumer and enterprise markets. This has not been true of any side of the AR space as of yet.

Hype is a dangerous but necessary component of the AR market cycle, especially when that market is still nascent. When considering the potential impact of technology such as Magic Leap and HoloLens or even mobile-based AR, it is understandable that both marketing groups and those people to whom the product is being targeted get excited about the product’s potential more so than the product’s actual capabilities.

These circumstances reflect a market that, while not much different in promise and capability, varies from the expected path that seemed clear two years ago—a path lined with ubiquitous head-worn devices driving completely novel content and user experience. While this is still a possibility, the expected likelihood of head-worn devices is a much longer path than many expected when viewed through a more realistic lens. Understanding these trends will help solidify and quicken business decisions around AR. There are an increasing number of examples of available applications, whether a customer wants either a full-fledged, immersive, MR experience or a more simple, mobile-device-powered, remote expertise implementation.

Developers have an increasingly capable tool set to deliver content as well. ARKit and ARCore act as first-party pillars for mobile devices, with strong synergy existing mainly with the Unity platform but available for other development platforms as well. These platform tie-ins are paramount in getting developers to create compelling and usable content for their targeted markets and technology. For smart glasses it is thankfully a similar story, with specialized platform tools and more universal developer tool tie-ins being offered to push content to head-worn devices. The similarities between mobile and head-worn devices for content and for some hardware components also means that both platforms can benefit from each other’s progress.

This year and 2019 will be an inflection point in the AR market. Enterprise maturation in digital transformation naturally leads to maturation in AR. Mobile AR maturity brings with it greater consumer interest and applicability. The growth of both of these markets is spurred by greater knowledge held by purchasers, developers, and consumers. Ultimately, these factors will coalesce in parallel, leading to a turning point and the start of a mature, better understood AR market as a whole.