TRANSFORMING THE WORLD ON THE COMPUTER’S TERMS

If you want the benefits of computing, either sit down at your computer or stare endlessly into your smart phone. Those are your choices.

To this day, computing and smart phones are like a baby in diapers—cared for by people, coddled by people, tolerated by people and, rather astonishingly, people only expect it to continue to get cheaper, faster, easier to lift, and perhaps more entertaining. But they don’t seem to expect much more.

Technology moves fast but it doesn’t move instantaneously. Most teenagers in 2021 have never held a “floppy” in their hands, and yet floppy disks were essential to personal computer users for at least two decades. Back then, you loaded your file into the computer off a floppy or you didn’t work on the computer. A lot of things have gone obsolete to get us to where we are. Today, USB “thumb” drives are seeing the same gradual sunset of obsolescence that floppies underwent a generation ago.

Some consumers resent—or even rebel against—the changes to (or disappearance of!) the ports on their machines, not to mention the things they used to put into them. Even so, most people have transitioned fairly smoothly from one version of their computer to the next.

That’s because computer peripherals can change (or become abstracted into “the cloud”) without disrupting the core computing “platform” at the center of your world—namely, a QWERTY keyboard with a trackpad and a screen. The “WIMP” user-interface (windows, icons, menus, pointing device) and its attendant hardware has been modified over the years, but it’s all still very much with us, recognizable and usable.

That situation is about to change. Although it was unthinkable just ten years ago, today one can read the news, answer emails and texts, post to social platforms, and participate in a video meeting as easily on your phone as on your laptop—and in many cases far easier. Consider what that says about innovation and the way that the combinatorial power of technologies can build on each other. In a sense, it’s the whole story.

If you haven’t started thinking about that yet, you really should.

The XR Universe

source: Harbor Research

THE NEXT COMPUTING REALITY

The next leap is going to cross a much larger chasm between computers and their users—not by making us like them, but by making them closer to us. How? In the short term, this will happen by replacing their screens with head-mounted devices (HMDs) that block out ordinary reality and present an entirely different world, or that overlay onto our world real-time data-driven graphics. These visual interfaces won’t require typing on—or even touching—a keyboard. Instead, their interface will involve hand and head gestures, haptic (skin level) feedback, and voice-recognition.

(How will our machines become closer to us in the long term? For one view on that, check with Mark Zuckerberg, who believes they will read our minds.)

In addition to specialized applications for healthcare, real estate, retail, education, engineering, etc., HMDs will incorporate all the functions of smartphones for voice communication, texting, email, video browsing, and social platforms. Once these HMDs become lightweight and affordable enough, they will be standard issue for every consumer in developed countries. And depending upon the speed of innovation, it is even possible that undeveloped segments of the world may skip the handheld smartphone entirely in favor of the head-mounted one.

Extended Reality (XR) Ecosystem Value Chain

source: Harbor Research

THE FORMS OF XR

Extended Reality (XR) is the blanket term for this new realm of immersive simulations, which is typically divided into three categories:

• Virtual Reality (VR) immerses the user in an imaginary or replicated world (or simulates the real world) in a way that completely blocks out the real physical environment.
• Augmented Reality (AR) layers or superimposes virtual images, video and sounds on the real world, which remains perceivable. This is most commonly seen in smartphone apps that show the real world in the phone’s camera with digital assets placed upon it. The “heads-up” displays of digital eyeglasses and windshields are other early examples of AR in practice.
• Mixed Reality (MR) is a hypothetical combination of the two, which could involve experiences like a “virtual wall” superimposed on reality that a user could actually “bump into” or bounce a virtual ball against.

XR in general broadens our visual command of the space we’re working and playing in. We are no longer conscious of, or limited by, the edges of finite screens. Further, the gestural control (via hand and head movements) used with HMDs represents a new, far from completely evolved, but very powerful method of navigating a computational environment.

That said, there are a number of technical issues that remain to be resolved. XR visualizations are computationally intensive and require high-end hardware to produce lifelike real-time visualizations. Improvements in size, weight, battery life, and cellular technology must all be addressed for HMDs to become a widely adopted mobile computing platform. But this has always been true of digital innovation, and these are not sufficient reasons for any firm to lag behind. As we’ve seen in previous computing incarnations, hardware will quickly catch up to software requirements.

For the foreseeable future, HMDs will co-exist with present-day computing incarnations (desktops, laptops, tablets and smartphones). In the long-term, however, as HMDs become lighter, more powerful, and less obtrusive, we foresee their use by all people in every walk of life.

OUR ENTERPRISE BET IS ON AR

XR has the potential for massive market disruption. We estimate that VR and AR together could become an $80B+ market by 2025. Our projections for that year include:

Extended Reality (XR) Device Market

source: Harbor Research

XR IS AN EYEBLINK AWAY

Although we focus on VR and AR as the major drivers of adoption of this new computing incarnation, we believe that as processor power increases and application development becomes more and more sophisticated, AR will be the more fruitful realm for business because it allows the power of computing to be embedded in normal reality.

It is still true that high adoption costs, uncertain value, and awkward user experience design are hindering adoption at the present time. However, successful XR pilots by industry leaders like Walmart, Ford, and Verizon have demonstrated the value of XR in enterprise, and this will be a major provocation for the market in these technologies to explode in the next five years.

Healthcare, retail, and manufacturing will experience the highest AR/VR adoption rate during that time, followed closely by construction and professional services. The top horizontal use cases we expect to see adopted by these verticals are training and education, and virtual workspaces and remote services.

Extended Reality (XR) Market Map by Use Case and Industry

source: Harbor Research

We think the challenges with integrating these systems into our everyday lives will require a far greater understanding of the user’s needs in a particular context-of-use. Smart Systems and the IoT push this even further. Computing power and networking is embedded in more and more of the objects and environments around us. Hence, the social and physical contexts in which connected devices and services can be used is even more complex and varied. This makes the need to rethink computing models essential to enabling effective or compelling user experiences.

As XR test-pilots continue to make headlines, work settings will also continue to shift in the wake of the pandemic, and hardware prices will continue to fall. Across hardware, software, and services, the XR market is quickly reaching maturity for enterprise use. For players looking to enter it, the time to start developing your solution is now.

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