Many wonder whether augmented reality is just a novelty or perhaps a fringe technology suitable only for the geeks in lab coats. In fact some have already written it off as a result of Google’s inability to build critical mass with Glass and the content companies’ production of mostly gimmicky applications as of yet. In this post I have compiled snippets from many market research sources in order to provide a picture of the opportunity that AR presents. The overwhelming consensus seems to be that AR is in the early stages of an explosive growth cycle and is destined to become an indispensable part of our lives. In fact I found nothing to the contrary. Do you buy into the hype? Be sure to leave your comments about your take on whether AR is poised to take off or be relegated to the heap of broken tech dreams.

Deloitte
“Recent advances in indoor location-based services could unlock new uses for enterprises ranging from retail stores to warehouses to front-office headquarters.” “The smartphone can deliver an intelligent presentation of information based on identity, agenda, itinerary, activities, roles and other relevant filters. Yet phones and tablets are but primitive forms of viewing technologies, which will likely give way to headsets, glasses, lenses and other display systems that operate fully synchronized with the physical world. That’s what augmented reality is about, with companies like Layar, Junaio and Aurasma already breaking new ground in enhancing real-world objects with digital information… The blending of augmented reality with analytics – enabled by a shift toward liquid data – is driving us inexorably toward breakthroughs in visualization that would have been science fiction just a few years ago. The Internet we know and love is converging with the Internet of things to create a brave new world of people, places and things being annotated with ever-more-relevant data.”[Tech Trends 2012 Elevate IT for Digital Business]

Juniper
Predicts that augmented reality apps will generate $300 million revenues in 2013 and will hit $5.2 billion in 2017, an increase from the predicted $82 million in 2012. The report also states that more than 2.5 billion augmented reality apps will be downloaded by 2017, a majority of which will be games that use augmented reality to add an additional layer of interaction to content. “Mobile augmented reality to generate 1.4 billion downloads by 2015 as major brands embrace the concept” “Enterprise apps with AR elements are expected to account for the third-largest proportion of revenues by 2015”[Mobile Augmented Reality]

total market

IDC
“The ability to add digital context to users’ everyday world will allow for new business models, mobile advertising, and applications to emerge. Companies producing mobile augmented reality applications, world browsers, and start-ups facilitating businesses to take advantage of the new platform will step into the spotlight and may become the next acquisition targets.”[Mobile Augmented Reality Private Vendor Overview — When Worlds Collide]

Gartner
Augmented reality reached the peak of its hype in 2010, and while technical and privacy concerns persist, augmented reality has substantial long-term potential and will reach mainstream adoption within five to 10 years. They predict that in 2014, 30% of mobile subscribers having data plans in mature markets will use augmented reality at least once a week. [Gartner Highlights Top Consumer Mobile Applications and Services for Digital Marketing Leaders]

gartner1

Gartner Hype Cycle positioning of Augmented Reality as of July 2012

IBM
“In the past, shoppers were classified by broad demographics, but soon they will be able to engage in an augmented reality shopping experience that is customized, and lets them take advantage of deals and special offers related to products that they likely need. By providing in-store shoppers with the same kind of personalized information that online shoppers receive, retailers can now harness Big Data in order to cater to each individual on a more personal level and transform marketing into a convenient and welcomed service for consumers.”[Augmented Reality Makes Shopping More Personal]

Forrester
“Mobile augmented reality (AR) has become a widely referenced technology in less than a year, but in fact this technology is just emerging and will take years to scale. For now, it is primarily used by brands willing to launch innovative mobile services and in search of a “wow” effect. However, Forrester believes this is much more than a gimmick. In the years to come, it will be a disruptive technology that changes the way consumers interact with their environments. It will bridge the real and digital worlds, enabling new ways to engage with customers via advanced digital interactivity. Because mobile AR makes the most of mobile’s unique attributes, it will help transform mobile phones into the new remote control of our personal daily lives. Consumer product strategists should benchmark innovation in this space very carefully, conceive their mobile services as if the technology were already mature, but integrate it very cautiously in their 2011 mobile road maps.”[Mobile Augmented Reality]

Mind Commerce
“The global market for augmented reality (AR) is, in many ways, where the mobile phone market was just a decade ago: a niche market, targeted at a very select and narrow field of potential users. But the advent of ubiquitous data-enabled smartphones and low-power, light-weight computing devices promises to push this market into the stratosphere over the latter half of the 2010s. The convergences of two powerful technologies, Augmented Reality and Mobile Commerce, will create many opportunities for new revenue-generating applications. These applications will have a directly positive impact on the mobile commerce ecosystem as new methods of interacting with real brands and real products in a virtual/augmented environment convert potential interest to actual sales. Augmented reality revenues will exceed $3 billion by 2015. Mobile commerce revenues will be doubled by 2015 with AR applications. Revenues generated from mobile phone augmented reality applications will reach $2.2 billion by 2015”[Mobile Commerce in Virtual and Augmented Reality]

ABI Research
“Developers will invest over $2.5 billion in Augmented Reality (AR) applications in 2018 as AR becomes part of people’s everyday mobile experiences, especially in the retail and marketing domains.” [Are Augmented Reality apps worth $2.5 billion investment by 2018?] “…recently, innovative technologists and developers have untethered AR by leveraging mobile networks and, as a primary device, smartphones. This shift into the mobile use of AR radically changes the paradigm of AR and propels AR far beyond the capacity, possibilities and opportunities of tethered uses. Mobile AR will expand rapidly, driven by smartphone apps, then even more rapidly as developers take advantage of AR platforms/engines that enable them to embed AR functionality into the broad base of smartphone apps.”[Mobile Augmented Reality]

