Augmented Reality Will Change the Way People See

Warehouse worker using augmented reality technology on a tablet.

Imagine if students could see a three-dimensional image of what they were learning about right in front of them. Or a surgical resident could practice a difficult procedure in a hyper-realistic simulation before operating on an actual patient. Or an automotive designer could see and interact with a model of a new vehicle to make needed changes before spending time and money on a physical prototype.

These scenarios and many more are possible with augmented reality (AR), a technology akin to (but different from) virtual reality set to revolutionize how humans interact with the world. Below, we discuss the overall AR market, profile several innovative AR startups, and explain how the technology works, its promises, and its pitfalls.

AR Market Set for Massive Growth

According to Grand View Research, the global AR market was worth $17.67 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 43.8% through 2028. The COVID-19 pandemic has contributed to this growth. 

“The rising demand for remote assistance and collaboration from enterprises that assist in workflow management and optimization is expected to propel market growth,” Grand View Research says. Companies are using AR-based apps to track, identify, and resolve technical problems. In addition, businesses use AR to retrofit, assemble, manufacture, and repair production lines. 

Individuals are driving the market as well, in large part through the use of smartphones, smart glasses, and other handheld and wearable devices for mobile AR applications that provide a more enriching way to interact with the world. Companies thus are examining how to use AR to provide consumers with customized and interactive experiences, such as “trying on” clothes on virtual models of their own bodies or seeing how furniture would look in their own homes.

Healthcare applications are also a big driver of the AR market. These include surgical simulations for training purposes, which are used by the Mayo Clinic and other healthcare organizations. Marketing and advertising are also starting to make use of AR for things like digital product and store launches and virtual exhibits, especially during the COVID-19 pandemic. Construction and architecture firms are beginning to use AR for modeling and other purposes, and the education industry is using it to provide more immersive instruction.

When it comes to hardware, Grand View Research says that head-mounted displays (HMDs) and smart glasses accounted for the largest revenue share at over 65.0% in 2020. This segment “is expected to continue dominating the market … owing to the significant demand for HMDs and smart glasses in industrial and enterprise settings,” the report says. “The growing number of applications in these settings, advances in OLED [display] technology, and availability of lightweight HMDs are expected to drive the growth of the segment.”

Other fast-growing hardware segments of the AR market include:

  • Handheld devices. These are expected to register the highest CAGR of over 45.0% from 2021 to 2028 because of their growing use in retail and -commerce. “The proliferation of smartphones and tablets and the continued integration of AR in handheld devices is allowing companies to enhance consumer experience and gain a competitive edge in the industry,” Grand View Research says. It adds that social media platforms are “aggressively deploying” AR, which is further driving the growth of the handheld devices segment.
  • Heads-Up Displays. This segment is also expected to grow substantially because of all the driver assistance systems that automakers are including in new vehicles. A heads-up display can let the driver focus on the road while still seeing data like speed, warning signals, turning directions.

So far, North America has been the most dominant region in the AR market, with a revenue share of about 35% in 2020. The US constituted a substantial share of that. 

However, the Asia-Pacific region is expected to see the fastest AR market growth, with a CAGR of more than 45% from 2021 to 2028. The Middle East and Africa also should see significant AR adoption due to the rising number of AR startups and multinational companies there, as well as rising levels of disposable income.

Key players in the AR market include:

That being said, there are upcoming AR companies worth taking a look at.

AR Companies to Watch

Trezi ($2 Million Total Funding)

Trezi, a company based in India, bills itself as the world’s first immersive platform for the building industry, connecting architects, designers, building product manufacturers, and others. Trezi’s Lens product offers a real-time, immersive, and interactive design experience that helps people explain design intent and meet the expectations of clients. 

In addition, Trezi’s Showcase uses AR to display virtual mockups and models, reducing the cost of physical ones. AR-based design communication eliminates the need to use outdated, static renderings. It also allows all members of the design team and their clients to review designs in real time to ensure they remain consistent throughout a product’s life cycle.

Designhubz ($875,000 Total Funding)

Designhubz, based in San Francisco, provides an AR platform that serves as a commerce solution for brands and retailers. Using the platform, clients can convert physical inventory, existing 3D files, and high-definition product images into immersive 3D and AR product views. They can manage these assets collaboratively and publish them on websites, ecommerce apps, social media, and elsewhere. Designhubz’s platform also allows clients to track and measure the success of their visualizations with in-depth analytics.

The Intellify (Funding Unavailable)

With offices in India, the US, and the UAE, The Intellify helps businesses use AR to enhance customer engagement and create unique brand identities. Its AR product can create 2D and 3D models, videos, animations, and audio. In addition, customers can use an Intelify solution to place items they might want to purchase in real environments (for example, a couch in a living room) or virtually “try on” products like sunglasses using a 3D model of their own face. 

The company also sells products like AR filters for social media platforms and AR navigation aids for indoor spaces like office buildings and airports. It can design custom AR products as well.

Apricus Med-Tech (Funding Unavailable)

Apricus Med-Tech provides AR simulators and other tools for training and assessing doctors as well as other medical professionals. It also builds AR applications that help predict how new treatments can help patients. In addition, the company’s AR tools can allow physicians to plan complex procedures and visualize data in new ways to enhance diagnosis and treatment.

