The technology business is more trend-conscious than almost any industry save, the fashion industry. Virtual Reality started out as this year’s hot technology trend, with enormous hype around the first generation of consumer headsets like Facebook’s OculusVR and the Sony PlaystationVR. In my view, the technology definitely lives up to the hype, but the business forecasts are way too optimistic. It’s not Virtual Reality that will change the world, but Augmented Reality that’s already having a bigger impact than anyone realizes.
First, what IS Virtual Reality? The underlying ideas have been around for decades – the idea that you can put a person in a completely simulated world using digital technology has captured the imagination of Science Fiction fans for years. Think about the Holodeck experience on Star Trek and that’s the potential.
The origins date back to the late 1930’s with the View-Master, which provided a 3D view of pictures using a simple viewer with photos on a disc. In the 1960’s, the first head-mounted displays were invented for Air Force pilots to do flight simulation. In 1968, Ivan Sutherland produced the first head-mounted display called the Sword of Damocles – while it was bulky, it set a standard for future generations of the technology. There were a lot of experiments in the 1980s and early 1990s with high-profile figures, like Jaron Lanier creating mystique around the technology, but technology limitations held back broad adoption. The Nintendo Virtual Boy headset in 1995 was poorly made and gave a bad name to the technology for years to come.
In 2010, an 18-year old Palmer Luckey created the first prototype of the Oculus Rift, and a couple of years later he launched a wildly successful Kickstarter project that raised over $2.4 million. In 2014 Facebook paid $2 billion to acquire Oculus, and took another two years to get the product ready for commercial launch. The declining cost and increasing power of computation has finally made VR headsets under $1000 a reality – that’s really the key to breaking into the consumer market. The first headsets have shipped this year.
The VR headset is completely immersive, blocking out your entire field of view. The head-sets track your motion – when you move your head up and down and around, the display tracks your movements to give you the sensation of being in a completely different environment. The experience is pretty mindblowing, there’s no doubt that the technology itself is NOT over hyped.
The first time I put on an Oculus I was blown away. You get the experience of being completely immersed – whether it’s in an imaginary landscape, or if you’re flying in a helicopter, or climbing a mountain – the experience feels so real it can give you vertigo. In fact one of the problems people have is motion sickness after wearing the headsets for too long. That’s testament to how powerful it is.
Gaming (and adult entertainment) are the obvious early uses for VR, but there’s a lot of exploration for different uses. You can use VR to visit a museum or historical site in school, or use it to train doctors in surgery, or to work on a golf swing. Right now the key is getting content in the market, and it’s still early days. Oculus, Sony PlaystationVR, the HTC Vive and Samsung GearVR are the major headsets on the market. VR is definitely the coolest technology to emerge in years, but the downside is that you need to wear a bulky headset, the content is still limited and you either need massive bandwidth or you need to be tethered to a PC or gaming console to get the full experience for the time being. So while it will be popular, it's more a niche technology. If you're a hardcore gamer, or into gadgets, you’d probably be interested in a VR headset. Businesses like hotels or real estate agencies will use them. But it won’t be the kind of thing that will see large segments of the population spending hours a day using.
Augmented Reality is way different. AR is technology that displays digital images superimposed over a view of the real world. You can use a headset – like Microsoft’s Hololens or headsets from Meta or Magic Leap (which are not yet commercially available – or you can use your smartphone or a tablet. The high-end AR headsets are still in early days – Microsoft has shipped a kit to developers, but at $3,000 a pop it’s not a mass market product yet. These headsets digitally map the world that you can see in front of you, then they can display any sort of image you can imagine (like a person, or a cartoon monster, or some text that describes what you’re looking at) so that it enhances your view of the physical world.
I got a chance to play with Microsoft’s Hololens earlier this year, and they have a demo where you can pin an animated object in space. In this case it was a twirling flying saucer that I pinned to a table – then I could walk around the table and look at the saucer from every angle – up, down and side to side. It was like it was really there in the room. You could shoot fireballs at the saucer until it blew up, revealing a virtual hole in the ground that you could look down into and see a whole underworld alive and buzzing underneath. This is impressive technology, but it’s not completely immersive like VR, and there are still some limitations like a small field of view. You can definitely see the potential for design and architecture, medicine, even NASA is using it so scientists can explore Mars using the images beamed back from the surface. Check out the Magic Leap videos on YouTube if you want to get a sense for how crazy cool this technology promises to be.
For all the promise in the future, there’s a much bigger story happening right now. Take a guess what is the biggest Augmented Reality app ever? Pokemon Go! Yes, Pokemon Go is a smartphone-based AR app that’s the fastest growing mobile app of all time. At the time of this writing it’s more popular than Tinder and closing in on Twitter. Yes, go out and catch a Pikachu and dive into the world of Augmented Reality. It’s already here and the potential is limited only by your imaginations.
Ed Maguire has worked as an equity analyst covering the technology sector since 1999 for a variety of firms including CLSA Americas, Merrill Lynch and CIBC. Previously he led sales for independent music distributor Twinbrook Music while working as professional musician performing on bass, violin and keyboards, composing, arranging and producing a variety of styles of music. Ed holds a B.A. in Music from Columbia and an M.B.A. from Rutgers in Finance and Management Information Systems. He lives in Millburn, NJ with his wife Lily, their two kids and the dog Spock.
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