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“Wearables Wars” is AR Insider’s mini-series that examines how today’s wearables will pave the way and prime consumer markets for AR glasses. Each installment will profile a different tech leader’s moves and motivations in wearables. For more, subscribe to ARtillery PRO.
Common wisdom states that mobile AR is the forbear to smart glasses. Before the latter achieves consumer-friendly specs and price points, AR’s delivery system is the device we all have in our pockets. There, it can seed user demand for AR and get developers to start thinking spatially.
That’s still the case, but a less-discussed product class could have a greater impact in priming consumer markets for AR glasses: wearables. As we’ve examined, AR glasses’ cultural barriers could be lessened to some degree by conditioning consumers to sensors on their bodies.
Tech giants show signs of recognizing this, and are developing various flavors of wearables. Like in our ongoing “follow the money” exercise, they’re each building wearables strategies that support or future-proof core businesses where tens of billions in annual revenues are at stake.
For example, Apple’s wearables are seeing strong revenue growth and offsetting smartphone revenue deceleration in the near term. Long term, we could see a holistic suite of wearables — including glasses — replace the current suite of iThings at the center of our computing lives.
Skin in the Game
But what’s everyone else doing? After examining Amazon last week, it’s time to zero in on Microsoft. It recently entered the wearables race with the Surface Earbuds. In addition to standard audio fare like music and phone calls, they’ll integrate natively with Microsoft products like Office.
But as always, the first question is ‘why?’. It turns out that its motivations are similar to Amazon’s. After failing to market the Fire Phone years ago, Amazon now sees wearables as a way to gain a direct touchpoint with consumers in a growing category, while the smartphone market matures.
Microsoft had a similar fate in smartphone era. Though not hardware, Windows Mobile OS was its wedge into the smartphone stack as a revenue center and a way to position its apps (Office, etc.) in mobile workflows. Android came along as a free (loss-leader) alternative and won that game.
Now, just like Amazon, it wants to market a mobile accessory that leapfrogs the smartphone in getting a direct touchpoint to consumers. Leapfrog is the key term as wearables are a quickly growing category (just ask Apple) while smartphones are reaching saturation (just ask Apple).
Vertical Integration
So how do wireless earbuds better position Microsoft? Again, it’s similar to Amazon’s wearables play in having native tie-ins to Amazon’s eCommerce-driving software such as on-the-go Alexa interactions. That gets its Echo line of products out of the home where more commerce happens.
For Microsoft, the Surface Earbuds have native integration and frictionless pairing with Microsoft products such as Office apps. That may sound strange at first but could create natural and valuable interactions in enterprise contexts. Think: smart audio cues during presentations.
For example, using voice input and automatic Powerpoint pairing, you can forward slides using voice commands. Other compelling use cases include voice transcription in Word, or live language translation — a potential “audio AR” killer app that Google has already done with Pixel buds.
This also carries similar advantages to Apple’s vertical integration with AirPods. As AirPods users know, a chief benefit is automatic pairing, which can only be accomplished if you own the hardware and software stack (Airpod + iPhone + iOS). It’s classic Apple, but others are following.
Full-Stack Approach
Vertical integration isn’t new for Microsoft as its been moving in this direction with Surface laptops and other hardware. The Hololens in fact is a vertically-integrated play that utilizes Microsoft’s full-stack approach to AR with the OS (WMR), application layer and secure AR cloud (Azure).
Speaking of the Hololens, wearables like Surface Buds could play into Microsoft’s eventual AR play. Audio AR is an area we’ve examined as an alternate modality that augments experiences using the more-natural and less-obtrusive medium of sound instead of (or in addition to) visuals.
For Microsoft, the two could come together in ways that extend Hololens use cases. That would be a sort of horizontal integration of textured audio with graphical overlays. But as is one point of this series, those longer-term AR outcomes require the general wearables seeds being planted today.
The other point of this series is how wearables support the core businesses of the companies producing them (follow the money). For Microsoft, that’s enhancing Office products and enterprise productivity in the near term, while cultivating additional dimensions of its long term AR play.
We’ll be back with more breakdowns of tech giants developing wearables strategies. Next up: Google.
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Disclosure: AR Insider has no financial stake in the companies mentioned in this post, nor received payment for its production. Disclosure and ethics policy can be seen here.
Header image credit: Microsoft