Apple’s Continued Emphasis on Augmented Reality Strengthens Retail and Supports Realistic Consumer Applications

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By Eric Abbruzzese | 4Q 2018 | IN-5279

In 2017—a pivotal year for the Augmented Reality (AR) market for a number of reasons—Apple’s ARKit and Google’s ARCore Software Development Kits (SDKs) were released. One year later, Apple continues to invest in ARKit and to show off the capabilities and potential uses of the SDKs. Google has been quieter on the matter, but the company’s upcoming hardware event in early October may also have some new AR-related announcements as the company pushes Google Lens and the wider Google ecosystem. For now, Apple’s AR showing has been stronger, and the most recent showcase—with significant retail potential and with well-received consumer-oriented AR examples—continues Apple’s strong AR momentum. This is combined with constantly flowing rumors of a novel AR or Mixed Reality (MR) device launch from the company in the next one to two years, with the rumors supported by continuing acquisitions and hiring in the space.

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AR Support: The Earlier, the Better

NEWS


In 2017—a pivotal year for the Augmented Reality (AR) market for a number of reasons—Apple’s ARKit and Google’s ARCore Software Development Kits (SDKs) were released. One year later, Apple continues to invest in ARKit and to show off the capabilities and potential uses of the SDKs. Google has been quieter on the matter, but the company’s upcoming hardware event in early October may also have some new AR-related announcements as the company pushes Google Lens and the wider Google ecosystem. For now, Apple’s AR showing has been stronger, and the most recent showcase—with significant retail potential and with well-received consumer-oriented AR examples—continues Apple’s strong AR momentum. This is combined with constantly flowing rumors of a novel AR or Mixed Reality (MR) device launch from the company in the next one to two years, with the rumors supported by continuing acquisitions and hiring in the space.

Revisiting Innovation

IMPACT


To many, Apple has strayed from its strengths in innovation since the iPhone and iPad launch days and instead has been playing it safe with iterative but well-designed and well-marketed products. Augmented reality offers a reentry to innovative growth for Apple—first on their immense mobile device install base and ultimately on the strength of their AR ecosystem for a head-worn entrance. Getting developers involved is paramount to a successful ecosystem, so the company’s first-party support both in developer tools (the SDK itself) and in its own content creation for the platform is significant.

A number of improvements that are hitting ARKit—including 3D object detection, shared tracking (called “shared experiences”), and scene reflection—are notable. Improvements to Animoji are also present, although they are less impactful than these technical improvements. Worthy of standalone mention, however, is Quick Look. It allows direct integration between AR content and existing Apple applications. Shopify is supporting ARKit and Quick Look and has the potential for their 600,000 merchants to use the platform.

This activity is forcing Google’s hand for their upcoming hardware event and for the next 12 months. Google has had as much, if not more, potential for revenue and growth in AR; but developer uptake of ARCore vs. ARKit will be critical. Today, ARKit is preferred from both a technical standpoint and an installed-base standpoint. ARCore could win on both of these fronts with proper investment and marketing. Even though Google is continuing to focus on artificial intelligence and machine learning, AR offers another source of data for collection and leverage, including in an underutilized realm of data—visual data. While Apple doesn’t have this same focus, both players can capitalize on the data available.

There is pressure on the hardware side as well. While Simultaneous Localization and Mapping (SLAM) tracking is improving, allowing for accurate spatial tracking with existing hardware (camera, nine-axis sensors, etc.), it can be improved even more with some dedicated hardware. Apple tangentially touched on this already with FaceID and would be smart to add that hardware as a rear-facing sensor package to further open up ARKit and the iPhone/iPad hardware potential.

An AR Bridge to Mass Market

RECOMMENDATIONS


The technology may have been there previously, but the level of polish was not. Apple brings refinement and integration to AR, which will be a boon for the industry. This level of refinement will continue to be a focus both in enterprise and consumer markets, with existing customers expecting a continually improving quality of experience, and consumers expecting polish from the very beginning.

Seamless experiences are critical to AR, especially early in the market, as fragmentation is rampant and user experience is a paramount concern. Opportunities like Quick Look are necessary to get consumers in front of content and to continually engage with it. ABI Research identifies retail, commerce, and marketing as the most promising growth areas for AR, offering a bridge between the more significant enterprise opportunities of today and the mass market consumer play of tomorrow. Business-to-Business-to-Consumer (B2B2C) opportunities are strong in retail. These ultimately can give way to more B2C interaction as the market matures, which is one of the final barriers to mass market AR adoption. Much of the technology underlying a retail or marketing experience can be applied to other markets and experiences as well—meaning the growth seen in retail will allow other content types to hit the market earlier and with a higher level of quality.

AR glasses remain an enterprise venture for now; but again they can leverage advances on mobile devices as seen today to mature more quickly. It is up to both content creators and hardware vendors to identify opportunities to bring glasses to a wider consumer base. For consumers, it is always a question of value to price. Enterprise has been stronger as the return on investment is more impactful than just value to price, with the potential of AR advantages outweighing a high device and/or platform price. Currently, any head-worn AR conversation for consumers ends at price, with average sale prices far too high overall combining with precious few devices in the market. The value for users just is not there, with no single killer app nor more generalized value potential (i.e., generalized daily use).

This year, as well as 2019, have been identified as an inflection point for AR; quality and quantity of hardware and content continues to improve, and the impact of ARKit and ARCore is beginning to materialize in a significant way—in no small part thanks to Apple’s continued focus on AR. In parallel, enterprises will grow their existing AR implementations across both mobile and head-worn devices, while realistic consumer adoption scenarios are beginning to materialize. This will strengthen as hardware, content, and supporting platforms continue to mature. Ultimately, a critical mass of support and capability will be reached, and support for AR will snowball. Then the conversation will shift from foundational questions of potential to forward-looking, transformational ideation.

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