Usually, we remember Charles Dickens at this time of year for, “A Christmas Carol,” but as I write this final AR Business World newsletter of 2017, I find myself looking back at the past 12 months with the opening lines of a “Tale of Two Cities,” resonating in my mind.
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair …”
To me 2017 was simultaneously the best and worst of times in Augmented Reality.
It was the best of years for vision, but not for adoption. It was a time for mind-boggling trailers of leaping whales, and disappointing performances to follow. It was a year of great innovations, but limited adoptions; a time for Unity and product fragmentation. It was a year of lofty goals that could not grasped.
Such ironies also filled my personal life. The Fourth Transformation became a best-seller. Transformation Group, LLC was formed and developed successful media, educational and consulting products. Yet, it was simultaneously a period in which a long-term partnership and friendship dissolved, corporate strategists for the most part remained in “wait-and-see” mode related to immersive technologies and much-hyped game changers, such as ARKit, changed very little other than Apple’s credibility as a category game changer.
At the same time, immersive technology investments flourished. People who experienced immersive technologies in headsets soared from a few million people in 2016 to several score millions in 2017.
In 2017, corporate adoption rose sharply. Ten percent of the Fortune 500 started pilot projects, some reporting extraordinary results in productivity, accuracy and profits and was on track to double each year for five years. The enterprise outspent consumer-facing businesses by a ratio of $10-to-$1, with the ratio tapering each year for the next five.
The consumer side, however, lagged for a variety of reasons this year, many of them related to the products’ high prices, short battery lives, clunky designs, and limited fields of view to name a few. These contributed to a consumer demand that was limited at best, too smart merchants not wanting to get too far ahead of customers, and tangible merchants so desperate to make tough quarterly returns they could afford neither time nor money to get distracted.
So as 2017, an odd year, draws to its inevitable close, what is the conclusion that we can draw? What is the lesson for us to learn?
Year of Irrational Exuberance
In the late 1990s, Alan Greenspan, then Federal Reserve chairperson, coined the term irrational exuberance. He was referring to investor immersion in a dot-com bubble that was dangerously inflating market values.
To my way of thinking, 2017 will be remembered as AR’s Year of Irrational Exuberance–if not for the entire world, which had troubles of its own, but for the VR/AR industry and those who share my Transformative vision for it.
This does not make it the worst of time by any means. We who dream dreams must be happy to pay the price to make them come true and often those payments span more than a mere 12 calendar months.
But as the baby breath of the new year awaits us after the conclusion of Christmas, the question I have been thinking about long and hard, is what will 2018 be like. First, it is not an odd year and second, much of the industry seems to be treating these final few weeks as if they had the worst New Year’s hangover in the history of celebration.
Year of Clean and Sober
In the last 12 months, nearly every aspect of the AR business ecosystem at a rate that is beyond healthy; it is actually remarkable in terms of money invested and products purchased, in terms of game-changing innovation, public awareness, technology, product and price refinement.
The only real problem of 2017 is that we insiders simply drank too much Kool-Aid. It altered our sense of reality in the same way Ken Keysey did for his followers according to Tom Wolfe in The Electric Kool-Aid Acid Test back in 1968.
I think 2018 will be different: it will be a more pragmatic year for the developers, vendors, buyers and adopter of immersive technologies. It is a year where the champions of Augmented Reality will cling to the reality of business and market adoption.
I predict 2018 will be the Year of Clean and Sober.
More will happen with less effervescent enthusiasm. The little corporate pilot programs will become fruitful and multiply in enterprise usage.
- VR will train more employees who will produce more on the job while making fewer mistakes. They will be retained longer and make partners happier.
- In healthcare, we will see better trained professionals using immersive technologies to treat, heal and save patients.
- Buildings will be better designed, constructed, leased and sold through VR and AR.
- Sports fans will enjoy bigger thrills and better understanding of team and player data.
- We will see incremental improvements in communications, public education, entertainment, energy exploration and other categories that very few people have even thought about.
