Intelligence Briefings Archives - Page 8 of 9

August 12, 2019June 11, 2022

Augmented reality’s (AR) definition continues to evolve. Though considered by most to be a graphical format that overlays imagery on the physical world, there’s an emerging sentiment that AR’s definition is too narrow. As the technology grows into its own skin, it’s expanding into alternate forms of “augmentation.”

Chief among them is the emerging area that ARtillery Intelligence calls “audio AR.” It involves AR’s signature overlays… but audible rather than graphical. It can inform users and augment their experiences through audio cues, which are advantaged by subtlety and reduced hardware friction.

In fact, the foundation for this opportunity happens through already-pervasive “hearables” such as Apple AirPods. The popular device sold 25 million units in 2018, which ARtillery Intelligence projects to grow to just over 100 million by 2023. This is the first step to an audio AR future.

The second step is content and apps that developers build on that hardware base. Apple is motivated to make this happen, as audio AR is one component – along with Watch and glasses – of a prospective wearables suite that ARtillery Intelligence believes will be central to the succession plan of a maturing iPhone.

Meanwhile, the BoseAR platform already provides developers a place to build audio AR apps and experiences. This should accelerate audio AR as developers are incentivized by distribution scale from Bose’ hardware base. It’s on pace for one million audio-AR enabled devices by year-end.

Developers are already jumping on this opportunity with audio AR apps that feature guided audio tours, espionage games or fitness management. Going beyond just audio cues, these apps tap into the IMU sensor bundle in BoseAR hardware to sense precise head movement as inputs.

AR’s expansion into new modalities and definitions doesn’t end with audible content. Other key signals and inputs are developing, such as location. In fact, one of the most popular forms of AR to date utilizes device location as a key input to inform and influence user experience: Pokemon Go.

Niantic AR lead Ross Finman likes to say “the real world is the content.” Rather than taking a secondary role to graphical overlays, the real world should be a primary component in AR experience creation, similar to how location is a key input that dynamically alters Pokémon Go play.

In what other ways is AR expanding into new modalities and definitions? We unpack this concept in the following pages, including examples, case studies, exclusive interviews, and original data. The goal, as always, is to inform and empower you with a greater knowledge position.

Industrial AR: Benefits & Barriers

July 6, 2019June 11, 2022

One of augmented reality’s (AR) proposed beneficiaries is the enterprise. That can take many forms including data visualization in corporate settings, or software to create customer-facing AR experiences for brands. Impact will also occur through AR visualization in industrial settings.

The latter includes things like assembly and maintenance in manufacturing facilities. The idea is that AR’s line-of-sight visualization can guide front-line workers. Compared to the “mental mapping” they otherwise do with 2D instructions, line-of-sight support makes them more productive.

This plays out in a few ways including speed, effectiveness, error reduction and safety. These micro efficiencies can add up to worthwhile bottom-line impact in large-scale operations. Macro benefits meanwhile include lower strain and turnover, leading to higher morale and institutional knowledge.

These benefits were examined in ARtillery Intelligence’s February 2018 report, Enterprise XR: Impacting the Bottom Line. But since that analysis, we’ve tracked several growing challenges to AR’s viability and implementation in industrial operations. The picture may not be as rosy as we all thought.

For example, though all of the advantages outlined above are valid, it’s challenging to get to the point of realizing them. Practical and logistical barriers stand in the way such as organizational inertia, politics, change management and fear of new technology among key stakeholders.

The biggest symptom of these stumbling blocks is the dreaded “pilot purgatory.” As its name suggests, and as you may have heard in AR industry narratives, this is when AR is adopted at the pilot stage, but never progresses to full deployment. It’s the biggest pain point in industrial AR today.

In a recent analysis with Re’Flekt, ARtillery Intelligence identified the sources and solution areas for these challenges: the “Three P’s.” Comprising People, Product & Process, they’re the top areas where effective AR implementation strategies should focus in order to avoid pilot purgatory.

For product, it’s all about addressing real operational pain points, uncovered through ground-level research. For people, it’s about customizing AR’s ROI story to individuals at all levels of the organization. For process, it’s about multi-disciplinary prototyping rather than top-down innovation.

We’ll go deeper on all of these in the coming pages, including demonstrable case studies. We’ll examine industrial AR’s benefits and barriers. This entails everything from product planning to internal communications refinement. The name of the game is to set up industrial AR to succeed.

AR Global Revenue Forecast, 2018-2023

June 10, 2019May 13, 2024

The augmented reality sector continues to show early-stage characteristics, including volatile levels of interest and investment. But how big is it now, and how big will it get? ARtillery Intelligence has quantified its revenue position and outlook, resulting in our latest forecast. This is the fourth wave of ARtillery’s AR revenue forecast.

