Reality check

Augmented reality holds much potential for operators and application providers. But how long will it take before it becomes a reality?

Tags: Booz & CompanyEricssonQUALCOMM Incorporated
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Reality check Matar: Advertising is likely to be at the forefront of AR applications.
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By  Nithyasree Trivikram Published  February 13, 2011

With the potential to change the way people view and interact with their surroundings, it is no surprise that augmented reality (AR) is a much talked about topic in the mobile application development space.

And while some analysts have expressed their doubts amid the hype, many industry insiders are convinced that AR will have a major impact on numerous sectors, from advertising, to retail and entertainment.

And with US-based research firm, Juniper Research, predicting that revenues from AR could reach $732 million in 2014, the nascent industry is fast gaining the attention of operators, vendors and application developers in the MEA region.US wireless communications specialist Qualcomm is just one company that is taking AR seriously.

Ziad Matar, Qualcomm’s director of business development for the Middle East region, believes that advertising, education and gaming are three sectors that stand to benefit from visual-based AR, and he says that advertising is likely to be at the forefront of AR developments.

“We foresee advertising to be the stepping stone for AR because it is a region that is very strong in local and regional advertising tenets, with a lot of advertising created and produced in the region.” He points to AR applications that allow a mobile device to project images onto surfaces such as a piece of paper as having significant potential in gaming and advertising. “AR can transform a piece of paper from a magazine into a living image that provides a message to the end-user.

“It could be bringing a text book to life or bringing an object which is new to the end-user that provides information on top of it. Ali Shah, business development manager at Ericsson sees location-based services as an early form of AR development. “The first level of AR probably came from Google by way of putting street maps on to the web. Though this hasn’t happened in the MEA region, in North America and in major cities in Europe it is widespread.

“We see smartphones with built-in GPS systems, accelerators and compasses, and AR applications can be built on. Though we see that smartphones are increasingly being used, it is just starting, as these are not yet mass market phones and they are still targeting a very niche market segment,” Shah says.

He also points to Google’s ‘Goggles’ application as another innovation that represents simple form of AR. “Launched in December 2009, Goggles is an image recognition software application for smart phones that allows you to take a picture of an object and it presents you the search result of that object from the internet,” Shah says. However, AR also brings its share of challenges. David Tusa, principal of Booz & Co, says that the opportunities presented by AR are “not without complexity”. He sees application developers as a more obvious beneficiary of AR than operators.

“In principle, the opportunity is there for AR just like any other application. But in terms of gross opportunity, it is not without complexity. “From a global perspective, people see a very strong `wow’ factor to AR. However, it’s not the natural territory for an operator.

It is much more for an application provider providing Android and iPhone apps. If it happens, the first sector to adopt this will be advertising. “I think that operators don’t have enough of the ecosystem in place to be able to make AR work in this region,” Tusa adds.

For Qualcomm’s Matar, collaboration between operators and application providers will be key to making AR a success. He says that adopting AR puts the region’s developer community at the forefront.

“Operators have a big role to play to enable the ecosystem, and that’s why they are already active in supporting the local and regional developers through application developer forums, and the development forum of Etisalat’s Mobily is geared towards iPhone apps development.”

Matar adds that another key component to make AR a reality is the ability of the smart phones to handle it. Shah adds that the MEA region will follow a global trend of adopting more AR applications, particularly as smartphone penetration grows. “We will be seeing more AR type applications coming into mobile phones here. A number of vendors have already announced AR applications on their devices such as Samsung.

“I see that the apps market will commoditise and what we will see is the demand for local content, because AR is all about content and that has to be local,” Shah says.
Qualcomm is currently supporting two on-going AR projects, according to Matar. “One of the projects is between a developer and a local entity in the UAE, which is expected to be launched during the first half of February this year. It will be an advertising application, but the message will be intended to educate the end-user about what they can do.

Shah adds that AR’s dependence on positioning technologies also opens up opportunities for telcos to “jump onto the AR bandwagon”.

“We are in discussions with most of the operators in the MEA region based on the customers we have in the mobile positioning systems and location-based services space.

“We focus on how we can use location-based and mobile positioning systems in AR as a mechanism for operators to enable them to gain new revenue streams,” Shah adds. But Shah also points to some challenges in terms of the development of AR applications, including a lack of standards. “There is no de facto standard in AR space. There is no platform that is big enough for everyone to work on,” he says.

“On existing platforms, you have applications like ‘Layar’ which works on the concept of ‘you have a map and a position, and you can provide layers of content on top of it.’ You basically put a layer of information on top of a GPS map.”

Shah believes that regulatory frameworks are a requirement for AR apps, particularly with respect to privacy. “With AR, which is also location-based as a technology, we will have issues about privacy and sharing of information. I see that some regulations might come in future. Hopefully, people and providers will regulate themselves, but if there is abuse, definitively regulators will come in.”

Profiting from AR

AR benefits operators in various ways including cost per download, applications paid for, incremental revenues including subscriptions, licences and advertising revenues.
AR is an important development for operators, according Matar. “The convergence that you are seeing between the mobile lifestyle and the IT lifestyle is bringing the entire web into mobile phones.

“As AR is about being everywhere, anytime, it’s going to be a personal service which only the mobile smart devices can provide. Mobility provides a premium that one can charge for, and hence it’s an additional revenue stream for operators.

He points to gaming as one area that could offer revenue generating opportunities to telcos. “The gaming apps sometimes rely on the real-time information that the operator will help bring through their networks. This will enable a constant communication need for the end-user to the device through the internet, which only the operator can provide,” he adds.

Shah says that while telcos have huge amount of data about companies and their profiles, AR applications can be used in some of their assets such as in location services and directories, in a more user-friendly manner, enabling operators to monetise assets more efficiently.

The core challenges of AR, according to Matar, are a clear understanding of the business model and who will fund projects. “We provide only tools and technologies to develop AR. But the limit is only the imagination of the people who develop it, and hence we work along with advertising agencies who have the creativity in place.

“However, we see that the business models will get defined as the AR field matures. Initially, operators will be able to charge for the data, which will enable them to reap the benefits of at least the connectivity requirements.

For Shah, content is a major challenge for rolling out AR in this region. He adds that there are no major regional content companies that are pushing AR at the moment. “One concept that is quite common in AR type is where you use the community to add value to the network. There is a very popular application for mobile phones which is called FourSquare, which is used by a lot of people in the UAE. This application uses the mobile user community to build content to its directory that proves beneficial for advertising by brands to draw customers. Perhaps, this will be a good area where operators can tap into offering their services.”

Tusa adds that operators could face a challenge in terms of the sheer network capacity required by AR applications. “The challenge for operators to offer AR services is the data capacity on networks because it sucks up a huge amount of data, particularly with mapping applications, and the issue is that operators cannot charge for it,” he says.

Shah is  optimistic about the potential of AR. “We will see various AR applications being used in areas spanning from M2M to consumer applications and gaming. Fast and efficient mobile broadband networks and technologies like LTE will provide the necessary infrastructure for adaptation of the AR technology across different industries,” he says.

Matar adds that much of the success of AR will hinge around collaboration between device manufacturers and app developers to make AR a “native application”. “You can already see this happening. Samsung is very much emphasising that all of their new high-end smart phones come with ‘Layar’ app,” he says. “Here, device manufacturers will have to play a role in making this technology ubiquitous, and it calls for a clear business case. “As AR evolves, it will become ubiquitous, just like the world wide web,” he adds.

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