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Augmented Reality: It's Tough in Reality

BOSE is the latest company to withdraw from pursuing ambitions in the augmented reality sector. Other casualties include ODG and Daqri (acquired by Snap). Earlier, Atheer, a pioneer in augmented reality (AR), gave up ambitions to sell headsets, retrenching instead to offer software platforms that enable enterprise application development on other companies’ hardware.

A few years ago, I chatted with a former Atheer CEO. He said the overriding challenge in hardware was the optics. We at Counterpoint believe this continues to be one of the most difficult aspects of developing AR glasses and one that no one seems to have managed to crack yet. Magic Leap is the ‘poster child’ for the difficulty in making AR work. It was determined to develop its own, unique waveguide, but ended up consuming billions of dollars and almost going bust.

Unsurprisingly, the BOSE solution was based on audio rather than visual augmentation. Though a novel approach, it didn’t garner enough interest to make it commercially viable. And after key personnel left and the downturn caused by COVID-19 hit home, BOSE is withdrawing from the initiative. The concept was reasonable – using audio to enhance something someone is already doing. For example, navigating through a city or working out in the gym. But these can be accomplished just as well using regular hearables paired with a smartphone or smartwatch.

BOSE’s departure leaves very few players continuing to push ahead in consumer-orientated AR wearable devices. The one with the highest expectations is Apple. It is expected to announce something soon, but precisely when remains unclear. Tim Cook has spoken of the potential of AR many times, and some sort of eyewear has been in development for several years. But we suspect it’s the pesky optics that will be causing Apple the most headaches. The current most likely timeline points to an announcement in 2021 with the product becoming available the following year. The most likely format will be for the glasses to work in concert with an iPhone – the phone delivering computational power and potentially electrical power as well. The glasses will effectively act as an additional screen and house various sensors to enable surface detection, hand tracking and possibly object recognition, although this is computationally intensive. ARKit, which has been available for several years, will be the basis for application development for the glasses.

Chinese company Nreal, which was founded by people who left Magic Leap, is ahead of Apple but following a similar path, though in its case it is confining itself to the Android smartphone environment. Nreal glasses plug into compatible Android phones for power and computational resources.  This simple approach – using the glasses as a second screen for an existing device – is relatively modest in scope, but is the lowest-risk way forward. Nreal supports Unity and Unreal Engine for application development and is looking at both consumer and enterprise options.

Consumer AR remains challenging and we struggle to conceive of truly compelling applications that will overcome consumers’ reticence about wearing glasses – an extremely image altering addition. But in the enterprise, AR is already proving its worth. Applications supporting diverse sectors like field force, construction and healthcare are already benefiting from AR devices – companies such as Vuzix have been performing well here.

Microsoft continues to gently push ahead with Hololens. But the devices are not without challenge to use given their size, weight and somewhat delicate nature that is incompatible with construction sites, for example. This means many of the most widely deployed AR use cases continue to be through screen – that is holding up a tablet or smartphone to see the enhanced view via the device’s camera and mediating software.

AR and VR are often cited as technologies that will be revolutionized by 5G. We can support this idea conceptually, but the near term reality is much less exciting and continues to be a hard, slow slog for the remaining players in the game. The AR revolution is inching closer, but it may still be a few years before it’s a commercial reality.

Peter has 27 years experience in the mobile industry with extensive experience in market analysis and corporate development. Most recently Peter was Global Head of Market and Competitive Intelligence at Nokia. Here he headed a team responsible for analyzing and quantifying the industry. Prior to Nokia, Peter was an equity analyst at SoundView Technology Group. And before that he was VP and Chief Analyst of mobile and wireless research at Gartner. Peter’s early years in the industry were spent with NEC and Panasonic.

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