But even with strong progress across the market, enterprise customers tell us it is too early to make a call on critical enterprise apps for smartglasses, VR or mobile AR.
The Enterprise Reality Ecosystem needs a strong cloud backbone and data analytics/business intelligence to support decision-making. The enterprise AR Cloud is emerging with Microsoft Azure Spatial Anchors, as well as broad AR Cloud startups like 6D.ai and Ubiquity6. So despite its early stage, there appears to be a path forward for the AR Cloud to support both smartglasses and mobile AR. There is less clarity for the enterprise VR cloud, although some have suggested blockchain as a solution. For enterprise AR/VR data analytics/business intelligence, Digi-Capital’s AR/VR Analytics Platform launched as the first dashboard solution to service this market at Google in mid-2018.
While the largest enterprise platforms today have users in the billions (PC, mobile, Microsoft Office etc.), enterprise AR/VR platforms need installed bases in the hundreds of thousands to millions to scale. Microsoft HoloLens 2 will reach hundreds of thousands of enterprise devices in the short term, but be highly concentrated in the company’s massive US Army contract at first.
HoloLens 2 (and eventually 3) could scale from that base to millions of devices across industries, but it might take Apple launching smartphone tethered smartglasses and bring-your-own-device (“BYOD”) demand for enterprise smartglasses installed base to reach their inflection point. Digi-Capital first forecast Apple launching in late 2020 over 3 years ago, but only Tim Cook and his inner circle really know if and when that could happen (and what it might look like).
VR’s enterprise installed base has seen individual corporate rollouts in the tens of thousands of units for training (e.g. Walmart), but still has a way to go to scale more broadly across enterprise.
Mobile AR has an enterprise installed base in the hundreds of millions today due to the ubiquity of compatible and configured devices. Again this isn’t active users, which is a much smaller number today.
Enterprise tech platforms don’t just need critical use cases and apps, they need critical hardware to run on. As above, HoloLens 2 could become smartglasses’ first critical hardware, with other players competing for that title (again Magic Leap has been primarily consumer/creator focused, but is also positioning for enterprise).
VR’s high-end and mid-range headsets from HTC, Facebook/Oculus and others have been used by the enterprise community for several years now, with ultra-high-end VR headset Varjo also launching this year. iOS/Android smartphones/tablets already do most things that enterprise mobile AR users need without dedicated hardware, although rear-facing depth sensors could add functionality as they become more commonplace.
Investment is a key driver to fuel the Enterprise Reality Ecosystem, with internal corporate spend as important as VC funding of startups.
In the consumer smartglasses market, Digi-Capital’s AR/VR Analytics Platform tracked Magic Leap raising over $2.6 billion so far. In the enterprise smartglasses market, Microsoft’s internal spend on the HoloLens ecosystem could dwarf that number (note: Microsoft has not discussed a figure). This appears to be yielding results, with the company’s $480 million US Army contract the largest single contract with an enterprise customer to date.
VC investment into consumer VR has dropped dramatically in recent years, with some enterprise VR exceptions. Facebook and HTC continue to spend internally to grow their enterprise VR businesses, with some large enterprise contracts to show for it. Investment into enterprise mobile AR has been small compared to smartglasses so far.
There are strong players in specific parts of the enterprise AR/VR market, but only a handful of companies with resources and capabilities to lead across the stack (in a similar way to Apple in the broader smartphone market, not just enterprise).
For enterprise smartglasses, Microsoft’s HoloLens 2 and ecosystem look like the ones to beat in the Enterprise Reality Ecosystem. Google and Apple could challenge, but Google Glass for Enterprise is an indirect competitor in some ways, and Apple remains Sphinx-like. Magic Leap has been positioning itself too, so it will be interesting to see what it delivers.
For enterprise VR, HTC, Facebook/Oculus and Microsoft (with partners) are the contenders for full stack enterprise solutions leadership. Likewise Apple and Google for enterprise mobile AR.
Too early to tell
The Zhou Enlai quote “it is too early to tell” is an appropriate summary of the Enterprise Reality Ecosystem today. Enterprise smartglasses, VR and mobile AR have solved parts of the puzzle, but each needs key pieces to become a true ecosystem in its own right. The focus, energy and talent focused on the challenge are formidable, so it’s going to be exciting to see where things goes from here.
(A big thank you to other great folks who helped in the research: Herb Schilling of NASA, JR Dawkins of Verizon, Jan Pflueger of Audi, Amar Dhaliwal of Atheer, Dirk Shart of Re’flekt, Marco Campanari of Hyperfair, Karl Maddix of Masters Of Pie, Florian Haspringer of Holo-Light and Daniel Seidl of Innoactive)
About Digi-Capital: Digi-Capital is a Silicon Valley based AR/VR adviser (reports, analytics platform, strategy consulting, investment banking)
Come see Tim Merel speak at our VRARA Enterprise Summit at LiveWorx June 10th in Boston!