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Mobile and enterprise are the keys to VR/AR scale

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Though PC and console VR are the sexier formats we’re all excited about, is mobile where VR will really scale in the near term? This is a question I’ve been posing to investors and innovators for an upcoming research report.

For example, despite impending HMD commoditization, IDC projects 2 million tethered VR headsets will be sold this year. That’s dwarfed by the 2.6 trillion global smartphones that represent mobile VR’s addressable market.

Though it’s a stripped-down version (no positional tracking, etc.), mobile VR is improving with things like Google Daydream. Its mainstream-friendly price point and accessibility also make it the gateway drug that VR needs.

The same goes for AR. Rudimentary forms — a la Pokémon GO — are giving the mainstream a taste of what’s to come. And though that’s not “real AR,” it will do the technology a favor through that same gateway-drug effect.

Silicon Valley business strategist Kristie Cu also reminds me that VR and AR align with 5G network roll-outs. That’s good timing, given that massive data payloads will make use of those bigger pipes.

“Between 2015 and 2018 [Orange has] committed 15 billion euros to get this infrastructure out,” she said. “So there’s a lot of money behind 5G, and VR is one of the driving factors in having the bandwidth.”

Cu is joined by Comcast Ventures, Lenovo and several other corporate investors currently vetting or sinking their teeth into VR and AR. And in the process of due diligence, they see a lot.

Comcast Ventures’ Michael Yang has an investment thesis grounded in VR and AR’s long run position as primary computing platforms. But more important is that they scale by crossing geographic and industry borders.

“It’s both consumer and enterprise, especially AR,” Yang told me. “It’s also very global right out of the gate. Other sectors we invest in aren’t as immediately global.”

CV portfolio company NextVR, for example, brings VR to a media staple with massive reach: live sports. Beyond the consumer angle, live sports is broadcast’s saving grace against cord cutting… and VR amplifies that.

Lenovo is meanwhile attacking these opportunities on two levels: It manufactures high-octane PC rigs for VR’s heavy graphical processing needs, and it’s pioneering mobile AR through the Tango-infused Phab 2 Pro.

Lenovo’s director of worldwide innovation, Joe Mikhail, expressed his vision of AR’s future, including his lead role on Meta’s Series B round. He believes the long-run opportunity is enterprise utility.

This is one reason we’ll see AR leapfrog VR in market size. Mikhail says that AR’s value will truly be unlocked with everything from workplace productivity to manufacturing and industrial design (think: 3D modeling).

The name of the game is to improve operational efficiencies, he says, as a means to real bottom-line results — and that’s what will really compel wide-scale AR adoption.

Yang agrees, advising a vertical-focused approach. “For a general-purpose developer, trying to understand a vertical is harder,” he said. “I’m looking for people from oil and gas, or aerospace or construction who envision AR overlays that make processes more efficient and intelligent. That’s the future we’re particularly excited about.”

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