Why Big AR Names Falling Is a Positive Market Indicator

In December 2018, two staples of the Augmented Reality (AR) space fell: Blippar entered administration, and a patent sale is planned for ODG in January 2019. Blippar, a machine vision and AR application company established in 2011, was unable to secure needed funding after an alleged investor dispute. ODG is a smart glasses hardware player active since 1999, with experience in military visualization before the more recent AR glasses activity. For both of these companies, the product on offer was high quality and competitive in the respective spaces. Blippar had received more than US$120 million in funding, and ODG had landed some notable enterprise contracts in the growing industry. Despite this, recent events are obviously not a strong showing. While it’s common for startups to pop up and fade away in very short periods of time, it’s another story when there is a positive track record and customer base already established. However, a lack of success for one company suggests success for others.

Both of these stories are unique, but also share some similarities. Blippar had pivoted go-to-market and product a couple times—most recently with a more universal machine vision/tracking focus—as the market shifted around. ODG rolled out two new smart glasses products last year, one an improvement on existing enterprise-focused hardware and the other more consumer-facing, again in an attempt to pinpoint success going forward. One is a maturing startup, the other is a mature player. One is a hardware OEM, the other a software platform. One thing that these companies have in common, though, is a sound product looking for a place to scale.

The shifting of the market is a critical point. While the AR market is indeed maturing, there are still numerous significant variables for any company active. New use cases are identified while existing use cases are expanded on or fall out of favor. Improvements in hardware and platforms can bring about new industries to break into. The consumer market has always been key for any mass market desires, and the AR consumer market is anything but mature and predictable. Pure focus on one use case/market/experience type can give an advantage, but if customer focus should shift away from that, or a larger competitor invests/acquires into the space, that advantage can disappear quickly. At the same time, a more universal approach can be advantageous for growing customer base, but may weaken an offering when focusing in. A balance between these two is ideal, one that can shift one way or the other dependent on market activity and customer feedback, and even better still if this shift can happen before a wider market reaction.

With those variables at play, it may not be a surprise that things didn’t go as planned. However, whether directly through patent acquisition (in the case of ODG), or secondarily by recognition of and action towards a new gap in the market created by these happenings, the progress made by these companies certainly will not be lost.

When companies with a strong offering fall, it is often caused by numerous factors—mismanagement, poor go-to-market, lacking marketing, etc.—but an increase in competition also contributes. In the AR market, this is a sign of maturation, both incumbent technology and platform companies getting involved, along with increasingly capable new entrants, creating an increasingly competitive ecosystem. This can force the hand of companies to stay ahead of the curve of an incredibly fast-growing market, and those who don’t adapt quickly enough are left behind, even if the product is valuable. Expect to see other big names pull out of the market, lessen their activity, or go under; it’s a natural progression for any market, and is exacerbated by the uncertainty and lack of knowledge that a new market contends with. That lack of knowledge is disappearing for AR, but the uncertainty is as strong as ever. Absolving as much uncertainty as possible, or at least diminishing the potential effects, through a well-researched go-to-market and roadmap will be an increasingly strong advantage.

That balance between a narrow focus and broad appeal becomes increasingly important as that market complexity grows, as does the importance of strong marketing and market positioning. A common occurrence in today’s market is targeting a specific area—whether that be a specific use case or vertical—and building out a product for potential expansion into other areas in the background. This allows time to mature both the public product that customers are using while researching and planning expansion. This allows a buffer of time to figure out that balance, and where success is most likely. Return on Investment (ROI) is the predominant topic of conversation in today’s market, and so having quantitative proof of ROI is a necessary first step. Mobile AR is growing in capability constantly, and in 2019, there will be more than a billion active mobile devices that are AR capable. While a consumer push is risky considering the lack of value proven in the market, that install base is a much better starting point than has been in the past.

In the end, the AR market is no different than any other tech sector, or even general market. A period of maturation continues, but with that comes a growing need to prove worth, sort out backend business, and push forward. Even with US$120 million in funding, Blippar wasn’t able to continue on. Even with decades of experience, ODG wasn’t able to realize its go-to-market. That’s not to say the product was flawed, but instead the surrounding market got bigger and better, and so greater pressure was exerted. So long as there isn’t a mass exodus or collapse of AR players, that pressure is a positive signal. With the increasing inclusion of AR as part of broad digitization conversations across markets, and upcoming excitement around consumer AR, more positive signals, along with those pressures, will come.