Augmented Reality Enters Mainstream Information Technology

Augmented Reality Enters Mainstream Information Technology
AR will grow exponentially, becoming the interface-of-choice between humans and machines, bridging the digital and physical worlds.
Technology Briefing


According to legendary Harvard Business School strategist Michael Porter, "AR will affect companies in every industry and many other types of organizations, from universities to social enterprises. In the coming months and years, it will transform how we learn, make decisions and interact with the physical world. It will also change how enterprises serve customers, train employees, manage their value chains, design and create products and, ultimately, how they compete."

In this segment we'll examine what AR is, its evolving technology & applications, and why it is so important. Notably, its significance will grow exponentially as "smart, connected products" proliferate, as it amplifies their power to create value and reshape competition. That's because AR will become the new interface-of-choice between humans and machines, bridging the digital and physical worlds. And while challenges in deploying it remain, pioneering organizations, such as Amazon, Facebook, General Electric, Mayo Clinic, and the U.S. Navy, are already implementing AR and seeing a major impact on quality and productivity.

Here we provide a road map for how companies will deploy AR and identify some of the critical questions they will face in integrating it into their products, strategies, and operations. Before we can appreciate the economic implications of applying augmented reality to business, we must understand what augmented reality is. Isolated applications of AR have been around for decades, but only recently have the technologies required to unleash its full potential become available.

At the core, AR transforms volumes of data and analytics into images or animations that are overlaid on the real world. Today most AR applications are delivered through mobile devices, but increasingly delivery will shift to hands-free wearables such as head-mounted displays or smart glasses. Though many people are familiar with simple AR entertainment applications, such as Snapchat filters and the game Pokémon Go, AR is being applied in far more consequential ways in both consumer and business-to-business settings.

For example, AR "headsup" displays that put navigation, collision warning, and other information directly in drivers' line of sight are now available and affordable in dozens of car models. Wearable AR devices for factory workers that superimpose product-assembly or service instructions are being piloted at thousands of companies. And AR is supplementing or replacing traditional manuals and training methods at an ever-faster pace.

More broadly, AR enables a new information-delivery paradigm, which the Trends editors believe will have a profound impact on how data is structured, managed, and delivered on the Internet. Though the web transformed how information is collected, transmitted, and accessed, its model for data storage and delivery-pages on flat screens-has a major limitation: It requires people to mentally translate 2-D information for use in a 3-D world. That isn't always easy, as anyone who has used a manual to fix an office copier knows.

By superimposing digital information directly on real objects or environments, AR allows people to process the physical and digital simultaneously, eliminating the need to mentally bridge the two. That improves our ability to rapidly and accurately absorb information, make decisions, and execute required tasks quickly and efficiently.

A wide range of companies, both large and small are busy creating ever more capable and user-friendly augmented reality hardware and applications. In addition to giants like Microsoft, Google, and Facebook, there are roughly 2600 firms worldwide addressing this opportunity. And they've already produced a wide range of products and prototypes, looking for exactly the right combination of attributes needed to ignite demand. What will consumers and enterprises be using these new AR wearables and hand helds of the future to do?

Some applications are an obvious progression from what we already have, like further enterprise use in service support, training, education, and design. But what about the uses that'll make strapping a wearable to our faces worth it day-in-and-day-out? One set of consumer applications involves health and fitness, which has been the driving force behind the acceptance of other categories of digital wearables.

Sports consumers have a higher propensity than other consumers to spend on new and innovative devices that may help them improve their sports performance, and so this vertical is an important proving ground for new devices. AR already has a presence in some glasses designed for cycling and swimming, like Form's goggles. These mainly present the users' performance data, but we can expect much more from this category in the future.

A second set of applications involves productivity enhancement. Productivity can mean all kinds of things, but in the case of AR, it chiefly refers to making everyday activities, like replying to emails, checking your calendar, keeping on top of your to-do list, and finding your way from A to B, more efficient.

Within five years, expect to see productivity become an embedded mass-market use case for AR. This is where slimmer, spectacle-like AR wearables would be ideal because they'd be light enough to be worn throughout the day. Imagine waking up and putting on a pair of AR glasses, which provide you a weather report, summarize the news and update you on notifications while you get ready. You could even watch your favorite TV show as you brush your teeth.

Productivity uses that are more advanced, like putting on AR glasses that turn your dining room table into a huge interface to control your computer sound more like science-fiction, but they're not out of the realm of reality. Acting as an audio interface is a third AR function that opens up additional application possibilities by tuning smart glasses into a replacement for your smartphone or your computer.