This Clean and Sober year will generate less hoopla and more profits. It will be a time where real business decision makers start figuring out long-term strategies and short-term implementations. It will be a time to measure, evaluate and educate. It will be a time to look over your metaphoric shoulders to see if your competitors are gaining ground with AR deployments and to look at customers and the people you wish to recruit, so you can understand how new technologies are fundamentally changing the cultures you need to reach the most.
What was this year’s tiny little test, will be next year’s best practice. The companies that went first will leverage their success to take a competitive edge and establish thought leadership. In 2017, AR observers saw so much promise, which explains how otherwise sane people may have been sucked into a small dose of irrational exuberance.
We will also see a shift in who has to learn a foreign jargon. In 2017, members of the AR community expected decision makers in retail and the enterprise to learn the language of the new technologies including terms such as volumetric, field of view and six degrees of freedom. It reminded me of an earlier era when productivity software publishers boasted when they produced 1200-page user manuals that users dreaded to open.
In 2018, the AR industry will learn the language of the business they are selling to. They will learn to see he customer problems with empathy and sell technology that reduce complexity, improve efficiency and make money.
Big Picture/Tiny Details
During 2017, I found myself frustrated more than one time by corporate executives who were trying to pick and choose between several disruptive technologies. They would talk about difficulties on whether to stake their futures on AR, AI, robotics, IoT, cryptocurrencies, autonomous vehicles and so on.
This is the wrong approach in my view. You cannot select one of these without considering how it integrates with the other. It is like having a carpenter decide to adopt a hammer at the expense of a saw. These are the tools of the near-term future and they often work best when used with each other.
J.S. Gilbert, a tech industry insider, predicted that these new technologies will begin to converge. “This will be a pivotal year as far as businesses setting the table; Attention will go to infrastructure, education, and other important factors to adoption.”
I agree. But to me, the big challenge of 2018 will be for c-level executives to paint strategic pictures that go five-and-ten years out, so that the middle level executives of the organization can start planning incremental steps in the form of low-risk, low-cost, easy to design and easy to implement pilot projects that steer toward that larger corporate goal.
I did not find many companies doing this in 2017, but I believe there will be many doing so in 2018.
Enterprise to Lead
Next year—as this year—the enterprise will be where the virtual lion’s share of AR investment will occur. According to Mike Boland, founder of ARtillry, an AR research firm, in 2017, the enterprise outspent the consumer side in AR by a ratio of $10-to- $1. While the margins will narrow in the coming years, Boland predicts the enterprise will enjoy a $10 billion ROI on AR investments in 2018, with the greatest investment going into manufacturing and assembly — where the greatest return was enjoyed in 2017.
The consumer side of AR in 2017 was not without its own little victories. Most notably Pokemon Go! grossed over $1 billion in 2017. It is following up in 2018 with 50 more cute little characters that the producers hope people will zap in parks and other public places. Personally, I can curb my own euphoria for Pokemon. I would not be unhappy to see it go. However, there are other immersive toys coming to market such as the Merge VR headsets that reveal puzzle games and living hearts through an amazing sponge cube when worn.
I had originally thought that products like the Merge Cube would make this the first AR Christmas, but I was wrong. AR will represent an extremely small percentage of Christmas retail sales. I doubt that 2018 will be the first AR Christmas either, but immersive headsets, toys and games will make AR more significant.
I also expect to see more use of AR to modernize the holiday shopping experience, particularly by merchants smart enough to appeal to the youngest family members — who we called Minecrafters in The Fourth Transformation.
Perhaps by 2020, AR will be a major component of holiday gift giving. Perhaps it will be later.
In the coming year, I will look at the future of business and consumer AR with the same enthusiasm as I demonstrated in 2017, but I will do it in the context of a more balanced clean and sober perspective.
ELSEWHERE IN AR WORLD
Meanwhile, in the closing weeks of 2017, I am seeing major announcements from huge companies including Amazon, Microsoft, Google, Apple and smaller companies with large aspirations that tempt me to get irrationally exuberant yet again.
In fact, there were more significant announcements than I have time or space to share with you if I wish to get my own holiday shopping done. Below are the ones that I consider to be the most significant for reasons that I will explain.
