Augmented Reality is the Ultimate Platform

At Presence Capital we’re focused on investing in both Virtual Reality (VR) and Augmented Reality (AR). I wanted to share thoughts on why we included AR alongside VR.

We believe that once we have fully immersive Augmented Reality there will not be a need for another visual computing platform. Anything you could want to display or user interaction you hope to enable will be possible virtually in AR.

Let’s first define Augmented Reality in practical terms. AR is using a computer to change information and what you see within the real world. This can be represented in a variety of forms: as text, 3D objects and characters, virtual screens, and so on. Further, fully immersive AR has the ability to seamlessly display information to any part of your vision. The focus of this post will be on fully immersive AR.

Currently, every screen including your television, smartphone, and laptop is visible in your field-of-vision as a physical object. Since a fully immersive AR device can display any type of image in your field-of-vision, it is also capable of virtually displaying other screens. Once these AR devices exist there is no longer a need for physical screens in most scenarios:

  • Mapping: Your smartphone has Google Maps with driving directions? Render the directions on the actual street in front of you as a glowing blue line with personalized animated golden arrows when you need to turn or take an exit.
  • Meetings: Need a tablet with notes in front of you? Simulate one in augmented reality.
  • Live TV: Trying to see the TV screen displaying a sports game at the bar? Position your own virtual screen wherever you want and display whatever game you want.
  • Translation: AR can also replace information in the real world so it is localized to you. Our portfolio company, Waygo, automatically translates Asian languages like Chinese and Japanese into English. Imagine visiting Chinatown with your AR glasses on and seeing all of the signs in English. Remove your glasses and they return to Chinese.

The transition from smartphone to AR apps is straightforward as well: allow bringing up a virtual smartphone or tablet running existing mobile software in an AR environment until developers start to build AR-native applications. Samsung already enables this in GearVR by letting users view webpages like YouTube and Facebook using their VR web browser. Neither of those apps have VR-native versions yet.

By virtualizing screens, AR will be a super set of all other vision-based computing platforms. AR can also replicate VR by blacking out the real-world and displaying only virtual content.

AR’s potential to virtualize existing computing devices has a few implications for today’s technology companies:

  1. Smartphone platforms have to get into the AR business. Consumer-ready AR devices will supplant smartphones. Google is already investing in this area via Google Glass and Magic Leap. I predict we will also see Apple enter the AR market eventually due to the potential threat to their iOS business.
  2. Computer vision becomes more and more important. The power of AR is unlocked when computers understand the world around you. Thus, The best computer vision technology will be able to provide a superior user experience. Google is currently in the best position here with their DeepMind tech and use of Google Photos as a way of building the world’s largest training image data set.
  3. It will be a while before we see consumer AR. Form factor and usability will need to significantly improve before the average person is willing to strap something to their head. Alternatively, businesses will overlook AR’s limitations if AR glasses enable 10x productivity. So expect B2B applications to be the first adopters of AR. This is Microsoft’s focus for the HoloLens.
  4. 3D engines like Unity and Unreal become increasingly more valuable as we shift from 2D to 3D as the primary way of displaying information. Even if content is 2D, like a webpage, that content is still displayed in 3D in order to “place” it in the real world. Almost all VR and AR developers today are building on Unity or Unreal due to the comprehensive tool-chain provided. There will likely be more entrants to the 3D engine market.
  5. It’s unconfirmed but likely that the OS that will power AR will be an extension of existing smartphone OSes. They are already optimized for low power consumption and portability. New APIs and frameworks will likely be added to aide developers with computer vision processing. Companies looking to lead the future in AR should focus on solving the hardware or computer vision challenges. A common-sense strategy is to prototype AR software first on smartphones so it can be quickly ported to AR headsets at launch.

On timing, this technology is a couple years away because there are still multiple hardware and software technical barriers before fully immersive AR exists. This presents opportunities for technology companies in this space.

Several AR hardware attempts were released in the past few years:

  • Smartphone apps displaying a live feed from your camera altered in some manner. For example, adding animated virtual characters to a physical board game.
  • Google Glass added a small glass display to the corner of your vision.
  • Other solutions tried to take VR goggles and enable AR by adding external-facing cameras.
Hyundai’s AR owner’s manual is based on smartphone AR technology

There are numerous issues with these solutions: display quality, handling user input, and integrating seamlessly with the real-world. These technological challenges have so far prevented the creation of fully immersive AR.

Even given these setbacks, we still think this is a great time to start building and investing in AR startups. In 2015, Magic Leap and Microsoft’s HoloLens began to address AR’s limitations. At CES 2016 multiple new AR headsets launched with a variety of improvements. Recent advances in machine learning, computer vision, and display hardware have made mass-market AR closer than ever.

Magic Leap demonstrating higher resolution rendering and seamless integration with real-world objects.

Augmented Reality is poised to evolve how we interact with computers in a way as meaningful as the smartphone. AR can become the ultimate platform by merging computers with the real world and by virtualizing all other computing devices. We’re excited to be a part of this future and to back entrepreneurs driven by the same vision.