Hidden Creative
“Marketers are driving growth in AR and data from ABI Research has proven that the market for augmented reality will reach $350m during 2014 – and that is just in the US alone.  Augmented reality has undergone a period of fast growth and the adoption of the first wave of market-based technology is now being used productively.”[Augmented Reality Marketing Strategies: the How to Guide for Marketers] on the run how being used
Rish Mitra (co-founder and CEO of Blippar)
“The broad trends in augmented reality are image recognition and tracking, location layers, virtual product trials and social gaming. Location layers have been popular so far because they were first to launch AR via the app stores… Image recognition and tracking is rising in popularity, but user experience is key to the success of technology. The user experience absolutely has to be seamless, instantaneous and offer real value to bring image recognition AR to the mainstream… The next big thing in AR will still be via smartphones, and we will see developments in the field of image, object, color recognition. There’ll be few verticals in the area where startups will find niche uses of this technology. Also, location layers and image recognition might merge to give users a more wholesome experience. In terms of beyond mobile, I do believe an AR eye-lens and glasses will evolve…”[Augmented reality: The past, present and future]

ARC Chart LTD
“Revenue generated from mobile phone augmented reality applications will reach $2.2 billion by 2015… By 2015, ARCchart expect a total installed base of over 1.6 billion AR-enabled phones will be present in the market… Currently, the augmented reality market is dominated by small start-ups with talented developer teams who are driving innovation. As the market picks-up, ARCchart expects the established industry players to increase their involvement. We have identified five service areas – search, advertising, image recognition, mapping and 3-D world views – which are essential for a complete AR solution and where large players can exert a stronghold. Companies active in several of these areas, like Google, Microsoft and Nokia, who also control their own smartphone platform and developer tools, will be well-positioned to dominate the space.”[Mobile Phone Augmented Reality: Market Analysis and Forecasts]

Perey Research
On open standards for AR: “…there has been widespread interest in and increasing requests for standards-compliant AR solutions. Content publishers that can provide high-value AR experiences are motivated to make their data available to users of various devices that are connected to all types of networks or that are not connected at all. By adapting the assets used by many terminals, and by adapting content delivery options, publishers can monetize content for different use cases across substantially larger markets. This maximizes the audience size and potential revenue. Adoption of standards also reduces implementation costs and mitigates investment risks by making devices and use cases independent. By the beginning of 2013, leading technology providers will respond to these needs by introducing interfaces that comply with open standards and by introducing applications that provide AR experiences based on content authored in or delivered by platforms of competitors or partners.”[100G and Beyond: Trends in Ultrahigh-Speed]

Technavio
“… forecast the Global Augmented Reality market to grow at a CAGR of 54.3 percent over the period 2012-2016. One of the key factors contributing to this market growth is the increasing demand for enhanced user experience. The Global Augmented Reality market has also been witnessing increasing partnerships or tie-ups between startups of this market and major players in the complementary markets.”[Global Augmented Reality Market 2012-2016] “…forecast the Global Head-mounted Display market to grow at a CAGR of 56.24 percent over the period 2012-2016. One of the key factors contributing to this market growth is the increasing adoption of head-mounted displays in the Consumer Electronics industry. The Global Head-mounted Display market has also been witnessing an increasing number of augmented reality products. However, the high ownership cost of head mounted displays could pose a challenge to the growth of this market.”[Global Head-mounted Display Market 2012-2016]

Robert Rice (Future Vision blog)
“2010 to 2020 will become The Decade of Ubiquity. Not only will L3 (Augmented Vision) become a reality, but the advent of this will spawn entirely new industries, professions, and hundreds of thousands of jobs. The impact of L3 will be equal to or greater than the effect of the Internet and the Web combined. Nearly every industry will change in some way, and L3 technologies will have a dramatic effect on our day to day lives, jobs, education, entertainment, culture, politics, society, and so on… Marketing and advertising will be completely reinvented and will be more interactive and dynamic than the targeted holographic advertising in The Minority Repor. The world around you becomes your display and your interface. Any and everything will be tagged, labeled, interpreted, remembered, and filtered, in real-time. Cyberspace, combined with L3 devices, will become something like a hive-mind collective conscience and memory that we can all tap into at will. We don’t quite know how this is going to happen yet, but a lot of thought and effort is going on right now. Ideas are beginning to become reality.”[Augmented Vision and the Decade of Ubiquity]

My own take is that everything that has been done commercially with AR up until this point has been about testing ideas and possibilities. Sure we’ve seen a lot of gimmicky advertising on the content side and we’ve seen a much ballyhooed wearable technology (Google Glass) fall flat and it’s users ridiculed as “Glassholes”, but I consider these to be early shots fired across the bough of the marketplace to let the world know something bigger is coming. One can see the hardware pieces beginning to fall into place. Companies such as Atheer Labs, Epson, GlassUp, Innovega, Magic Leap, Meta, Optinvent, Technical Illusions and Vuzix have glasses in development that will enable 3D and registered overlays of images and information while other companies such as AR Toolkit, Daqri, Layar, Mataio, Qualcomm and Wikitude are building the software and APIs that will enable mobile AR experiences to be created for this hardware. The use cases I discussed in my previous post are just waiting for these pieces to come together to make them viable. It is then that we will see AR change the world. I’m thinking that the use case solutions will begin truly emerging by 2017, and the technology will reach critical mass in the marketplace by early 2019.

One Thought on “06: Market Outlook

  1. Brilliant collection of market reports – thanks for the hard work!

    You may want to add a recent report predicting the adoption curve for Smart Glasses at http://augmentedreality.org/SmartGlassesReport

Leave a Reply

Your email address will not be published. Required fields are marked *

Post Navigation