ARCore & ARkit: The Acceleration of Mobile AR (new report)

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Mobile AR hit an inflection point in 2017. It started with Facebook's Camera Effects Platform in April, followed by Google's "visual search" and "VPS." Then in June we saw Apple's ARkit, followed by Google's August ARCore launch.

Those last two are perhaps most impactful because of the tools they create for developers to build more advanced AR. Mobile AR can really scale when it's in the hands of developers, and when they're incentivized by an installed base in the hundreds of millions of devices.

We've recently quantified that installed base (ARCore & ARkit), but decided to take it a step further. ARtillry's latest Intelligence Briefing takes a deeper dive on ARCore and ARkit. How do they differ? What happens next? and what does it mean for AR developers?

The report tackles these questions, which you can preview and/or subscribe here. More can be seen below in the report's executive summary. Stay tuned for more analysis in the coming weeks, especially as mobile AR continues to evolve.

Executive Summary

Over the past six months, the tech sector has reined in its initial excitement about glasses-based augmented reality (AR). This includes realigned expectations on the time horizon to consumer ubiquity. But in the meantime, the AR world is keeping busy with another opportunity: mobile AR.

Beyond specs (battery life, field of view, etc.), AR glasses’ detriment is form factor: It needs to be sleek and cheap enough to sway consumers to reconcile a key point of friction: personal style. The bar is set high for anything people are asked to put on their face, as Google Glass taught us.

This concern goes away in enterprise contexts (the topic of another report) but is a sizeable barrier in consumer markets. And we’re a few years from marketable formats. The good news is that the stepping stone — or gateway drug as we like to call it — is mobile AR. And there’s a lot happening.

Going by the numbers, mobile AR’s addressable market isn’t the low-millions of headsets: it’s the 3.2 billion global smartphones today and 4.6 billion by 2020. Those aren’t all AR compatible in terms of optical and processing components, but most will be over the next replacement cycle (2.5 years).

Google’s AR development kit ARCore will become compatible with 3.9 billion global android devices during this time frame, and Apple’s ARkit will reach 673 million iPhones. Both achieve AR through software, utilizing the standard smartphone RGB camera, thus lowering the barrier to “true AR.”

Compared to graphics that simply overlay a scene, true AR infuses graphics that interact with physical objects in dimensionally accurate ways. ARCore and ARKit apply simultaneous localization and mapping (SLAM) through a surface detection approach that doesn’t require advanced optics.

The result is an overall democratization of advanced AR capability. This starts with the massive installed base mentioned above, which in turn incentivizes developers with a larger addressable market. Then the content they create entices more users to engage, enacting a virtuous cycle.

Looking forward, we can expect several AR apps as ARCore and ARKit gain footing. But more impactful will be years of third-party innovation with both SDKs. That could rival in creativity and advancement, the app economy itself, which kicked-off ten years ago with the first iOS SDK.

But several questions remain: How quickly will this happen? What are the pros and cons of each AR toolkit? What will be best practices in building, distributing and marketing AR apps? And what does it all mean from where you sit? These questions are tackled throughout this report.

ARCore Will Reach 3.6 Billion Phones by 2020

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Just like Apple’s June ARkit launch, Google’s recent ARCore unveiling has bred lots of interest its addressable market. And just like with ARkit, ARtillry has applied best practices in market sizing and forecasting to pinpoint that figure.

The verdict: There are 26.5 million ARCore-compatible  phones today, growing to 71.5 million by the end of 2017. Based on the size of the Android universe, this will quickly accelerate over the next few years, reaching 3.6 billion units (92 percent Android coverage) by 2020.

How did they arrive on these figures? The starting point is ARCore’s current compatibility, limited to Google Pixel and Samsung Galaxy S8, running Android 7.0 (Nougat) or greater. Looking at cumulative sales figures for both devices, we’re at roughly 26.5 million total units in market.

But that’s the easy part. The hard part is projecting forward. Based largely on the size of the overall Android installed base — 2.9 billion global devices today, growing to 3.8 billion by 2020 — number crunching ensued. One key forecast input is upgrade cycles in the Android Universe.

About 16 percent of Android devices usually run OS versions released in the prior year, while 32 percent run versions older than one year, 29 percent older than two years, 15 percent older than three years, and 8 percent older than four years (hence ARCore’s lack of full coverage in 2020).

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There was also a major hint from Google: The company noted in ARCore’ introduction that it’s working towards a goal of 100 million compatible phones — including Huawei, Asus and LG — when the platform launches. It didn’t provide a date but we’re predicting Q1 2018.

