Augmented Reality: Getting Beyond the Hype

This meshing of digital information with real-world images is all set to take off. But a few hurdles remain

As we look back on the year's technology milestones, 2009 may go down as the year of the rise of augmented reality. As recently as January, this meshing of digital information with real-world images sparked little interest even in the geekiest of circles. But more recently it has made appearances in everything from Topps baseball cards and Honey Nut Cheerios cereal boxes to John Mayer's Heartbreak Warfare music video and Michael Bay's DVD release of Transformers: Revenge of the Fallen. Augmented reality is near the beginning of a meteoric rise—and it has the potential to affect every aspect of how we interact with technology.

Yet augmented reality will have to overcome some major challenges if it is indeed to become, well, a reality. Hype around new technologies is nothing new, but the hype around augmented reality is off the charts. A quick look at Google Trends provides an excellent illustration of this. Searches for the term augmented reality have been static or even declined in recent years, only to spike since the beginning of the year, especially in recent months.

Recent interest is being driven by the convergence of handheld smartphones, faster cellular networks, and cloud computing. Bruce Sterling calls augmented reality "a techno visionary dream come true." However, much of the hullabaloo surrounding augmented reality paints an unrealistic picture of this blossoming industry.

Twitter While You Walk

Many of the applications showing up in Apple's (AAPL) iTunes music store claim to feature "augmented reality," and if you push or pull at the accepted definition of the term, they just might be. But is an application that lets you Twitter safely while you walk, by replacing the normal background screen with the camera's view of what's in front of you, really augmented reality? Or should the term "augmented reality" be reserved for applications that truly mix digital assets with the real world?

The industry could battle the hype and mislabeling by establishing standards the rest of us can understand. Otherwise, augmented reality will quickly meet the same fate as "green" products: Marketers will advertise even the slightest of augments as "augmented reality," leaving consumers confused and bewildered. Consumers and purveyors of augmented reality devices and applications might benefit from input from an organization such as Underwriters Laboratories, which tests products for safety and compliance with standards.

Another challenge facing augmented reality applications is determining the location of the user. Specifically, apps need to do a better job knowing where I am, and where I'm going.

The where-I-am part of the problem is painfully obvious to almost every smartphone user. Since most augmented reality applications run on devices like the iPhone or Android-powered handsets, they are limited to the GPS capabilities of those devices. More often than not, the accuracy of these devices is less than stellar. Confirmation that you are within 50-100 yards of your actual location might be good enough for today, but future applications will require much more precise GPS data.

Software Gap

The "where I'm going" part of the equation needs as much work, if not more—and the responsibility falls squarely on the shoulders of software developers. Personally, I've found many of the currently available augmented reality applications to be somewhat disappointing. Sitting at a downtown Austin (Tex.) coffee shop, I used one to look up surrounding points of interest from Wikipedia. As I moved the device around the room I was presented with graphics floating in space listing out all details on various points of interest around me.

This was a very cool effect. Yet when I pointed the camera in the direction of the Capitol building, the only thing in the viewfinder, other than the two people who could be seen studying nearby, was a floating graphic indicating that the Capitol was 1.6 miles in that direction. In many cases the "value" of the augment is minimal unless I'm in line of sight of what I seek. Otherwise, what premium does this technology provide over Google Maps, or any of the dozens of "non-augmented" applications that provide the same function? For augmented reality to become a part of our everyday lives, it's going to have to become practical.

One of the biggest pieces missing from the augmented reality puzzle is the realization of a cheap and fashionable head-mounted display. Sure, holding your iPhone up in front of you like a divining rod works, but it's tiresome at best. And let's face it, people stare.

In 1966, American computer scientist and Internet pioneer Ivan Sutherland invented the first head-mounted display. Now, 43 years later, we're just starting to solve some of the associated complex problems.

Time to Invest

Here's where investors can play a key role in helping make the augmented reality hardware of science fiction a reality. I know Terminator vision seems like fantasy, and your partners at the VC firm don't see a market, but the time to invest in augmented reality hardware is now.

Then there's the power-consumption conundrum. Augmented reality applications tend to soak up all of the power that a device has to offer. The use of the display, Wi-Fi (or 3G network), and processing power all add up to major battery drain. Fortunately, the semiconductor industry is already working hard to address this issue across the spectrum of cell phones, netbooks, and other wireless devices.

However, there's a flip side to augmented reality's need for power: Not only do devices need better power supplies, they also need more computational power.

The devices currently available on the market are hundreds of thousands of times more powerful than the computers of yesteryear—and they fit in your pocket. That's great, but augmented reality needs more than the limited computational power of these devices to truly fulfill its potential. Future processors and integrated chipsets will hopefully provide the necessary advances in both computing power and power optimization. But until they arrive, "power" will likely be one of the most limiting factors facing the augmented reality industry.

The great news is, there's a very good reason why so many are jumping on the "augmented" bandwagon: opportunity. The challenges outlined above will be met—not just by the amazingly talented people who've been toiling away for years to bring the industry to this point but also by those just venturing into the field.

Before it's here, it's on the Bloomberg Terminal.