3D Object Libraries
In the past ten days, Amazon, Google and Microsoft have all launched 3D object libraries that make it easier to develop 3D, VR and AR properties. They all have very clear similarities and equally clear differences.
Object libraries are where graphical objects are stored and then licensed to people or companies who wish to use them. These are not new in any way. Those cute emoticons that pepper our social posts are examples of object libraries.
What is new and different is not just that visual objects are moving into 3D for use by VR/AR developers, such as Google just announced, but they are already spilling over into use by non-technical professionals and everyday people including children.
At its annual developer conference in late November, Amazon introduced Sumerian, a new library of 3D objects. Sumerian is believed by some anthropologists to be Earth’s first human language, and plays an important role in Neal Stephenson’s Snow Crash, the Sci-Fi that inspired virtual worlds and VR Goggles.
When Sumerian is ready in early 2018, it will let non-technical people create VR, AR or 3D apps to be viewed with Oculus Rift, HTC Vive, and iOS/Android handheld devices. An employer can build virtual training classrooms where new employees, scattered about a global enterprise, could all join and participate. A real estate agent could easily provide a virtual building tour.
Writing in MIT Technology Review, Rachel Metz noted that Sumerian works interactively via voice with the AI-based software used in Amazon Echo’s Alexis. The company believes anyone who can build their own website will be able to incorporate Sumerian’s 3D objects. These new spaces will be viewable through Google Daydream, HTC Vive, Oculus Rift, as well as iPhones and iPads.
I have long been calling Amazon the sleeping giant of immersive technology. While so far Apple, Google, Facebook and Microsoft have declared and demonstrated how vital AR is to their future, Amazon has been quietly taking position without most people noticing.
With the possible exception of Google, Amazon appears to be a leader in Artificial Intelligence, which is where the magic comes to AR. It is when your devices start getting to know you better than your own spouse does. Alexis is the leading consumer technology using AI today. In fact, Echo recently introduced a screen option, and that screen puts it just one augmented bunny hop away from an AR/VR Echo if you ask me. Amazon will be able to use Sumerian to showcase its own tangible products, such as furniture, where it will be competing against Ikea and Walmart.
Meanwhile, Google, the other personal digital technology giant with AI capability, has been busy as well. Less than a week after Sumerian was announced, the company announced the Poly.API. While still aiming just at developers, Poly enables a much faster and easier development of thousands of 3D objects. As Techcrunch described it, Poly “represents yet another step in the company’s efforts to court AR/VR developers with useful tools that expand beyond the company’s Daydream and ARCore platforms.”
While these two libraries do not directly compete, they clearly overlap, and I think that will be far more so by this time next year. First, if the objects are so easy to use that a non-developer can use them, and if they are engaging enough for commercial showcasing such as Amazon furniture, then there is really no reason why a developer would not use them to get an important job done faster.
I would guess that in the short-term future both Amazon and Google will accelerate development of new properties. I would also not be surprised to see AI quietly pervade new objects in both libraries. I also would be very surprised if works from both libraries don’t start spilling over into industrial and productivity applications where VR and AR mixed with AI can do wonders with gamification that improves training, safety and productivity.
Finally, Microsoft also jumped in with Simplygon Cloud which intends to help make content more friendly on game development platforms. Its essence is reducing the complexity of polygons, the core architecture of 3D objects.
I usually don’t mention games in this newsletter, but the similarity of these three new platforms, launched within ten days of each other, at the end of this Year of Irrational Exuberance, gives me hope that in the coming Year of Clean and Sober better software will be developed in less time in every area where immersive technologies can be used.
VR Furniture with Machine Learning
In a previous ARBW Issue, I talked about six major brands launching AR apps for home furniture buyers. Now comes a seventh application. This time from an unknown start-up that promises to take home design and buying a significant step forward. This makes it one of the most attractive acquisition targets I have seen lately.
The startup is called Lexset, and it is the first home design app to incorporate machine learning, the part of AI that allows technologies to think for themselves. Lexset learns from the design and mood of a room. It then searches the web for objects ranging from couches and lamps to wall hangings that it thinks will enhance the design of the room. Eventually, I assume it will be able to personalize future recommendations by the choices it sees users making.