Stepping back, one takeaway is that ARkit has a slight advantage in being first to market with a head start in developers’ invested time. But the lifespan of AR will eventually diminish Apple’s three-month head start. Greater developer attraction will ultimately come from platform reach.

Apple also has a near-term lead in the installed base of ARkit-compatible iPhones (380M), but one hardware replacement cycle (2.5 years) will give most smartphones AR-compatible optics and processing. And the Android universe exceeds iOS, by more than two billion units.

Other points of differentiation come down each platform’s approach for delivering AR. Apple’s DNA is an app based framework, while Google’s web-based DNA will be reflected in its use of Web AR. The latter could have less friction (in addition to more scale), as we’ve examined.

There is of course a lot more to these competitive dynamics and addressable market sizes, and they'll be included in ARtillry Insights' latest report, available tomorrow. It will take a deeper dive on ARCore and ARkit, and the strategic implications for everyone. Subscribe here.


For a deeper dive on AR & VR insights, subscribe to ARtillry Insights. See ARtillry's market-sizing and forecasting credentials here. 

Uncovering Consumers' VR Behavior & Attitudes (New Report)

To access the full report, subscribe to ARtillry Insights. VRARA members receive a substantial discount. Become a member here.

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Who’s using virtual reality (VR) today? What are their motivations? What are the VR use cases and content categories that resonate most? And for those uninterested in VR, what are their reasons?

A lot can be learned about VR’s market opportunity by answering questions like these, and uncovering sentiments of the consumer public. And in VR’s early days, such data is scarce yet critical to positioning strategies.

So ARtillry set out for answers. Working closely with Thrive Analytics, ARtillry authored questions to be fielded through its established survey engine. The result is the first wave of Thrive’s Virtual Reality Monitor™ (VRM).

Tapping a considerable sample of almost 2000 adults, the data returned telling consumer behavior patterns, useful in ongoing VR strategy refinement. That includes content, hardware and other components.

See the key takeaways below and preview the report here. To access the full report, subscribe to ARtillry Insights. 


Top findings include:

  • VR headset owners showed high satisfaction compared to other categories of consumer tech products. However many non-owners (38%) reported disinterest in VR ownership.
    • VR's immersive experience presents a double-edged sword: It produces highly visceral and satisfactory user responses... but you have to see it to believe it
    • This creates a challenge to scale distribution, given inherent adoption barriers like price and technological invasiveness. Education, retail installations, VR arcades and mobile VR will be the 'gateway drugs' to reduce that friction and cultivate tomorrow's VR owners.
  • Among the things that VR users desire, more and better content top the list.
    • This validates that content is king in VR, just like other mediums.
    • Content is currently a gap in VR’s value chain, challenged by a classic "chicken & egg" dilemma, given low overall headset penetration.
  • VR affinity correlates to youth and natural technology interest among digital natives.
    • Willingness to spend $400+ on VR equipment shows a reverse correlation to age, with one exception: Ages 25-34 are more willing than ages 18-24, likely due to spending power.
  • $400 is a significant price point, validated by Oculus’ recent Rift pricing adjustment.
    • We’ll see more price competition: emerging sectors often trade margins for market share.
  • Native thinking is a VR success factor: building specifically for the form factor.
    • Just like with smartphones, VR apps and games that utilize unique aspects (i.e volumetric movement) will outperform those that shoehorn legacy 2D media into a VR experience.

Availability

The report is available to preview, and full access can be granted to ARtillry Insights subscribers. In partnership with the VR/AR Association, ARtillry Insights delivers a bundled research package to equip subscribers in AR and VR sectors -- and those entering from other sectors -- to make informed business decisions. Learn more or subscribe here

VR/AR Opportunity Spotting is All About Knowledge

AR and VR are poised to become the next transformational platform shifts, reaching nearly all aspects of our lives and work. And that vision holds business opportunities accross several verticals -- everything from gaming to retail.

But the opportunity is counterbalanced by substantial challenges, such as detecting the right gaps in the value chain. As always, it's a matter of optimal timing and go-to-market execution. And that process is all about being empowered through a knowledge position.

Against that backdrop, we announce ARtillry Insights, a research and intelligence subscription. Through a partnership with the SF-based Intelligence firm ARtillry, we'll deliver a monthly package consisting of original and curated intelligence. 

Its main goal: to equip subscribers in AR and VR sectors -- or those entering from other industries -- to make informed business decisions. To find out more, see sample work or subscribe, go to the ARtillry Insights main page, or contact us.

VRARA Members receive a subscription discount.