Why augmented reality has surpassed virtual reality as the potential next big thing

There was a fundamental difference about how these two technologies came to market that I think is tied directly to why one appears to be far more successful than the other. What is also interesting is that while there have been point successes with augmented reality in the consumer market with efforts like Pokémon Go, much of the success with both efforts has been in business with a specific focus on training and remote help for service and manufacturing personnel.

Augmented reality (AR) is when rendered content is intermixed with real world items; virtual reality (VR) is when the entire field of view is rendered. The entire class is called mixed reality.  

AR has been kicking VR’s butt for some time: it even overcame the catastrophic decision by Google to bring out Google Glass where they charged consumers for what was basically an alpha product that made them look stupid. Typically, that’s a damned good way to destroy an entire segment. 

The two initial champions for each technology were Facebook for VR with Oculus and Microsoft with Hololens. (Disclosure: Microsoft is a client of the author.)

Price vs. quality

One of the biggest mistakes the technology industry makes when bringing out a new product is not setting a minimum acceptable bar. Often, they attempt to hit a price point as their highest priority, and the offering falls below the minimum threshold of what is acceptable. That was the issue with initial VR headsets from both Facebook (Oculus) and HTC (Vive). Not only was the screen-door effect pronounced for both of these expensive headsets: there wasn’t enough interesting content to drive sales.

Microsoft’s approach with Hololens was the exact opposite. They worked with the Lawrence Livermore labs at the outset as part of the Mars exploration effort. The result of this effort was a viable solution that allowed researchers to explore Mars using Mars Rover data and video as if they were on the planet. So, there was a tight coupling between the initial application for the product, and the hardware specification was largely unlimited. Way too expensive for consumers but businesses that need remote viewing will pay almost anything for a product that provides this capability with the minimum of compromises. The product remains expensive but has fans that span aerospace, automotive, healthcare, exploration and any other effort that requires high-quality remote viewing.

Business vs. consumer

Generally, the best way to bring out a new technology is to focus on industrial or business markets first because those markets have the budget to pay for adequate solutions. You then cost reduce the effort and, when ready, and if it is appropriate, bring it into the consumer market. That way you preserve quality, you already have core skills, you have business user advocates, and the initial consumer experiences are high quality.  

This is the way the PC came to market, initially the things were wicked expensive (my first portable computer was the Panasonic Executive Partner costing, when you adjust for inflation, around $8,000) but eventually prices came down to where you can get a far better laptop for under $500. (Actually my $65 Amazon Fire HD Tablet has more performance than that 30-pound luggable had, though it did have a built-in thermal printer.)

So, Microsoft targeted business first and had decent success while Facebook went after the consumer first and now they are rumored to be actively moving to kill the market by racing to the bottom. This last is highlighted as the reason that Brendan Iribe, the co-founder of Oculus, just resigned from Facebook. Like me, he seems to think this move by Facebook is brain dead stupid. This probably will also reinforce the efforts to try to remove Zuckerberg from the company he founded.

Even with advocacy – we call them evangelists in the consumer segment – the business market comes packaged with them as the companies that initially use the product can generally be used to help sell other companies. For consumers you generally have to initially hire evangelists, and Facebook didn’t seem to get that either, apparently trying to keep costs down.

Content is king

One of the advantages of a business initial focus is that this focus helps a lot when it comes to developing content. For Hololens, Microsoft didn’t have to come up with a killer application: Lawrence Livermore Labs just told them what they needed. For Oculus, much like the Xbox or PlayStation, they needed a killer game but apparently had no idea how to create one. Every business customer generally comes with a packaged request of specifics they want; you have to guess about games and if you don’t have a great games team, and Facebook clearly doesn’t, you don’t have a solution.

The most successful VR effort right now is likely the Sony PlayStation VR because it was brought to market by the Sony PlayStation team, and it included content. Microsoft hasn’t done the same thing with the Xbox likely because they want a higher quality, and they don’t yet have a handle on gaming content.

Wrapping up

Microsoft Hololens and AR in generally is impressively successful while Facebook Oculus is not only unsuccessful: one of the key executives over it just ran from Facebook. This was because Microsoft targeted business and not consumer markets first. This allowed them to develop an adequate specification, get a ton of help with initial applications, and build solid credible advocacy with companies like Boeing. Facebook effectively missed the meeting and with Samsung fielding their new HMD Odyssey+ (an impressive effort with twice the resolution and no screen-door effect) at $499, their entire effort may have been bypassed by a firm, Samsung, who is far more expert at launching products. It is interesting to note that the Samsung HMD products are also tied to a Microsoft initiative.

VR headsets for business have been slow to market and even though they too can be used for training, VR success has lagged AR success for business due also to a lack of business focus.

The end lesson is that it is far better to have a high-cost, fully functional product, targeted at business initially and then cost reduce it, than to run to the bottom and produce something no one wants.