Marketing High Technology – Professor Laura Kornish

Augmented Reality
(AR)
Applications and Adoption of an Emerging Technology

by Tim Falls
11/22/2009
 2

Contents
I. Introduction .......................................................................................................................................... 3
II. What is Augmented Reality? ................................................................................................................ 3
Augmented Reality Defined ...................................................................................................................... 3
A Brief History ........................................................................................................................................... 4
III. Applications of Augmented Reality ...................................................................................................... 5
Business................................................................................................................................................. 8
Societal Change ................................................................................................................................... 11
IV. Adopter Groups .................................................................................................................................. 13
V. Marketing AR ...................................................................................................................................... 14
Actions to influence decisions ................................................................................................................ 14
VI. The Future of AR ................................................................................................................................. 16
Trend or Revolution? .............................................................................................................................. 16
The Experts Weigh In .............................................................................................................................. 16
IMHO ....................................................................................................................................................... 17
VII. Works Cited ........................................................................................................................................ 18
 3

I. Introduction
In the early 1990’s I was a rabble-rousing kid skateboarding around downtown Evansville, IN.
One of the fondest memories I have from those simple summer days was the day I discovered
this “thing” called Virtual Reality. While cruising along my normal route, I came across a large
crowd of people gathered for a festival of some sort. Inquisitive as I was, I decided to explore.
The first thing that caught my attention while meandering through the crowd was a giant stage
on which a life-size gyroscopic structure was mounted. Within this spherical construction, was a
person secured by straps, wearing goggles, and spinning about in every possible direction. I had
no idea what this was, but I knew it looked fun; therefore, I had no choice but to check it out for
myself. Once I was strapped in, I was suddenly “sitting” in the cockpit of a bi-wing plane and
quickly took off on my “virtual” flight through the beautiful surroundings of a world that had
little resemblance to Indiana. And so my interest in technology was born.

Returning to present day, virtual reality has become a fad of days gone by in terms of its
common, everyday use. A new technology known as Augmented Reality has emerged into
mainstream society, and once again my interest has been sparked.

Within this report, I will (a) define Augmented Reality, (b) explore its various applications, (c)
discuss the adopter groups and marketing techniques that might propel the technology into our
everyday lives, and (d) postulate on the future role of Augmented Reality in our lives.

II. What is Augmented Reality?

Augmented Reality Defined
Augmented Reality (AR) is simply a variation on Virtual Reality (VR). While VR immerses a user
in a synthetic environment and prohibits the user from seeing the real world around him, AR
allows vision of the real world, with virtual objects superimposed upon that real-world view
(Azuma, 1997). Another expert’s definition of AR explains that it involves “computer displays
that add virtual information to a user’s sensory perceptions” (Feiner, 2002). In terms of the
relationship between AR and VR, this same author explains, “Whereas virtual reality brashly
aims to replace the real world, augmented reality respectfully supplements it.” In other words,
 4

a user of AR can experience “a live direct or indirect view of a physical real-world environment
whose elements are merged with (or augmented by) virtual computer-generated imagery –
creating a mixed reality” (Various, 2009).

To offer some simplicity to this definition, Ronald Azuma, Ph.D., Research Leader at Nokia
Research Center Hollywood, points out that AR is a system characterized by the following three
attributes: (1) it combines real and virtual, (2) it is interactive in real time, and (3) it is registered
(i.e., perceived by the human brain) in three dimensions (3-D). He also offers the following
observation as to why AR exists: “AR enhances a user’s perception of and interaction with the
real world…[conveying] information that the user cannot directly detect with his own
senses…[in order to help] a user perform real-world tasks” (Azuma, 1997).

A Brief History
The first AR prototype system was developed in the 1960s at the universities of Harvard and
Utah, by computer graphics pioneer Ivan Sutherland and his students. Then, in the 1970s and
‘80s, AR was studied at institutions such as the US Air Force, NASA, and the University of North
Carolina. Finally, in the early ‘90s, the term “Augmented Reality” was coined by Tom Caudell, a
researcher at the Boeing Company. Since then research and development efforts have boomed,
hardware costs have fallen, and software has improved dramatically (Feiner, 2002).