Built from daily market coverage, insider interviews and market-sizing experience from 15 years of analyst work (see methodology section), ARtillery Intelligence has devised a disciplined and independent market-sizing process. The analysis is segmented into revenue categories such as consumer, enterprise and sub-divisions of each.

So what did we find out? At a high level, ARtillery Intelligence’s position on AR revenue growth is best characterized as cautiously optimistic. Growth and scale will come, but likely slower than many industry proponents believe, due partly to the pace of adoption and other signals that ARtillery Intelligence – and its sister publication AR Insider — tracks.

In fact, you may notice that AR revenue projections in outer years are lower than other firms’ figures. They’re also notably lower than our past estimates, as we adjust to market signals. This is common in market forecasting, as proficient market watchers perpetually course-correct based on dynamic market conditions and variables.

The following pages quantify and project figures within several revenue categories, as well as hardware unit growth. Bulleted insights are included throughout to qualify the revenue drivers and rationale behind the numbers. And further narrative insights can be found in ARtillery Intelligence’s monthly reports, which can be accessed in the PRO library.

The goal, as always, is to empower you with a knowledge position.

VR Usage and Consumer Attitudes, Wave 3

April 8, 2019May 13, 2024

How do consumers feel about VR? Who’s using it? What devices and apps do they prefer? And what do they want to see next? Perhaps more important, what are non-users’ reasons for disinterest? And how can VR software developers and hardware players optimize product strategies accordingly?

These are key questions at VR’s early stages that we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be presented to more than 3,100 U.S. adults in Thrive’s established consumer survey engine. And we’ve analyzed the results in a narrative report.

This follows similar reports we’ve completed over the last two years. Wave III of the research now emboldens our perspective and brings new insights and trend data to light. All three waves represent a collective base of 7,065 U.S. adults for a robust longitudinal analysis. This will continue to improve.

Meanwhile, what did we find out? At a high level, 16 percent of consumers surveyed have bought or used a VR headset, up from 11 percent in 2018. More importantly, VR users indicate high levels of satisfaction with the experience: 67 percent reported extreme or moderate satisfaction with VR.

As for price sensitivity, demand seems to inflect at $400 and $200. These are interestingly the price points for Oculus headsets including Quest, Rift S and GO. This indicates Oculus’ competitive edge aggressive price competition and accelerating market share, congruent with our separate projections.

Furthermore standalone VR – embodied by Oculus Quest, Go and other emerging headsets – represents a key inflection point for VR this year. Though still early (this survey was fielded before Quest’s market launch), standalone VR addresses many consumer objections evident in this survey.

However, it’s not all good news: Non-VR users report relatively low interest in VR ownership – 27 percent, down from 31 percent in 2018 – and explicit lack of interest. This downward trend in interest is concerning for VR but isn’t surprising given the dip in excitement we’ve anecdotally observed.

Moreover, the disparity between current-user satisfaction and non-user disinterest underscores a key challenge for VR: you have to “see it to believe it.” In order to reach high satisfaction levels, VR has to first be tried. This presents marketing and logistical challenges for the industry to push that first taste.

The same challenge was evident in our corresponding AR report, but mobile AR’s adoption barriers are lower. This is nonetheless a common challenge for immersive technologies. It will take time, acclimation and price reductions before they reach a more meaningful share of the consumer public.

These points join several other strategic implications that flow from latest consumer VR sentiments. We’ll examine those takeaways in the coming pages, including the latest wave of findings, and our narrative analysis for what it means. The goal is to empower you with a greater knowledge position.to date now represent a cumulative base of 7,065 U.S. adults, enabling robust longitudinal analysis.

These survey results are a telling snapshot of VR adoption, which we’ll detail in the coming pages. That will include charts and a narrative story arc that unpacks strategic takeaways, and our outlook for consumer VR. But before we take that deeper dive, here’s a highlight reel of survey findings.

Mobile AR Usage and Consumer Attitudes, Wave 2

February 11, 2019June 11, 2022

How do consumers feel about mobile AR? Who’s using it? How often? And what do they want to see next? Perhaps more importantly, what are non-users’ reasons for disinterest? And how can app developers and anyone else building mobile AR apps optimize product strategies accordingly?

These are the questions we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be presented to more than 3000 U.S. adults in Thrive’s established consumer survey engine. The results are in and we’ve analyzed the takeaways in a narrative report.

This follows the last few months’ ARtillery Intelligence Briefings, which examined social and commerce-based AR. Now, a deeper view into real consumer usage and attitudes validates those narratives while providing new dimension on mobile AR strategies and opportunity spotting.

