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R’s traction over the past few years has occurred mostly through the smartphone camera. As our research arm ARtillery Intelligence quantified in its mobile AR revenue forecast, this early AR modality has reached scale by piggy-backing on a ubiquitous device we all carry.
But that scale has a tradeoff. Mobile AR’s quantitative benefits come with qualitative detriments. Though AR enjoys mobile’s sheer reach, smartphones aren’t the technology’s optimal vessel. There, AR is overshadowed by other established and primary smartphone activities.
Beyond taking a back seat to other mobile use cases, AR’s use on smartphones can be awkward and un-ergonomic. Arm fatigue sets in through the act of holding one’s phone up for long periods to experience line-of-sight graphical overlays. This keeps session lengths relatively short.
At the same time, AR glasses aren’t ready for prime time. At one end of the spectrum is hardware that’s graphically compelling but stylistically untenable (think: Hololens). At the other end is hardware that’s sleek but underwhelming in graphical intensity (think: North Focals).
What will it take to get over that hump? Will Apple’s rumored glasses accelerate things? And how many years will this process take? ARtillery tackles these questions in its report, Smart Glasses, the Road to AR’s Holy Grail, which is excerpted below for AR Insider readers.
Evolutionary Step
Though AR’s attention and scale have erstwhile resided on the smartphone, its fully actualized form will eventually arrive in glasses form. This is the AR modality that will unlock its true potential, given that use cases will be more intuitive and positioned in users’ line of sight.
To be fair, we don’t mean to downplay the commercial success seen so far in mobile AR. It will eventually be dwarfed by the value created by AR glasses, but there have been respectable wins in the meantime for smartphone-based AR, such as Snap’s AR lenses.
After accomplishing deep and frequent user engagement levels, Snap has attracted brand advertisers that want to expose their products and messaging with the same degree of immersive depth. ARtillery projects spending on AR ad placements to reach $6.8 billion by 2025.
But even Snap admits that mobile AR is an evolutionary step on the path to AR glasses. This is why it simultaneously fuels mobile AR lens initiatives and wearable hardware. Snap’s Spectacles mostly represent an R&D effort to get a feel for the social dynamics of wearable tech.
“We believe that in order to envision this future of computing overlaid on the world, you really need to take the screen away that’s cutting you off from the actual physical world, which the mobile phone does,” Snap’s Carolina Arguelles said at the AWE Europe conference. “Our investment in Spectacles is because we want to test, iterate, and understand what it means to interact with cameras when they’re on your face. We want to know what good content is….How people interact with it….What they like….What should the UX be? “
Growth Curve
AR glasses have arrived if you consider enterprise deployments, where stylistic drawbacks aren’t as much of an issue as in consumer markets. Form-factor issues still exist, such as comfort and heat, but these drawbacks are forgiven when sizeable ROI gains are at play.
For these reasons, enterprise spending dominates AR glasses. However, spending shares could eventually flip as AR glasses get sleeker and more commercially viable. Consumer markets are generally bigger than enterprise markets though the latter sometimes leads in early-stage tech.
To quantify that, ARtillery Intelligence projects AR glasses spending to grow from $822 million last year to $13.4 billion in 2024. Enterprise spending is 98 percent of that total, but will retract to 90 percent by 2024, and continue to decline until the consumer growth curve intersects.
But that will take several years to happen, not just due to requisite technical advancements, but also AR glasses social acceptance. As seen from Google Glass’ early fails, cultural acceptance and comfort levels for face-worn hardware (with a camera, no less) is an uphill climb.
Mark Zuckerberg and Evan Speigel have each projected AR glasses’ endpoints to take up to 10 years. But there are also glimmers of hope. History tells us that if anyone can accomplish that feat of mainstreaming emerging tech – or at least catalyze the process – it’s probably Apple.
Wild Card
Apple’s track record in mainstreaming emerging tech – also known as its “halo effect” – is the reason why you likely hear so much chatter about its rumored smart-glasses. The stakes are high for the AR industry, as Apple’s eventual moves could make or break its near-term traction.
But the question is, what’s Apple’s strategy? And what will its AR glasses be and do? Starting with the former, Apple’s AR glasses strategy is driven by similar factors as its wearables play: to future proof its core hardware business in the face of decelerating iPhone revenue.
Apple AR glasses could accomplish this by both propping up and succeeding the aging iPhone. The former happens as it creates reliance on the iPhone for local compute. In other words, the iPhone gains importance – and user incentive to upgrade – if it powers your smart glasses.
An iPhone succession plan is meanwhile accomplished through a suite of wearables that replaces the collection of iThings that orbit our computing lives. That could mean line-of-sight AR graphics that accompany spatial audio from AirPods PRO, and biometrics from Apple Watch.
This fits Apple’s signature multi-device ecosystem play: The whole is greater than the sum of its parts, thereby driving multi-device use. In this way, AR glasses will be a key puzzle piece in Apple’s future road map. Like the iPhone, they’ll start slow, then scale up rapidly.
We’ll pause there and circle back in the next report installment to go deeper on what Apple’s AR glasses could be and do…
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