In fact, "audio smart-glasses" without AR functionality, like the Alexa-powered Amazon Echo Frames, are already garnering success. So, adding an audible component to AR shouldn't be overlooked. Hearables that integrate a virtual assistant, such as Siri, Alexa or Google, with proactive, rather than reactive AR, could prove to be a notable inflection point for the industry.

As with smartphones, we believe the big payoffs will occur in an enterprise setting. That's why many of the devices created-to-date aren't aimed at regular consumers but are instead designed to be used within businesses. Already, some companies use AR wearables to keep track of stock within a busy warehouse and follow detailed instructions about logistics on the go.

Prior to the pandemic, enterprise applications for AR headsets were already proving popular, but social distancing measures throughout 2020 meant more and more businesses looked to augmented reality solutions to keep them up and running. AR devices from companies like RealWear, Vuzix and Microsoft provided invaluable support to businesses at challenging times, especially in scenarios like warehouse fulfilment and remote assistance.

For many businesses, AR was essential for "keeping the lights on" when Covid-19 was causing huge disruptions to operations. Other business uses include training, especially when providing people with a simulation of a real-world environment to learn and practice. Many enterprises, particularly in construction and medical sectors, are embracing AR headset devices to provide hands-free enhanced vision for planning, design, patient care and training. This is particularly useful in high-pressure situations that are difficult to replicate.

AR has already been used on a small scale to train astronauts to prepare for a spacewalk and medical students to perform surgery. And AR is proving beneficial for industries that rely on planning and visualization, including almost any type of design and conceptualization needs. A number of onsite AR tools, use Microsoft HoloLens, to visualize construction when the real world is just a cleared, muddy plot.

What the bottom line? Augmented reality has until now, been the "sleeping giant of Information technology" but it seems ready to awaken. Like it's sibling, virtual reality, augmented reality has consistently over-promised and underdelivered, because neither the technology, applications, nor target users were ready to deliver on its potential. But that's all changing.

Given this trend, we offer the following forecasts for your consideration. First, the growing adoption of AR in healthcare applications will drive the growth of the augmented reality market. Several AR-based solution providers are collaborating with healthcare organizations to provide AR-powered healthcare applications for various purposes. The healthcare segment is anticipated to witness the fastest growth from 2021 to 2028 owing to the growing adoption of AR technology in vein visualization, and surgical visualization, as well as medical training and education.

Second, the automotive segment will exhibit a CAGR of over 45.0% from 2021 to 2028. Automotive companies are integrating AR technology into their automobiles and leveraging the capabilities of AR technology to offer a better experience to their customers. The most significant contribution of AR has been in the field of security and awareness, wherein companies are integrating AR-based, advanced safety systems with online safety features.

Third, the education segment will witness significant growth from 2021 to 2028 in line with the aggressive use of AR technology by schools and universities. The outbreak of the COVID-19 pandemic triggered increased adoption of AR technology in the education industry as educators sought more innovative ways of teaching and offering dynamic content for students in unconventional settings.

They found that AR technology can be especially helpful in enhancing the student experience. Specifically, AR can be used to provide a more detailed, immersive, and real view of knowledge to students. The potential AR holds in helping students in better understanding educational concepts by using 2D and 3D modeling, discovery-based learning, AR books, AR games, and AR-based skill development also bodes well for the growth of the market.

Several educational technology companies, such as Neo Bear, Strivr Labs, Talespin Reality Labs., and Health Scholars, are exploring the potential of AR technology for educational applications. Fourth, augmented reality platforms will enhance shopping both on-line and in-store. AR is already gaining popularity in the retail and e-commerce industry in line with the growing consumer preference for online shopping.

AR technology can particularly enhance the 'try before you buy' digital experience for customers which helps retailers significantly reduce the rate of returns. Fifth, the growing prevalence of augmented reality in construction and architecture will also enhance the growth of the augmented reality industry. AR technology can be used to prepare a 3D model of a plan using mobile devices which helps architects in bridging the gap between imagination and reality.

Sixth, AR technology will transform indoor navigation. For instance, software development company MobiDev has already demonstrated indoor navigation using its ARcore platform by constructing an optimal route to the user's desired destination and demonstrating it on a mobile device. When it comes to outdoor navigation, AR technology can help tourists in searching for suitable accommodations and selecting sites and locations to visit with the help of AR-based virtual tours.