Until very recently, all practical use of AR was “largely relegated to applications [for] training
and inspection in automotive and aerospace manufacturing;” however, AR has recently made
the leap from commercial-scale, capital intensive equipment to consumer-scale, affordable
devices. In fact, as one telling example shows, this shift has been so drastic that a niche market
of mobile AR applications for smartphones has emerged, growing from “virtually no users in
2008 to an expected 600,000 by the end of 2009” (King, 2009).
 5

III. Applications of Augmented Reality

Past, Current, Future
The various and numerous applications of AR can be classified any number of ways. I have
grouped the applications in terms of the manner in which they are used and the areas in which
they provide value, including: (a) entertainment, (b) personal utility, (c) business, and (d)
general societal impact – in order of their relative gravity. In the following pages, I will provide
examples of applications in each category.

Entertainment
Television networks use AR to enhance the experience of its viewers. If you have ever watched
a college or professional football game on television, you have experienced AR. Notice the
image below, taken from the perspective of someone watching their favorite team on ESPN
(Various, 2009).

Though most people take these features for granted given their commonplace existence, both
the yellow first down line on the field and the scoreboard/game-clock display come to the
viewer by way of AR.

Video game technologies have been simulating AR in first-person-perspective games for many
years through the use of “head-up displays” (HUD) such as the one shown here:
 6

As you can see, the player has a plethora of information within his view, including a map, health
and ammunition data, and a link to mission objectives. There are many such games emerging
for mobile devices as well, such as Firefighter 360 pictured here:

(Presselite)
Books and magazines, two of the more traditionally low-tech forms of entertainment, have
also found ways to incorporate AR. The December 2009 issue of Esquire Magazine (shown
below) has received significant attention for its interactive AR cover, which communicates with
a webcam and “comes to life” for the reader – upon placing the AR image within the camera’s
view, a three dimensional video plays on the reader’s computer screen through a web-based
application . Beyond the cover, there are several pages within the issue presenting additional
opportunities for interaction with the reader via AR.

Esquire has created an innovative way to enhance the reading experience by linking its physical
magazine to a comprehensive collection of digital content that would never fit within the
 7

confines of its printed covers (Sviokla, 2009). This unique employment of technology creates
value for the stakeholders involved with such a publication, and thus, will be revisited in a later
discussion of the business applications of AR.

Personal Utility
Some examples of products recently released to the consumer market illustrate how AR can
increase the ease with which individuals operate in their everyday lives.
GPS Navigation systems have become almost standard in today’s vehicles, whether the unit is
built-in by the manufacturer, added by the owner as a standalone unit (e.g., Garmin, Tom-
Tom), or simply built into one’s mobile phone. Due to the mobility of these devices, they are
equally applicable to other forms of travel (i.e., walking, cycling.) The following image shows
information a driver or pedestrian can expect from AR-enhanced GPS units:

(Sviokla, 2009)

Augmented Reality Browsers have been developed to enhance the functionality of mobile web
browsers. Companies such as SPRXmobile and Mobilizy have created the products Layar and
Wikitude, respectively, which are sold in the form of applications for the iPhone and Android-
based smartphones. These and similar applications (including the Yelp app for restaurant
reviews) allow a user to view the world through their smartphone camera with layers of digital
 8

information about the buildings, landmarks, businesses, and people that appear
appea in the camera’s
viewing area. The images below demonstrate select examples:

Business
Augmented Reality is expected to bring about notable changes in the business world,
world many of
which have already taken root. A
Aspects of business that may be impacted most include
marketing, customer/client
client relationships, and information/knowledge access.

Marketing departments around the world are experimenting with AR on aan increasing basis.
Examples of this trend include:

1. Lexus - placed an AR advertiseme

advertisement in this month’s Esquire that actually promotes the use of
their own AR applications within
in new
newly available vehicle features termed the “Driver
Driver Attention
Monitor” and “Dynamic
Dynamic Radar Cruise Control
Control.”

