First-mover advantage in augmented reality technology is a prize that is so valued that every large technology company is making significant investments in it today. Ultimately, AR technology may replace the smartphone as the primary connected device that users carry around with them. In theory, Apple, the world’s most profitable smartphone maker, is the most vulnerable.

Listed below are the leading macroeconomic trends in augmented reality, as identified by GlobalData.

Enterprise adoption

Enterprises are starting to recognise the benefits of AR in training, maintenance and repair, customer support, and product design. Healthcare, logistics, manufacturing, and the military are early adopters of AR, while Microsoft (with HoloLens 2), Vuzix (with Blade smart glasses), Lenovo (with New Glass C200), Magic Leap (with Magic Leap One), and Google (with Google Glass Enterprise Edition 2) are all targeting the enterprise market. DHL, Boeing, Porsche, Verizon, Coco-Cola, and Zara are all using AR, but the technology’s high cost, relative immaturity, and lack of effective infrastructure are restricting growth and this is likely to remain for at least the next three years.

Consumer adoption

Whilst the enterprise AR market is likely to be more lucrative, many players like North, Snap, Oakley, and Bose are targeting the consumer AR market. Epson and Vuzix target both the enterprise and consumer markets. Microsoft, the leader in enterprise AR, is rumoured to be planning a consumer device too.

Most consumer-focused apps are free for users and developers are paid by distributors like Apple and Google. However, enterprise-focused software is either bundled alongside hardware or bought separately. As the technology matures, subscriptions, location-based entertainment, and in-app purchases will become more prominent. PokéBalls and PokéCoins, for instance, are available for in-app purchase in Pokémon Go, while the Google ARCore-based Mind Map AR is free downloadable content.

Content

The dearth of augmented reality content is one of the biggest obstacles to mass adoption of AR platforms. Launched in 2016, Pokémon Go remains the most recognisable content app for AR. In social media and ecommerce, AR is restricted to basic photo filters, virtual try-on services, and indoor furniture placement applications. A longstanding factor holding back the development of effective AR content is high speed broadband infrastructure. As 5G telecom networks are rolled out, more AR content will emerge.

Hype

AR is in its infancy but has already been touted as the next major computing platform by tech leaders like Apple CEO Tim Cook. This has inflated market expectations to levels which the technology has so far failed to match. Magic Leap raised $2.6bn in funding over five years by advertising unmatched augmented reality experiences, but their first hardware offering (the Magic Leap One) proved to be underwhelming, both in terms of content and sales. Niantic has repeatedly promised to develop unique AR games but delivered familiar, Pokémon Go-type experiences each time. Well-funded, promising start-ups like Meta, Osterhout Design Group, Blippar, and Daqri have all exited the market.

China

The Chinese leaders in computer vision technology (including SenseTime and Megvii, as well as Moviebook and Kujiale) are attracting significant investment. At the consumer level, several influential Chinese companies have developed AR offerings. JD.com launched an AR mirror that allows users to test out make-up without having to physically apply it, while Alibaba and Tencent are making AR content available on their internet ecosystems. Smaller players like HiScene and nReal are focused on application-specific hardware (mostly smart glasses) to support enterprises.

This is an edited extract from the Augmented Reality – Thematic Research report produced by GlobalData Thematic Research.