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The complicated future of augmented and virtual reality

Illustrated gif of VR glasses
Illustration: Aïda Amer/Axios

Depending on who you talk with, augmented and virtual reality are either the next big thing or a giant disappointment. Several moves over the past week show it's probably both.

Between the lines: Both the products and the market are developing more slowly than initially anticipated, forcing startups to rejigger their plans to survive longer with less revenue and big companies to be cautious about investing too much, too soon.

Driving the news:

  • Last week Qualcomm introduced the XR2, its latest VR/AR chip designed to power the next generation of VR and AR devices and offering support for higher resolution displays, more cameras and 5G support. It's also working with Pokémon Go creator Niantic on a reference design incorporating both companies' knowhow.
  • The well funded Magic Leap is repositioning itself to focus more on business customers, only the latest in a series of players in the space to do so. It's all the more notable as Magic Leap has raised more than $2 billion in funding while being hyped as a transformational breakthrough in augmented reality.
  • Facebook sold its Oculus Medium VR development program to Adobe. Meanwhile, Oculus Quest is gaining support for hand tracking, a small but important move forward in capabilities to make VR experiences less cumbersome.

The big picture: The road that VR and AR are on is well-paved in tech. Initial buzz leads to overheated enthusiasm, then a "trough of disillusionment." After that, there's a steady march in which the technology ends up meeting or surpassing expectations even while taking far longer than anyone anticipated.

  • The problem for AR and VR is that several key ingredients — battery life, screen resolution and comfort — aren't where they need to be for either technology to go mainstream, especially for consumers.
  • By aiming at consumers, companies also made sacrifices in the name of cost, which has further compromised the experience, says Urho Konttori, founder and producer chief at Varjo, a Finnish startup focused on VR for business.
  • Many AR and VR companies are pivoting towards business use because in that market, as long as you can find one money-saving or productivity-enhancing use, you can ship a successful product.
  • In the consumer market, by contrast, there's a chicken-and-egg problem — there's not yet enough content to drive hardware sales, and low hardware sales mean the market remains unattractive for most content creators.

What's next: At last week's Snapdragon Summit, I had a chance to try out technology from startup Spatial, which aims to create virtual collaboration for business users across different kinds of devices and platforms. (See video here.)

  • Spatial's technology allows people on XR2 prototypes, Microsoft HoloLens, Oculus Quest and even AR-capable smartphones to engage, via avatar, in one virtual environment, using virtual whiteboards, for example. While still crude, Spatial's tool is already in use at companies like Purina to bring together remote teams.

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