The AR Show: XR’s Killer App is ROI

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Folks in spatial computing come from all kinds of interesting places and backgrounds. That’s the fun in early-stage sectors that are being shaped by the people and technologies that inhabit them. This principle is embodied in former DJ and current XR influencer/executive Alan Smithson.

As he discusses with Jason McDowall on The AR Show, a background combining business, education and entertainment shaped his path to XR and primed him as a thought leader. He now runs MetaVRse as well as the XR Ignite accelerator and the XR for Business podcast.

But that path really inflected when he experienced VR for the first time at Eric Shmidt’s annual Curiosity Camp. There, none other than Chris Milk administered Smithson’s first taste of VR. As it sometimes goes with gateway drugs like first-time immersive experiences, he was hooked.

“That second I tried VR, I was like ‘that’s what I’m doing next’,” he told McDowall. “‘I don’t even know what this magic is, but I want it.'”

 

What came next was dabbling in nearly all aspects of VR — everything from 360 video of boat raves to enterprise implementations. And through all this cross-training, Smithson discovered early what it took the rest of us a while to realize: enterprise is the here-and-now XR opportunity.

“Back in 2015 and 2016, headsets came online… and ‘everybody’s gonna get rich on VR.’ I was like, ‘This is not going to be a one-year, two-year, three-year thing. This is going to be a ten-year thing.” And so I looked at it as, businesses can leverage this technology much faster and more efficiently than individuals… an individual may use their VR headset once per month. But in a company, that headset can be used once an hour to train people. So we took a business-first approach, and we’re up to like 60 projects in everything from AR to VR. That broad approach has really given us a fantastic understanding of the entire ecosystem.”

Specifically, MetaVRse focuses on two areas where Smithson has seen the most impact: training and marketing & sales. Training has the most tangible financial benefits for all the reasons mentioned in a previous episode with Derek Belch, such as reducing cost and boosting efficacy.

“We’re seeing between 50 and 75 percent decreases in training times, and increases in retention rates across the board… [It’s] saving $millions in travel instantly. These are not immaterial numbers… it’s easy to sell an executive on saving $millions.”

VR also resonates with enterprises for marketing & sales because they can demonstrate products in more streamlined ways. Equipment manufacturers for example can show up at trade shows with a few headsets instead of shipping giant tractors. In all cases, it boils down to ROI.

“My business partner made it very clear. He said, ‘The killer app for XR is ROI.’ If you can show that you’re saving or making a company money, that’s the only thing that really moves the needle… Your sales team can take [VR] rather than fly your customers [in]. Or even worse, fly that machine to a trade show. People do that all the time… you could put that in virtual reality for a fraction of the cost. The ROI that we’re seeing is anywhere between 20 to 50 percent improvements across the board.”

The ROI story is also playing out in consumer contexts, or what we’ve started to call B2B2C. That’s all about implementing XR for companies who use it to engage their customers. Smithson cites Macy’s who’s seen more sales and fewer returns with in-store VR furniture visualization.

“You can see what your furniture would look like in your own space. So you step up to an iPad and design the room… then you go in VR, and start furnishing your room… They’re seeing on average across 110 stores a 45 percent increase in purchase size. The industry average for furniture returns… a really expensive endeavor…  is 5 to 7 percent. Macy’s is decreasing that to less than 2 percent. One more thing that makes this even sweeter: A normal furniture store in Macy’s takes up a couple of thousand square feet and cost about half a $million to build. VR takes up 500 square feet and costs less than $50,000 to build.”

This attention to ROI also applies to Smithson’s biggest passion which is to revolutionize and modernize education. XR has a key role given capacity for visual learning. But it’s also about structural transformation to customize curriculum around life goals versus traditional rote learning.

“So if you can decrease training times by 70 percent in a corporation, what do you think we can do with kids’ education?… Netflix uses AI algorithms to give you better movies to watch. Why aren’t we using the same technology to give kids better education and better learning?” 

As for what comes next, Smithson believes that for all of the above visions to be realized on a more ubiquitous scale, XR people have to get out of the industry bubble and sell it to real people. It otherwise becomes an echo chamber which doesn’t advance AR’s mass-market penetration.

He also has thoughts on everyone’s AR favorite topic: Apple glasses. Aligned with our recent analysis, Smithson doesn’t believe rumors that the glasses have been canceled. He also doesn’t believe it fits Apple’s M.O. nor the status of the underlying technology to expect a 2020 release.

“I think they’re full tilt on AR and they will come up with glasses. And I also disagree with the timelines that most people put on these things. Most people thought we’re going to have AR glasses by 2020. My guess is Apple will announce in 2021 and release in 2022. And they’ll be glasses that have limited functionality, but very cool… Apple has a history of taking their time and then getting it right… Nreal glasses… Magic Leap… HoloLens… these are wonderful devices but there’s no way they’re even close to being ready for consumer adoption. Consumer glasses need to be as light as the North glasses, as powerful as HoloLens, run on the cloud, be powered by your phone wirelessly, be fully secure and have applications that are useful.”