As for the findings, mobile AR usage is up to 22 percent of the U.S. population. These users are mostly experiencing mobile AR through apps, such as those built on ARkit and ARCore. But we see trending towards lower-friction experiences such as “AR-as-a-feature” and web AR.

Mobile AR users also appear active and engaged across the board, with more than half reporting that they use mobile AR at least weekly. The top app category is gaming, which we attribute to Pokémon Go’s popularity. But other key categories, such as Social AR and visual search, are on the rise.

Mobile AR users also indicated high levels of satisfaction with the experience. But beyond these and a few other positive signals, there are some negative signs and areas for improvement. For example, non-mobile AR users report low likelihood of adopting soon, and an explicit lack of interest.

This disparity between current-user satisfaction and non-user disinterest continues to underscore a key challenge for AR: you have to “see it to believe it.” In order to reach high satisfaction levels, apps have to first be tried. This presents marketing and logistical challenges to push that “first taste.”

Put another way, AR’s highly visual and immersive format is a double-edged sword. It can create strong affinities and high engagement levels. But the visceral nature of its experience can’t be communicated to prospective users with traditional marketing such as ad copy or even video.

The same challenge was uncovered in our corresponding VR report last July (we’ll publish the second wave in Q3). This makes it a common challenge with immersive media like AR and VR. It will take time and acclimation before they reach a more meaningful share of the consumer public.

Meanwhile, there are strategies to accelerate that process, and to build AR apps that align with consumers’ current standards. In the coming pages, we’ll examine those strategies and unpack the full set of survey results. This is meant to empower readers with a greater knowledge position.

Social AR: Spatial Computing’s Network Effect, Parts I, II & III

January 7, 2019June 11, 2022

One of the biggest questions nagging the Augmented Reality (AR) sector is, what will be its killer app? And when will it arrive? The medium needs such an accelerant to legitimize and bring AR into mainstream acceptance – something it’s failed to do in the 18-months since Apple’s ARkit launch.

We’ve speculated in past Intelligence Briefings that killer apps will likely extend beyond the novel and “sexy” attributes that have thus far driven the industry’s speculation, imagination and design principles (e.g. games). It will rather be something more mundane that provides all-day utility, like visual search.

But another category will also vie for the position of AR killer app: social. Indeed, you could argue that a social AR killer app has already arrived and accelerated mass acceptance: social lenses. We see these as an important AR “gateway drug,” but only a glimpse into social AR’s true potential.

One thing missing from social AR lenses – though quite popular through Snapchat and Facebook – is meaningful social interaction. More “augmented media” than augmented reality, they’re created in isolation then shared with friends to be consumed asynchronously at a different time or place.

But true social AR will combine this time/place-shifted paradigm – which will still be valuable to achieve scale — with synchronous AR. This will rely on technically complex multi-player functionality, a key tenet of the AR cloud. But when it arrives, it will unlock new possibilities and use cases.

Moreover, the multi-player use case inherently accelerates usage and adoption through viral growth. It also has the potential to benefit from the fundamentals of network effect. With each node (user) added to shared AR experiences, the value and appeal of those experiences can grow exponentially.

Beyond the multiplayer angle, augmentation is generally a natural fit for social interaction. Extending from social lenses (face filters, etc.), next-generation graphical overlays will include real-time layers of information that people choose to share with others through live AR overlays as they walk around.

These shared titbits could be everything from mood to relationship status to stylistic accouterments. The latter opens the door for business models around the exchange of virtual style items. This builds on the concept of marketplaces for digital identity, manifesting today in communities like Fortnight.

Speaking of which, one construct for socially-oriented AR is – as Ubiquity 6 CEO Anjney Midha puts it – “an MMO for the real world.” This envisions layers of virtual worlds all around us which can be dynamically activated by users through AR interfaces, while managed and permissioned by creators.

But questions remain. Who will build this? What will the ecosystem consist of? Will there be open platforms for developers to create shared spatial experiences? We’ll tackle these questions in this three-part report (totaling 85 pages), including narrative analysis, original data, exclusive company interviews, and case studies.

AR Commerce: Monetization Comes Into View

December 10, 2018June 11, 2022

There are several forms of monetization that will develop for augmented reality (AR). In past reports, we’ve examined opportunities for its role in advertising (consumer-facing) and industrial productivity (enterprise-facing). The ROI case continues to strengthen in these and other AR applications.

One particularly promising area of AR will be its role in influencing and fulfilling consumer purchases. Extending from (but different than) AR advertising, AR commerce involves graphical overlays that inform consumers and demonstrate product attributes in physical retail or e-commerce contexts.

For example, AR-pioneering retailers like Walmart let consumers activate product details in store aisles by pointing their smartphones at those items. Employing computer vision and object recognition from product databases, this empowers shoppers and breeds customer loyalty.

