Why augmented reality is expected to be four times bigger than virtual reality

Although virtual reality products like Oculus Rift have attracted more attention lately, augmented reality devices like Google Glass might have more potential in the market.

Virtual reality (VR) has gained a lot of attention in both the technology and mainstream consumer markets over the past few years, and rightfully so. It's a jarring experience not only for the user who gets fully immersed into the move or video game they view through the device, but also to anybody who happens to see somebody with an Oculus Rift strapped to their face. That latter aspect is a big part of the reason why one analyst expects the less-invasive augmented reality (AR) to be the more successful of the two.

Augmented reality has taken a back seat in the emerging tech world in the last few years, and suffered a particularly big setback when Google withdrew its Glass headsets from consumer markets in January. The world's first big introduction to AR fell flat, earning a negative reputation (at best) among everybody except those who wore them.

Going forward, however, the features of Google Glass which were not under scrutiny – the AR tools that overlaid information on top of real-world objects – will eventually appeal to consumers and generate as much as $120 billion in revenues by 2020, Tim Merel, managing director of consulting firm Digi-Capital, wrote in a recent article for TechCrunch. By comparison, Merel expects virtual reality to generate about $30 billion by 2020.

"AR is great fun for games, but maybe not as much fun as VR when true immersion is required – think mobile versus console games," Merel wrote. "But that possible weakness for gamers is exactly why AR has the potential to play the same role in our lives as mobile phones with hundreds of millions of users. You could wear it anywhere and do anything. Where VR is like wearing a console on your face (Oculus), AR is like wearing a transparent mobile phone on it (Magic Leap, HoloLens)."

Among the use cases Merel listed for AR going forward is "a-commerce," a new term that he called a "cousin of e-commerce and m-commerce" and which Digi-Capital forecasts to account for a significant share of all AR revenues. Presumably, a-commerce would mean that an AR device like smart glasses would project information like promotions in nearby retail stores or detailed product content along with the ability to make purchases directly from an AR app.

Merel briefly cited some of the societal issues surrounding these technologies, namely the widespread Google Glass hatred and the motion sickness that has afflicted some Oculus Rift users, and admits that these still need to be ironed out. But ultimately, he says that the AR market has as much potential as the smartphone and tablet markets did over the past decade.

He makes a good point. You have to wonder what could have happened had Google designed Glass to be discreet and non-intrusive, so users could make use of AR without wearing a goofy-looking headset and without the ability to record video without anyone else's knowledge. The market could very well be on its way to fulfilling that potential.

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