Even Better Than the Real Thing

Even Better Than the Real Thing

By PAUL SKELDON

‘It’s the real worldâ€"only better.” This is how Jay Wright, business-development director at technology company Qualcomm Inc., describes the latest buzz technology to grip the digital world.

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So-called “augmented reality” is the overlaying of digital information onto the real world, and everyone from games designers to retailers to health-care companies to estate agents are gearing up to use it. While the potential for such technology to change the world is vast, the biggest challenge for its backers will be to convert this virtual revolution into rock-solid profits. Fortunately, there are countless ways this can be achieved, but not all are immediately obvious.

Augmented reality has shifted from its high-industrial beginnings at aerospace firm Boeing Co., where it was used to overlay schematics of complex wiring diagrams onto actual wiring via a headset, to being a tool that offers to bring together the real world and the Internet. Such a confluence of the actual and virtual worlds should already have offered a route to riches untold. But the commercial potential of this new technology is very far from being realized.

In laymen’s terms, augmented reality is defined as computer-generated contentâ€"which typically includes graphics, audio and other sensory enhancementsâ€"that is superimposed over live images to enhance the real world. In mobile devices, where augmented reality’s future seems to be heading, it uses everyday technology such as cameras, global-positioning systems and electronic compasses. These are built into the phone, in combination with WiFi and broadband networks, to bring together location, orientation and contextâ€" all adding up to a richer experience of the world around the user.

Retail Potential

Some early examples of augmented reality in action include an “app” on smartphones that will tell a user the location of the nearest metro station, if he or she just points the phone at the street on which they are standing. Another app, from the Museum of London, will overlay on the phone’s “street view” an image of what the street looked like hundreds of years ago. Augmented reality even allows users to point a so-called “Stargazer” app at the night sky and it will overlay the constellations, stars and planets and facts about them. Others offer the chance to see reviews, menus and comments added onto the view of a restaurant or bar.

Tissot

A woman tries on a new watch remotely outside Selfridges in London. Augmented reality means she does not even need to go into the store.

Such technology is undoubtedly useful, and in the case of the Museum of London’s app, fascinating to some, but does it have any genuine commercial potential? Mr. Wright believes it has. “The means of monetizing augmented-reality apps won’t be any different to any other app,” he says. “Some will pay to download, some will use app-purchasing and others will be ad-funded. There may well be some new players and some new platforms, but the business models for these apps will be the same as all the others.”

For example, Yellow Pages in the U.S. is testing the use of augmented reality to overlay advertsâ€"paid for by businessesâ€"to street views when the app is used. Meanwhile, in the Netherlands, eBay Inc. is testing a service that will show users all those people who are trading goods in the neighborhood.

EBay’s vice president of local classifieds, Bob van Dijk, is adamant that the future lies in local salesâ€"that and adding virtual technology to its burgeoning real-estate business.

In the U.K., property website RightMove.com has also toyed with a real-estate app, developed by mobile technology firm Mobile Interactive Group Ltd., which works in the same way as eBay’s proposed new service. In this case, users point the phone up and down the street and the app tells them what is for sale, or to rent, how much it costs and gives the user the chance to contact the property agent.

It’s not only in real estate and classified ads that this new virtual technology has money-making potential, says Theo Forbath, vice president of innovation strategy at software company Aricent Inc..

“The real money lies in turning augmented reality into the consumer space with games, entertainment and education,” he says. “In the next 12 to 24 months you will see it everywhere, changing how people shop, by bringing the advantages of the Web to the in-store experience. It will transform business, allowing for better virtual meetings and it will play a big part on both children’s educational toys and adult education. Think of those headsets you currently get given at museums: These will soon all be apps on mobiles.”

Virtual Tech, Real Money

What is exercising the calculators of venture capitalists the world over, however, is how to turn this technology into something that creates genuine revenue streams.

“Retail and gaming are the obvious areas that can deliver revenues with augmented reality right now,” says Mr. Wright. “There are already shoot-’em-up games you can play, interactively, overlaid onto the real world and there are already many games developers working on such games that will sell at a premiumâ€"expect to see them on sale early next year.”

Jonathan Chippindale, chief executive of augmented reality retail pioneer Holition, believes that the future of the technology lies in the consumer arena. “We saw huge interest in our augmented reality screens at the front of Selfridges in London. These allowed people to virtually try on Tissot watches without going inside the store,” he says. “Tissot saw sales of its watches rise by 83% in the store while the trial was running.”

eBay

‘Now anyone wanting to sell something can simply scan its bar code and use the information provided to create a sales profile.’ — Roeland Loof of eBay

Another area where retailers are set to benefit is in applying augmented reality to technology that is already in widespread use, such as bar-code scanners. Built in to a number of retailer apps, bar-code scanners allow consumers to scan a bar code and launch all manner of information about that item. “EBay has built this into its sellers’ app,” notes Roeland Loof, head of mobile in Europe for the auction site. “Now anyone wanting to sell something can simply scan its bar code and use the information provided to create a sales profile. This makes selling via mobile much easier.”

But augmented reality has perhaps one more potentially lucrative surprise up its sleeve. While much attention has been placed on how it can extend things that already exist, many are starting to look at how it can generate a whole new revenue stream through its use in health careâ€"or more specifically, health monitoring.

“Our research shows that 19 out of 22 health-care professionals already see wireless health-care monitoring as vital,” says Andy Zimmerman from Accenture Ltd. “There are already millions of devices in circulation measuring heart rate, blood sugar, asthma and even whether elderly patients are moving or upright. And consumers appear to be willing to pay, often relatively large amounts of money, to get the data from these devices [on their mobiles] from aging parents so that they can monitor them remotely. It all comes down to the fact that residential care for the elderly is very expensive, so they are trying to look after them at homeâ€"and wireless technology helps do this.”

This may not be what most people imagine when they think of augmented reality, but it is perhaps the main money spinner for using data to “augment” the real world.

Mr. Skeldon is a mobile telecoms journalist based in London. He can be reached at reports@wsj.com.