With more attention on the Extended Reality (XR) market than in recent years, 2024 promises to hold a plethora of new applications for XR hardware both new and old. Many of these applications will not be well-received, which is a net positive for the market, as it enables better value targeting and audience knowledge for what is and is not wanted in the XR space.
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New Experiences to Be Tested
Microsoft recently announced that Word, PowerPoint, and Excel are coming to the Meta Quest line of Virtual Reality (VR) headsets. This joins previous efforts between the two companies on collaborating with Teams and Outlook availability. Meta wants to position its VR headsets more as Mixed Reality (MR) devices than pure VR, bringing in the real world through a live camera feed. This is also the main focus for Apple’s Vision Pro, but by all accounts, the Vision Pro is purpose built for MR, while the Quest uses MR more as a value add, with concerns around passthrough quality common.
While it’s not likely that users will flock to using Office in a VR headset, the effort shows the importance of experimenting with content on new hardware in order to gauge user sentiment. In more established markets, this is increasingly done internally and with market research, but the novelty and interest in Extended Reality (XR), along with lacking user scale, is leading companies to experiment more in the market. Opportunities to monetize that experimentation and establish a brand are both valid side effects, with the additional risk of negative brand sentiment for failure.
Ambitious, but Realistic
One of the more promising applications for XR is indeed virtual collaboration and “beyond desktop” applications, but the reality for these experiences is not yet fully understood. The user experience for XR office work is difficult, with device comfort and long-term usage both challenging normal working patterns. The XR experience must be sufficiently better than the alternative, or offer an entirely unique solution to see large-scale adoption, which is true of any application. Some applications are fantastic with XR, especially visual and interaction-heavy workflows like 3D content creation, but others are much more experimental.
Not every XR application needs MR to be an integral part of the experience. VR games, for instance, are unique in their ability to entirely replace the user’s environment with a virtual one—this is an advantage offered by no other technology, and bringing in the real world as a core part of the experience can ruin that experience. MR for quality of life improvements is still valuable—like temporarily showing camera passthrough for environmental safety or real world interaction—but not as the focus of the experience.
Technology for technology’s sake is not the answer. For a comparison: in the early days of Microsoft HoloLens in 2015, Microsoft and its customers excited for the new device were testing countless use cases for MR. Most of these never materialized—even Microsoft’s own marketing for HoloLens showed use cases in gaming, healthcare, and other markets that either never left pilot phase or took years to do so.
A similar situation can be expected with Vision Pro and similar MR devices—customers and content creators will be desperate to leverage the device and will try to create applications for the device, whether it makes sense to or not. Once again, this is a net positive for the market, but it may not seem that way publicly or to those directly involved. News cycles will latch on to poorly received experiences and negative outcomes, but this often misses a larger picture and go-to-market. Testing the waters is necessary for a novel device type, and when that testing is attached to a big name like Apple, failure is exaggerated.
The enterprise XR market has been experimenting with AR and VR for a decade, and the lasting use cases are those that prove value continually—training, remote assistance, and work instruction. The consumer market, and novel enterprise use cases for that matter, do not have that foundation of proven value to work on, so experimentation is once again necessary. Given Apple’s operating scope, this also means big names will likely create poor content and experiences—a necessary part of growing a product category.
Navigating a Tumultuous Field
With competition heating up in 2024, and interest expected to grow in kind, there will be much more noise in the XR space than in recent years. Filtering that noise to identify directly impactful items will be critical; along with that, realistic expectations for hardware capability, rate of growth, and user segments and numbers is critical as the market enters another potential hype cycle:
- Be Comfortable with Failure, but Define Failure Explicitly: This can be difficult, with roadmaps spanning years and products being positioned purposely as “market tests,” rather than hopeful new product lines. If a new hardware launch is meant more as a test or Research and Development (R&D) product, market it as such, rather than universally launching in the hopes of a chance runaway success. More concrete and realistic goals around user base and user experience will help maintain a healthy market outlook as competition increases.
- Make More Ambitious Plans Part of a Larger, More Reliable Go-to-Market Strategy: This helps cushion companies and brands against “failure” as market testing continues. Meta has broad metaverse ambitions and smart glasses plans, for example, but also has a successful VR play with Quest as it stands. Apple has been active in the XR space for years, even without a dedicated Head-Mounted Display (HMD) product—ARKit and using Light Detection and Ranging (LiDAR) for scanning, for example—and it’s clear the company’s XR plans are broader than Vision Pro.
- Don’t Bet on a Single Vendor, Hardware, or Software: This is quite difficult in the current XR market with few viable competitors, especially in hardware, but looking forward, this is increasingly important. All attention will be on Apple in 1Q 2024, and for good reason, but scale does not lie solely with Apple and the first-generation Vision Pro.