Does Augmented Reality Have Broad Market Potential?

Every once in a while I get a
really interesting letter about the potential "game changing" business
applications of the super-hyped augmented reality "industry." I'm deeply
skeptical about AR's ability to change anything until comprehensive
standards are developed to define exactly what constitutes an "AR
product," but the article I received deserves closer review.

interesting article
comes straight from the tech blog Vision
Mobile. In the article, Andreas Constantinou, one of a new crop of
reporters looking at augmented reality, discusses the unique economies
created by augmented reality and virtual worlds with an eye towards the

But is Constantinou overly
optimistic about the transformative power of augmented reality?

From the Vision Mobile article:

What's interesting is when entire new economies emerge,
new systems for creating value and monetising from that value. I
would argue that in the last few years we have been witnessing the
creation of Augmented Economics, the economy formed by superimposing
value on top of our physical world. But let me take a step back to

Let's take a look at
the market potential of augmented reality services, both tethered to the
webcam and desktop computer model of today as well as some new
innovators hoping to bring augmented technology to new and interesting
areas of traditionally old-technology business.

Constantinou cites several
emerging providers of augmented reality services, including Facebook, "
platform that overlays virtual games and applications on top of the
people profile" and the new Google-map-using Monopoly City Streets
online game.

There's no arguing that augmented
reality like Facebook provides is immensely popular and profitable.
There is a market demand for information that is easy to access and
constantly updating. Just look at Google Labs. But is there a coming
wave of augmented reality technology that will find successful ways to
monetize the actions of its users?

We've looked at how hype related to augmented reality
could damage its eventual large-scale rollout
, and how virtual worlds are not yet the
global phenomena
touted by
some of the Metaverse's most ardent proselytizers. However, if augmented
reality continues to perform as it has in limited releases and can
eventually be expanded to serve a varitey of info-gathering and
organizational purposes, the virtual economy could take off.

Gauging the real value of the
virtual world can be tricky, as different statistics send mixed signals.
Compared to the broader real-world economy, virtual
worlds are booming
as more users spend real money for virtual
items. But this also assumes that virtual worlds will grow unabated over
the next several years when, in fact, there may be a distinct
saturation point that exuberance currently masks.

As Asia's
virtual worlds bring in over $5 billion in real-world revenue
, it's
tempting to consider virtual worlds an eventual contender to the
real-world economy. However, it's much more likely that virtual worlds
will serve as a smaller consumer economy where a few large developers
reap the benefit of developing immersive environments where users
happily convert money back and forth, much like Second Life.

Augmented Reality is even trickier to
judge, as its most recent launches have been small-scale iPhone
applications and publicity
blitzes on the cover of Esquire magazine
. There's not yet any real
way to tell whether a consumer is buying augmented reality programs
because of the augmented reality aspect, or for some other reason.

Gauging the commercial potential of
augmented reality will first require a widespread product release, much
like the iPod helped marketers understand the pervasive MP3 environment.
Unfortunately, until such a release emerges, speculation remains just

Expanding the Augmented

As I reported several months ago, the real potential for
a breakout in Augmented Reality technology comes when AR can break
itself from the constraints of the computer. Some pioneering AR
entrepreneurs are trying to do this by partnering with the music
industry, another part of the economy in dire need of some
clear-thinking innovation.

the augmented reality company Total Immersion is moving forward
with plans to bring augmented technology to the old field of music

Total Immersion will make
use of augmented reality's interplay with webcams to create an
interactive, eye-popping experience right on the back of the album. At
least, that's the plan. From Total Immersion's announcement:

held in front of a home webcam, the artwork shows 3-D images of
the band chatting to the viewer before giving an impromptu performance
of the hit new single ‘I Need You’, all within the palm of their hand.

can turn the sleeve artwork around to view the band from
alternative angles. The band members move as fluidly as they would if
they were physically standing on the piece of paper being held.

Total Immersion hopes that
bringing user involvement into the album buying process will lead to
increased sales and future contracts. There is some potential for
in-store webcam systems similar to the kiosks that allow potential
buyers to sample music from the album, but this is also a more
capital-intensive investment than the kiosks.

Whether or not the album
actually sells, Total Immersion makes the argument that consumers are
increasingly tech-savvy and demand more than a bland passive listening
experience. As we've shown in the past,
the rise of virtual worlds and
user-centric environments is making the passive consumer a thing of the
, and companies that
offer products with no frills or opportunities for user interaction are
finding consumer markets increasingly uninterested in boring products.

Building the Business of Augmented Reality

a successful business plan on the back of augmented reality might be
tricky. BusinessWeek and other mainstream news outlets are already
reporting that the
promises made by augmented reality hype masters may be more than the
technology can actually deliver
. Companies like Total Immersion may
see a field without heavy competition, but there are few major consumer
augmented reality companies for good reason.

On the micro level, small
developers have created innovative iPhone applications that make use of
augmented reality filters, but no one has been bold enough to try a
large-scale consumer product rollout. As BusinessWeek notes, dozens of
products feature "augmented reality" features regardless of whether they
actually use augmented technology.

Establishing standards could
be step
one in clearing the field for a widespread consumer move to augmented

Marketers will advertise even the slightest of augments as
reality," leaving consumers confused and bewildered. Consumers and
purveyors of augmented reality devices and applications might benefit
from input from an organization such as Underwriters Laboratories,
which tests products for safety and compliance with standards.

Launching a new industry is never easy, and there will be plenty of
corporate failures as new standards and best practices emerge. We turn
it over to the readers: When will augmented reality make its wide-scale

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