I see Artificial Intelligence as a missing link to the transformational powers of AR. It is only when our headsets know us well enough to offer us customized choices, that the fundamental change covered in The Fourth Transformation become a reality.
Obviously, furniture shopping is becoming one of the first killer AR apps. The existing competition creates a great opportunity for Lexset, a new and unknown player. But, more than the app is the tech. The Lexset capabilities are the start of digital machines making accurate choices for people on individual patterns.
This may be creepy to some, but it will prove to be irresistibly useful to others.
AR Training Competition Grows
Competition is starting to appear in more places in the AR business landscape in categories that show the greatest promise, such as employee training.
I’ve written a few times about the Silicon Valley startup STRIVR. It is one of the industry’s few Cinderella stories. In 2015, it began by developing VR software to help the Stanford University quarterback to train without getting sacked by practicing linebackers. By 2017, Walmart was using it to train 140,000 store employees.
Now, comes a British based company called Loco Dojo which started as a VR game. It is now building VR training software with a new corporate training app called Make Real which is in prototype for a global telecom. Make Real does not replicate quarterback training, but it does let future maintenance workers wearing Oculus Rift headsets experience the daunting and dangerous job of climbing mobile phone masts while seated securely in the corporate classroom.
The more competition there is for furniture buying or training people to do challenging jobs, the better it is for users. The technology gets better and cheaper faster and faster. That is what I like to see.
It also shows me a new career path for the many VR game developers who are discovering there are just so many ways to zap aliens before the game market gets glutted. Now, they can still build on Unity, and sell products to the world’s largest enterprises using the skills they leaned as game developers.
Seeing Where It’s At
Mapbox is a leader in vector maps, 3D renderings that visually show data in remarkably useful ways. It has been around for a few years and is flourishing by all reports I can muster on a privately held company.
After securing $164 million in new financing a few weeks ago, it quickly bought up a couple of important companies that will leapfrog its AR capabilities. First, it acquired Mapdata, a neural network company that enables navigation software to overlay useful driving data on top of a navigational map.
A few days later, it acquired ARFitness, which enables exercisers to track their movement over terrain while hiking, cycling or running.
Where do I think Mapbox is going? Everywhere. This is a very promising company that is enjoying an extremely strong and disruptive position against more traditional mapping companies. Mapbox will allow us to see maps that look like the roads and trails we use, the cities we live in and the world’s we inhabit.
Medical VR Gets Clinical
Perhaps, the most important niche to be rapidly adopting immersive technologies is one of the historic laggards of personal digital technology, healthcare. In the last year, I’ve seen apps that help people with personal health and quantified self-issues, apps that help terminally ill fulfill bucket list requests, and training apps that train better anatomy students and prepare surgeons before they perform delicate procedures. I have even found an AR app being used as a sales tools for corrective dental surgery.
But, many of these apps are only being used by a few forward-thinking schools and practitioners so far. While great capabilities are being demonstrated, the medical industry—for good reason—is slow to adopt new practices until scientific, clinical tests are conducted.
Now, that is starting as well. Robert Mazumder, an occupational therapist and a PhD candidate at the University of Waterloo, near Toronto has been using VR software and headsets.
Mazumder measures heart rate and galvanic (electric currents produced by chemicals) skin response to determine subconscious response to various urban environments. Subjects are misled a bit in their instructions, so they can’t carry biases into the VR setting.
This is indicative of how I see many medical issues will be investigated and addressed in the future. “Taking a clinical study approach is the best way to gain acceptance from the medical community,” Kristi Hansen Onkka, head of HealthiAR, a healthcare marketing consulting firm, told me.
Onkka and I will teach an online class on AR for healthcare professionals on Feb. 6, as the next edition of Transformation Group’s AR and the Future series.
I leave you with this, my parting thought of the year in terms of ARBW: May you be clean and sober for most of 2018, but remember, a little irrational exuberance really isn’t all that bad now and then.