Magic Leap ($3.5 Billion Total Funding)

Florida-based Magic Leap produces a wearable AR headset that aims to solve a variety of business challenges. For example, it enables collaboration and co-presence, permits visualization of 3D files by an individual or a group, and lets remote experts train others by seeing what they see in real time and dynamically updating work instructions. 

The device itself is lightweight and hands-free, enabling a range of low-latency interactions from conference room meetings to collaborative product design to planning a complicated surgery. A handheld controller connected to the headset allows users to manipulate virtual objects with haptic (touch) feedback.

How AR Works

Augmented reality involves blending digital elements with the real world to “augment” things that we see. Most often these are visual overlays or haptic feedback that provides a sense of touch, but they can also be things that stimulate other senses. A simple example is Google Sky, which lets you point your smartphone at the night sky and overlays information about what stars, plants, and constellations you’re looking at. Other actions that wearable AR devices can help perform include:

  • Assisting soldiers and pilots during training or even during battle. AR headsets can display everything from a map of a training course to the status of a fighter’s critical systems.
  • Placing instructions for repairing an engine directly in a mechanic’s line of sight while they’re working on the vehicle.
  • Guiding warehouse workers to an item on a shelf via the shortest route and provide information about it. 
  • Allowing someone to interact with an industrial robot by viewing data about it and accessing its controls with haptic feedback.

According to the Harvard Business Review, augmented reality works in the following way:

  • AR software is loaded onto a device that has a camera, or perhaps GPS and an accelerometer as well (like a smartphone).
  • The AR software processes the video stream and tries to recognize what the camera is looking at using artificial intelligence and other technologies.
  • The software then downloads information about objects in the camera’s field of view, or a related 3D virtual object, from a cloud-based platform and superimposes that information onto the screen.
  • In addition to seeing virtual data and objects, users often can interact with a physical object. For example, someone wearing an AR headset while interacting with a robot might be able to control the robot in addition to seeing data about its performance.
  • The size and orientation of the AR display automatically shifts as the user moves. New information is displayed and old information is removed as needed.

The difference between augmented reality and virtual reality (VR) is that AR provides enhanced interaction with the real world, while VR completely immerses users in a virtual one. VR applications are usually more expensive because they require more sophisticated equipment and greater processing power, whereas many AR applications can be used with a relatively inexpensive headset or even a smartphone.

Benefits of AR

AR has a variety of benefits in a host of applications. For example, it can:

  • Create unique digital experiences that combine the physical world with virtual enhancements. This can include everything from simple smartphone apps that overlay information about what you’re looking at through the camera to overlaying surgical plans on a patient in the OR. 
  • Present complex information in a way that’s easy to absorb. For example, someone repairing a vehicle while wearing an AR-enabled headset could see labels of each relevant engine component and read step-by-step instructions, all of which would be directly in their field of view without having to take their eyes away from their work.
  • Keep users engaged. AR-based games are the latest thing in entertainment. Moreover, AR can also help brands engage customers through interactive catalogs, advertisements, store signs, etc.
  • Help businesses differentiate themselves. Creative use of AR apps, such as one that Nike recently rolled out to help customers find the right shoe size, can drive purchases and inspire brand loyalty.
  • Make remote communication more immersive. Students, in particular, can benefit from AR when taking remote classes by visualizing what they’re learning in new ways. In addition, businesses can use it for remote meetings and product development.

Although AR applications are being used more and more in a variety of settings, perhaps the technology’s greatest potential lies in the field of education. Among other things, AR can make learning materials more accessible to students, help them understand that they’re learning, provide opportunities to interact with each other and virtual elements related to the subject matter, and give them hints about how to solve a problem. 

“The outbreak of the COVID-19 pandemic has triggered the adoption of AR technology in the education industry as educators are trying to find more innovative ways of teaching and offering dynamic content for students,” Grand View Research notes. “AR technology can particularly help in enhancing the student experience.” 

“AR technology allows the combination of real objects and virtual information in order to increase students’ interaction with physical environments and facilitate their learning,” one recent study found. “Developing technology enables students to learn complex topics in a fun and easy way through virtual reality devices.” During a virtual, AR-based tour to a museum or zoo in a different country, lessons could be taught in the company of the teacher as if everyone was actually there. 

Another study found that an AR mobile application increased students’ motivation to learn for similar reasons: It provided a new way of interacting with the world and created experiences that would be impossible in a completely virtual world or the real world without AR.

Downsides of AR

Despite AR’s great potential, there are a few downsides. 

  • It’s expensive. AR hardware and software are getting cheaper but are still unaffordable for many, especially small businesses.
  • It raises privacy and security concerns. Like many new technologies, AR requires the collection and analysis of a massive amount of data about the people using it. Some AR applications also create real-time recordings that can run afoul of privacy laws. The privacy and security of the data AR applications collect will need to be satisfactorily addressed for AR to become truly mainstream.
  • It can be dangerous for the unwary. Anything that superimposes virtual images or information over the real world can theoretically cause someone not to pay sufficient attention to their surroundings, leading to accidents.

Adriaan Brits

As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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