Tech giants like Google and Amazon have done similar. By pointing your phone at items in the real world, informational overlays can be triggered to contextualize items. Moreover, transactional calls to action are included to capture consumers’ wallets during these high-intent “visual-searches.”

This makes AR commerce a key part of the future of these tech giants’ user experiences – mapping closely to their core businesses in areas like search and e-commerce. It therefore holds a great deal of priority and investment – both of which will accelerate this sub-sector of AR in the near term.

Beyond visual search (pointing your phone at items to contextualize or buy), AR commerce can work in the reverse manner. In other words, “product visualization” is a key AR commerce modality in which consumers can digitally place 3D product mockups in their surroundings to see how/if they fit.

As you can imagine, this use case maps particularly well to home goods, or large and bulky items that require a more informed purchase in terms of fit and style. For that reason, furniture players like Wayfair and IKEA have invested in such AR features, as have auto manufacturers like BMW.

Add all of these factors together and AR commerce will be one of the most tangible and revenue-generating “flavors” of AR that develop in the near term. ARtillery Intelligence projects that $6.1 billion in annual transaction value (value of goods purchased) will flow through AR interfaces by 2022.

Beyond near-term benefits and monetization, mobile AR commerce developments will also serve a longer-term end: AR glasses. The tactics, business models and consumer acclimation that happen around smartphones will seed next decade’s glasses-based AR commerce – the real endgame.

XR 2018 Lessons, 2019 Outlook

November 12, 2018June 11, 2022

2018 was a reflective year for XR. After an exuberant 2016, followed by a corrective 2017, XR industries settled into a moderate pace. This includes reset expectations on the size and timing of AR & VR markets, as well as an overall acceptance that 2016’s aspirations will take longer to materialize.

But we saw deep-pocketed tech giants charge ahead with XR. With strong contention that XR represents the next computing shift, they’re investing in the future of their platforms by gaining early market share and technological edge. And they’re each attacking XR from different angles.

Apple is investing in AR to fertilize the ground for the future of its hardware business: AR glasses. Google is cultivating visual search, a close cousin of AR, as a future search modality. Amazon is embracing AR to boost e-commerce, and Facebook is spending billions to position a VR powerhouse.

Despite XR market softness, it was these moves from tech giants that provided confidence in 2018 for the eventual market arrival. Indeed, there’s no bigger vote of confidence in a technology and a market than billions of dollars in long-term bets. We believe this will continue into 2019.

One of those key investments will be Facebook’s continued subsidization of VR headsets, through aggressive price competition. It’s executing a classic loss-leader approach to gain early market share and build up the installed base of Oculus headsets. This is already accelerating consumer adoption.

We also learned important lessons in 2018 about AR adoption and behavior. Mobile AR, despite its potential scale, is gated by consumer AR interest and app quality. And these factors need more time in the oven. The half-baked quality of many ARkit apps hasn’t sold the masses on AR just yet.

But though the scale is relatively low, mobile AR users are showing strong engagement in terms of frequency of use and other behavior. In formats where engagement is measured heavily, such as AR ads (branded AR lenses), performance indicators and advertiser ROI are already quite strong.

Meanwhile, there were wild cards played in 2018. Magic Leap One finally launched, coupled with even more ambitious promises. Apple’s acquisition spree and patent filings point to its AR glasses in the 2021 timeframe. And the AR Cloud’s importance emerged into the collective consciousness.

So the question is, where are we now with these and other XR sub-sectors? And what can we expect in 2019? Drawing from ARtillery Intelligence’s deep XR coverage, we ventured to answer these questions. We’ll look back at 2018 to extract measurable lessons, and predict XR’s directions in 2019.

2018 XR Global Revenue Forecast, Fall Edition

September 4, 2018June 11, 2022

There’s been volatile interest and investment in AR & VR over the past 24 months. But how big are these sectors, and how big will they get? ARtillery Intelligence has quantified the revenue opportunity in several AR & VR product areas. The result is our latest XR revenue forecast.

Applying market sizing and forecast experience from 15 years of analyst work (see methodology section), ARtillery Intelligence has devised a disciplined and independent revenue forecast for XR, segmented into sectors like AR, VR and enterprise and consumer sub-divisions of each.

The following pages provide market revenue projections within each product category, and bulleted insights all along the way. This is meant to qualify the revenue drivers and rationale behind the numbers. And we’ll go deeper on specific data segments in future monthly reports.

Lastly, to characterize ARtillery Intelligence’s overall position on XR revenue growth, we maintain a cautiously optimistic view. Growth and scale will come but slower than previous industry excitement and rhetoric indicated, due partly to the pace of adoption and other signals we track.

AR Business Models: The Top of the Food Chain, Parts I & II