Saying the Reality Business (VR + AR) today is a lot like the cell phone business was before the first iPhone hit the scene is a good place to start thinking about the industry. The simile is apt, easy to understand, and largely true – at least as a baseline. In short, it’s early days. Some power players — Facebook, Google, Samsung, and arguably HTC, Microsoft and Snap — have emerged, but we’re still a long ways from critical mass.
Those of us old enough to remember things like “Treo,” “Windows Phone,” and “Symbian Series 60” know that Microsoft, Nokia, and Palm were once power players in the smartphone market. Then things changed, swiftly and for good. The first iPhone was launched in January of 2007, and went on sale that June. Though somewhat imperfect, this chart from Pew Research Center shows cell phone and smartphone adoption in the US in the years leading up to, and following, the first-gen iPhone.
Two things to note here:
- Cell phone adoption in the US was around 75% when iPhone went on sale. Adoption had climbed steadily over the preceding five years, from 62% in October 2002. While the statistical rate of adoption didn’t spike in the years after iPhone, climbing “steadily” over the next five years to 89% in November 2012, it’s well worth noting that the closer adoption gets to 100%, the harder it is to win those percentage points. In other words, cell phones were already achieving critical mass in the US before iPhone. They became ubiquitous soon after.
- Smartphone adoption wasn’t even being measured when the first iPhone launched. Geeks like me may have been deep into dissecting the differences between N73 and K790i, but the average Jane probably doesn’t even remember the “original iTunes phone,” Motorola’s ROKR E1, which debuted in 2005. In other words, smartphones didn’t go mainstream until after iPhone. Once they did, adoption came relatively quickly, rising from 35% to 77% in just five years.
By comparison, let’s look at AR/VR adoption in the US, using data from eMarketer. Note the following charts measure AR/VR usage, and not ownership of a headset or other purpose-specific device, as cell phone/smartphone adoption data shows. But the data’s good enough for our purposes. First, Augmented Reality adoption:
Two key points, quickly:
- These are just projections, but growth from 30% to 54% over just four years is pretty impressive!
- % change is already projected to decline. However, it’s worth mentioning the elephant in the room that’s likely not folded into these projections: Apple is on the record as having significant interest in AR. Should they make an AR-focused play, they’d immediately be leveraging an estimated 800 million active iPhone users worldwide. That could dramatically change these numbers in a hurry.
And next, VR usage:
Even more noteworthy than the AR projections, eMarketer shows virtual reality use in the US having doubled from 2016-17, and projected to more than double again by 2019. By then, almost half of the US population will experience VR content at least once per month (if these projections hold, which of course they won’t, at least not exactly). Looking only at user adoption and one firm’s projections, the current moment is reminiscent of the smartphone industry in the days leading up to the first iPhone unveiling on January 9, 2007. The early adopters have already landed, the underlying technologies are in place, and the stage is set for accelerated growth. A parallel may even be drawn between cellphones and AR, and smartphones and VR: Back then, cell phones were the “baseline experience” while smartphones required a bigger user investment in terms of both up-front purchase costs and ongoing time and resources devoted to learning to use the thing, paying for monthly data, and buying apps. Today, AR is relatively easily experienced by anyone with a modern Android or iPhone and enough interest to find and download an AR app. VR, on the other hand, requires that additional outlay of time and resources: For starters, you need a headset, even if it’s just a Google Cardboard that the New York Times sent you for free.
The Same, But Faster!
Even if eMarketer’s projections wind up erring on the optimistic side, which I think they will, a number of conditions are setting the stage for accelerated adoption of AR/VR as compared to smartphones. Though none should come as any surprise on their own, taken as a whole they paint a picture of how our increasingly technology- and phone-dependent culture has changed the nature of new business ventures in general, and is shaping the AR/VR industry, specifically:
- Mobile is Everything
With apologies to William Carlos Williams, So much depends on a battery-powered, network-connected supercomputer tucked away in a young man’s pocket. Mobile phones are the computer of choice for today’s users, and mass adoption of AR/VR depends on advances in battery and network technologies in particular. Oculus and HTV Vive rigs tethered to desktop PCs are fine for today’s early adopters, but the masses will only get involved when hardware is truly mobile.
- Apps Rule, For Better and For Worse
Back when BlackBerry and Windows Phone ruled the day, “apps” came on CD- and DVD-ROMs packaged in cardboard and cost upwards of $50-100 each. Now they’re purchased and downloaded with a tap on a touchscreen, and $9.99 is considered expensive. The ease with which developers can publish, and consumers can use, new software is accelerating the growth of new industries like never before. The whole, “Try that new app right now!” phenomenon didn’t really exist pre-iPhone. But how will the expense of producing quality VR content, in particular, coexist with consumer expectations shaped by App Stores?
- Attention Spans Are Dead. Or Are They?
On the one hand, nobody reads any more and “fidget spinners” are being banned by schools across the land. On the other hand, gaming and eSports are thriving, and those titles demand hours and hours of devotion if you want a chance at “winning.” Is VR the next immersive consumer art form, or will it fall prey to blog-sized attention spans?
- Headsets Are Lame, Sunglasses Are Cool, Contacts Are Even Better
Tech consumers have been trained to obsess over light and thin gadgets. A narrative already exists regarding, “Contact lenses that augment reality.” Google Glass got some play from early adopters, but not as much as Snap’s Spectacles, which don’t do as much but are infinitely cooler and less cumbersome. Is the “iPhone of AR/VR” destined to be the first device that offers real functionality in a form factor no more intrusive than the shades, specs, and contacts we’re already accustomed to? Or can standalone headsets like Gear VR and forthcoming Daydream models make some real inroads? See also: #1 above.
There’s much to dig into here, and we haven’t even touched upon the enterprise and B2B potential for AR/VR. Fodder for another post, for sure!