For instance, Hubs Hotels by Premier Inn has transmuted its rooms into a city map as part of the efforts to help customers in knowing about the tourist attractions near the hotel and other useful details. The growing adoption of AR technology in the travel and tourism industry will further drive the growth of the market for augmented reality.

Seventh, continued advances in AR technology and the growing adoption of this technology in consumer applications will drive the need for compatible AR chipsets. Companies, such as Qualcomm, AMD, and Intel, are responding to the situation and launching state-of-the-art AR-enabled chipsets. For instance, in May 2018, Qualcomm launched the Snapdragon XR1 chipset, which is dedicated to the "extended reality platform."

In December 2019, the company unveiled its 5G-enabled Snapdragon XR2 chipset for AR and VR hardware. Similarly, in July 2019, MediaTek, a fabless chipmaker based in Taiwan, launched the MTK i700 chipset for AR applications which is focused on Artificial Intelligence (AI) and the Internet-of-Things (IoT).

Eighth, spending on Head-Mounted Displays (or HMDs) and "smart glasses" will account for the largest share of augmented reality industry revenue over the coming decade, owing to the significant demand for HMDs and smart glasses in industrial and enterprise settings. In 2020, spending on HMD and smart glasses accounted for 65% of industry revenues.

The growing number of applications in industrial and enterprise settings, advances in OLED technology, and the growing availability of lightweight HMDs are expected to drive the growth of this segment. AR smart glasses require high computational power. So, the system is capable of processing the viewer's vision in real-time.

For instance, in July 2019, Nvidia showcased an AR wearable that features a Foveated AR, which can track the viewer's eye and offer an improved visual experience. Importantly, HMDs and smart glasses will also transform the supply chain by identifying new or optimal use cases in logistics and supply chain management.

Ninth, the handheld devices segment will register the highest CAGR of over 45.0% from 2021 to 2028 owing to the growing deployment of handheld devices in retail and e-commerce applications. The proliferation of smartphones and tablets and the continued integration of AR feature in to handheld devices is allowing companies to enhance the consumer experience and gain a competitive edge in the industry.

In retail, handheld devices can help customers in trying out in-store products before making a buying decision. Furthermore, aggressive deployment of AR across social media platforms is also driving the growth of the handheld devices segment. Not surprisingly companies such as Google and Apple are heavily capitalizing on AR technology, leveraging AR Core and AR Kit, respectively. For instance, in May 2019, Google introduced AR applications on its Pixel 3A as well as the older version of the smartphone.

Tenth, the Heads-Up Display (or HUD) segment will also witness considerable growth from 2021 to 2028 owing to the latest innovations in driver assistance systems. A HUD system allows a driver to concentrate on the road while simultaneously tracking vehicle data, such as warning signals, speed, and turning indicators on the windshield.

Many automotive electronics companies, such as WayRay, Visteon Corporation, and Continental, have also made a foray into the AR HUD market to tap the potential of immersive tools for better productivity and quality of work. In September 2020, BMW introduced an AR HUD device for prototype engineering and vehicle concepts. The company also introduced AR apps that offer a virtual experience of its cars.

Eleventh, the industrial and manufacturing application segment accounted for the largest revenue share of over 20.0% in 2020 and will maintain its lead from 2021 to 2028. AR helps industries in ensuring efficient operations by detecting glitches quickly, keeping all the processes going, and subsequently reducing manufacturing downtime. The deployment of AR in the aerospace and defense industry is still in its nascent stages; it is limited to assisting technicians in making appropriate decisions while carrying out manufacturing activities as well as reducing the time required to find the information for repairing a particular device or a weapon.

And, Twelfth, companies which successfully harness augmented reality will formulate solid answers to five indispensable strategic questions. 1) What is the range of AR opportunities in our industry and what is AR's potential impact on customers, product capabilities, and the value chain? 2) How will AR reinforce our company's product differentiation? 3) Where will AR have the greatest impact on cost reduction? 4) Should our company make AR design and deployment a core strength, or will outsourcing or partnering for this capability be sufficient? And 5) How will AR change communications with our stakeholders?

Every critical metric from revenue generation to employee productivity to quality control should be examined to determine whether existing or potential augmented reality capabilities can improve their performance. It's important to realize that with such a rapidly advancing technology, many applications which are not cost-effective when identified will generate an excellent rate of return by the time they are ready to roll-out.


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