Augmented reality "is a live, direct or indirect, view of a physical, real-world environment whose elements are augmented by computer-generated sensory input such as sound, video, graphics or GPS data."
Augmented reality has been around for awhile now, and is becoming increasingly relevant. Many players in the technology sector seem to be gravitating towards the technology and many are even beginning to file patents. Looks like the patent war may be endless. Anyways, Could this technology be the next innovation that drives the tech market?
There seems to be an expanding number of companies moving towards the innovative augmented reality concept; and numerous gadgets, uses, and apps are beginning to spring from it. Patents are being filed and new ideas are being applied and integrated into the concept of augmented reality. If it can become more mainstream and successfully crossover into the retail market, the possibilities are endless. Soon companies like Apple, Microsoft, and Google may be competing over this technology, while simultaneously engaging in more and more battles relating to the existing patent war.
Tech companies aren't the only ones getting into augmented reality, either. Disney (NYSE:DIS) has also filed patents. Even Bank of America (NYSE:BAC) is getting in on the technology, filing patents as well. Many of these patents seem to be more conceptual then realistic, but augmented reality seems to be seeping into the world as a retail reality. The key for adoption will be transitioning the technology away from "novelty" status and into something consumers see relevant and useful.
Google (NASDAQ:GOOG) has their new glass project that focuses on augmented reality. Google intends to blur and blend reality with a new set of glasses which will project information, entertainment, and other functions such as an online search. The company also recently announced a "Star-Trek" inspired feature "where gadgets woven into users' daily lives seamlessly respond to questions." The glasses may replace the smartphone one day, according to proponents of the augmented reality gadget.
Google has also apparently filed patents for an augmented reality watch. The watch in its current imaginative form will contain a transparent cover which will allow its owner to view content on an augmented reality screen. These items are just prototypes, but could one day be the next big thing. Google is developing a series of augmented reality products which look promising.
Nokia's (NYSE:NOK) upcoming Windows 8 smartphone, the Lumia 920, will possess an augmented reality app dubbed "city lens". This is another step to move augmented reality to retail and cement it in the mainstream technology market.
With City Lens, the user can hold up their Lumia 920 and their environment will become loaded with information regarding their surroundings. Navigation and mapping will also be integrated into the app, so that users can utilize it to find what they are looking for as well.
Apple (NASDAQ:AAPL) has also experimented with augmented reality in the past. Last year they filed patents for an augmented reality app that seems to be similar to the Nokia app mentioned above. Mapping apps that use augmented reality are already available for the iphone in the app store, but like most existing augmented reality apps they tend to be clumsy and not as reliable or responsive as they should be. It will be interesting to see how good the Nokia app is, because it may end up being another clumsy augmented reality app that gets added to the long list of existing apps.
Microsoft (NASDAQ:MSFT) is yet another company that is exploring augmented reality technology and its various uses. Microsoft, in conjunction with the University of Washington, has apparently been working on contact lenses that receive and transmit radio signals between an individuals optical nerves and their brain. According to the research team, the lenses may contain the possibility to help treat blindness, as they don't need vision to transfer information. This is because the info is transmitted directly to the brain through nerves. Theoretically, an augmented reality stream could be sent to the brain to allow formerly blind individuals to see. This seems like a bit of a stretch, but the possibilities are intriguing nonetheless. Microsoft also possesses Kinect technology, which may add another component to the development of the future augmented reality market.
When looking back at the tech sector, Google seems to be in the lead. The Google glasses have already been revealed to the public, albeit not yet released, and have the potential to enable users to have unlimited access to information with the blink of an eye. Everywhere the glasses go, so will Google's search engine. This could be a huge source of growth for Google, especially while their search engine holds the dominant position in the market by far.
Other companies are experimenting with the technology and putting their own unique touch on it, but if Google's glasses are released and become a hit, they may soon become a game changer. Internet search is expected to continue growth by 12% over the next five years, and Google has the dominant market share in search. If search is integrated into AR Glasses that create the ability to "Google search" anywhere, anytime, then growth may exceed a modest 12% and perhaps even explode.
Google search screens may even end up on kitchen walls and dinner tables. If Google can pull it off, they can utilize AR technology to make their search engine available everywhere we look. Why is this significant? Search is Google's most profitable product, and they are seeing pressure put on their revenue due to mobile. With AR devices, search will be not only mobile, but everywhere.
After their recent dip in price, now looks like an attractive time to start considering Google, since the sell-off has made them cheaper by nearly $100 from their 52 week high.
Augmented reality could end up being Google's innovative savior that generates explosive growth and advertising through search revenues. If growth is a concern, it might end up becoming an unfounded concern if (and this is a big if) AR catches on. According to research, the AR market is expected to double by 2015. Like the smartphone market once was, AR is currently a niche market that is barely tapped, and Google is currently the company best poised to profit from its expansion. This is because Google's search engine gives it an unique edge that will be hard to copy or replicate, especially when integrated with AR and the leading operating system, Android.
The expansion of AR will allow Google to integrate their search engine further into our lives, digitally enhancing reality and the publics access to knowledge stored on the internet. This will compliment Google's current ecosystem, including its dominant Android operating system, and further cement them as the industry leader in search. Of course augmented reality is still in its infancy stage, but its massive potential (at least at the moment) will be best captured by Google, allotting another outlet for the company to expand and grow.
Disclosure: I am long NOK, MSFT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.