Augmented Reality: the growth through smartphones and apps and the future for businesses

The battle for AR–Augmented Reality on mobile platforms has just begun and Mark Zuckerberg, at F8, left no mistake about Facebook’s strategy:

we are making the camera the first Augmented Reality platform”.

The phrase is not to be taken lightly, the big competitors from Apple to Google and including Tencent (the group that heads WeChat), Snap, Alibaba, Baidu, Samsung, Huawei, have certainly accelerated the race to secure a foothold in a very promising market, already estimated at 60 billion dollars by 2021 (Digi-Capital report).

However, Facebook and Apple will be the two giants to compete for the market. Apple, after Zuckerberg’s challenging words, didn’t waste any time and a couple of weeks ago announced, through Tim Cook in person, the availability of the ARkit for iOS by presenting it as “the largest AR platform in the world that brings Augmented Reality to a higher level”.

The final conflict will be played out on software (for mobile)

If two big players like Facebook and Apple are investing economic resources, skills and time to propose solutions and services capable of capturing people’s interest, we can not ignore the fact that the phenomenon will become more and more relevant and the hardest battle will be regarding software.

While on the hardware front Apple has to battle with Samsung and Huawei for a market that could secure 400 million users in the next 4–5 years, on software the gaming market will instead be challenged by big players: Apple has, in fact, rivals like Facebook, Tencent, and Snap that could bring AR’s mobile apps to an established base 4 times larger than that of the hardware with hundreds of millions, if not billions, of users by 2021.

Just imagine Facebook’s AR being made available to over 1.2 billion active users each month on Messenger and WhatsApp, respectively, and over 700 million on Instagram. Even if all of these users do not immediately use the new features (it took 4 years to convince half of Instagram’s users to use Direct), it is undeniable that the fan base growth potential is very high.

We do not underestimate Apple, and their ability to convert almost all iPhone users to new software in less than a year. The ARkit rollout could be very convincing and also be the element that pushes the sale of new iPhones, offering Apple a new life-blood to mark the step also on the hardware front.

Great surprises for those who understand how to do business in a new way

Augmented Reality has come to the attention of the general public thanks to the wide visibility that the app for the Pokémon Go game gained globally, sparking criticism and controversy among the less experienced. However, the potential of AR will increasingly be expressed in business areas far from gaming.

80% of Mobile AR’s revenue will come from sectors that have nothing to do with gaming 
(but that thanks to Pokémon Go can now turn to a “ready-made” audience)

The areas where we will see the most promising solutions flourish will be:

  • Mobile network data;
  • eCommerce sales;
  • Advertising;
  • App consumer (non-game);
  • mobile app B2B (mainly devoted to sales).

Mobile network data

Peaks in data network usage will be one of the primary consequences of AR’s mobile app growth. The data tsunami to come will allow the cloud and virtualization market to flourish (mainly for networks and storage) but will offer Telco and Service Providers new business opportunities, perhaps focusing on premium services.

eCommerce

One of the most promising is the area of eCommerce that could find new services in AR, not so much for in-app sales, but for improving the buying experience, which results in greater loyalty. It will be possible to:

  • show via mobile AR an item of clothing, laptops or even a car, allowing the user to see how it is made, how it works, how it drives;
  • enter the item you intend to purchase in an environmental context (for example by choosing a garment and superimposing it onto a person’s figure directly in the mirror or verifying that the furniture we intend to buy is the correct fit for our home and so on).

Regarding commerce, augmented reality blended with virtual reality and the physical store experience opens new scenarios for the Retail market, today one of the liveliest and one that is, precisely on these technologies, investing most.

In many car showrooms, you can already try driving a vehicle with an immersive and engaging Mixed Reality experience that in many cases the user will also find in the car itself that they purchase — increasingly connected and augmented.

Advertising

If we think of scenarios like this, the imagination on the Advertising front cannot help but race ahead. New native advertising formats are already emerging, exploiting both the medium (AR mobile apps) and the data generated by its use for communication campaigns, promotions, engagement, and user relationships. In this area, Google will probably offer greater opportunities for businesses, thanks to its extensive database of maps and geo-localization.

Mobile AR as the undisputed domain of AR and VR

What appears to be almost certain, looking at market forecasts and letting loose the genius of creativity on possible business applications, is that the Mobile AR component, accelerated by smartphones and mobile app kits, will be predominant across the AR and VR market in general.

Some barriers still need to be overcome:

  • the availability of devices that can provide a “view” of superior quality (well beyond Pokémon Go that is), perhaps that “hook” easily onto a smartphone;
  • the life of smartphone batteries;
  • mobile connectivity (and relative costs);
  • the app ecosystem.

The proposals with which Facebook and Apple are forcing the market have marked the point of no return that puts companies in the face of difficult choices but at the same time increasingly expand the opportunities for innovation through which to develop new services and to conquer an ever larger slice of customers and users.

We are already experimenting with the ARKit released by Apple on different mobile projects that will be moving forward in the coming months. If you are interested in a mobile AR consultancy, contact us to evaluate the potential and the opportunities for your business.

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