Daily Crunch: AR Startups Face an Uneasy Future

Very rarely does an early technology garner such an air of inevitability like AR has in the past few years.

2018 was supposed to be a year where the foundational tech for augmented reality was built out a bit and the industry took a couple big leaps.

Things started off well-enough, but momentum really doesn’t seem be on the side of some of the industry’s heaviest hitters heading into 2019, suggesting that life for earlier-stage startups may not be much easier.

There are plenty of reasons to be long-term bullish on AR, but the time horizons some have espoused seems to be bogus and pitch decks organized around a near-term spike in phone-based or glasses-based users are going to have a tougher time being taken seriously in 2019.

AR

The ghost with the most:

The company spent the past few years trashing industry standards and lauding their own approaches with braggadocio. But ended up releasing a product that largely iterated on its competitors.

With the release of their “developer kit” this year, a product that clearly seems to have stopped being a first-gen product. Only when the reality of the climate availed itself. The startup seems to be finding that optics and infra progress is going to come more slowly than foretold.

AR

People’s Take on AR:

According to people who think Magic Leap hindered progress in the AR industry by siphoning investor attention and discouraging other hardware startups from joining the fray in the face of a billions-backed unknown.

But in 2019, there are fewer available plays for the funding juggernaut. They spent years trying to distinguish themselves from the corporate mission of Microsoft and their HoloLens headset. Now it seems they’ve begun to see that the only hope of justifying their sitting valuation in the next few years is enlisting support from the big customers. That MSFT is chasing, as opposed to single-handedly birthing a consumer market.

Magic Leap recently lost a bid to Microsoft for a $480 million military contract to outfit troops with AR headsets. And Microsoft prepares to release a second-generation HoloLens with the enterprise in full concentration. It seems like Magic Leap is going to reshuffle its deck.

At this point, selfie masks still seem to be at the edge of users’ comfort levels. Leaving lots of solved tech problems stuck in limbo waiting for problems that makes them worthwhile.


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Platform tech opportunities:

Part of this broader content pain is the fact that some known platform fundamentals are still getting tackled.

In 2018, the startups in AR that were raising the most buzz were so-called “AR cloud” startups. Teams that largely focused on solving more fundamental back-end problems around localization and mapping.

It turns out “simple” problems like getting a bunch of users in a single session or keeping track of objects you’ve moved around between sessions are actually incredibly complex.

Targeting Audience:

Platform plays are going to have to dial in their target audience. A bit more than everyone with an AR-enabled phone. More realistic expectations are something the industry should benefit from.

ARKit and ARCore are going to level-up and game engine-makers are going to get better solutions for AR content creators.

Back-end vision challenges going to solve and enable things like more seamless multi-player. But there are plenty of reasons why these tech problem solutions won’t lead to big changes in user behavior.

Users failing to take off in the second year of some of these big platforms probably won’t dissuade Apple. But it definitely will dissuade some investors from continuing to bet big on the near-term future of mobile AR.

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Vaibhav Tyagi

Vaibhav Tyagi

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