2. Lego - installed what they called “Digital Box Kiosks” in hopes of turning “prospect customers
into paying customers” by allowing shoppers to interact with the product before making a
purchasing decision.
 9

(ubergizmo.com, 2009)

3. Tobi – an online clothing retailer featuring a “virtual dressing room” where an online shopper
can upload a picture of herself and then “try on” different items. A user can then readily share
these images with friends and gain feedback through social networks like Facebook or via
email. Below is a screenshot of the site and its unique tool:

(Tobi Blog, 2009)

Significant disruptions in the marketing landscape can be observed at a macro level as well. For
example, a group of four agencies specializing in marketing, interaction design, advertising,
social media, broadcast design and content development have joined forces to launch a new
organization called Digital Marketing Collective (DMC). DMC’s founder says the group is
intended to address the fact that “the marketing industry is undergoing a fundamental
transformation as consumers and businesses shift their attention from traditional media –
television, radio and print – to the internet, wireless devices, games and other digital devices”
(PR.com , 2009).
 10

Relationships in business may also be enriched by AR. The popular CRM software,
SalesForce.com, could offer additional features by combining AR and face recognition software
(standard technology in photo applications such as Picasa and iPhoto) to allow access to
professional information about colleagues, clients, and companies via data retrieval from
LinkedIn, Facebook, Twitter, etc. (Sviokla, 2009). This level of data access could prove helpful to
the mobile business person at an industry conference, for example, by allowing instantaneous
profile information through a mobile app. The image below shows this type of tool in use:

Training/Knowledge

Most sectors in today’s workforce require of their employees a great amount of knowledge.
Considering the immense amount of information the average employee needs at his or her
immediate disposal, AR solutions are a perfect fit for a variety of business tasks. BMW recently
released a concept piece exhibiting a mechanic wearing AR goggles, which presented step-by-
step instructions for the replacement of an engine component. Tools such as this can boost a
business’s efficiency by increasing employee productivity while simultaneously decreasing
employee error. While the US military has been employing similar practices for some time, it
seems likely that AR will become increasingly influential in the commercial space going forward.
 11

Societal Change
There are many applications of AR that have potential to create widespread positive impact at a
higher, public level.

Healthcare is perhaps the area where AR could make its biggest strides by solving a critical flaw
in today’s healthcare system: a lack of information at the point of service (Sviokla, 2009). Just as
the mechanic uses AR for guidance through his task, so could a doctor performing brain
surgery. Beyond this somewhat obvious application of AR in health care, there are new and
innovative uses also being explored. For example:

One group of scientists is working to develop “a prototype portable health care support
device for Emergency Telemedicine,” which would “telematically ‘bring’ a specialist
doctor [to] the site of a medical emergency, allow him to evaluate patient data and
issue directions to the emergency personnel on treatment procedures until the patient
is brought to [the] hospital.” An AR system like this would “allow maximum utilization of
available resources and offer a complete, practical solution for increasing survival rates
before and during the transportation of accident victims to a hospital” (S Pavlopoulos,
1997).

The Military has been utilizing AR for years. Applications currently in use as well as those in
development will likely change the landscape of peacekeeping.

The Battlefield Augmented Reality System (BARS) is an excellent example. This system
addresses challenges faced by soldiers who find themselves in the urban battlefields of modern
warfare by increasing situational awareness and allowing more efficient military operations. All
of the tools described in the consumer and commercial applications to date can greatly benefit
a soldier who is navigating an urban environment (Mark A. Livingston, 2002).

The following images illustrate the experience from a soldier’s perspective:

 12

Idealistically speaking, the application of AR in military settings will lead to improved safety and
quality of life for soldiers and civilians around the globe.

The U.S. Government is now using AR in a consumer-facing capacity through its Recovery.gov
application, available on the iPhone and Android mobile operating systems. A company called
Sunlight Labs has teamed with Layar to create a unique way for citizens to see where the
American Stimulus funds are going. The screenshots below illustrate the application in use:

(Rosen-Amy, 2009)

An AR contact lens prototype rounds out my discussion of applications of AR technology, as it

represents a truly futuristic example that could materially affect the way humans interact with
their environment on a daily basis. A team of scientists from the University of Washington will
 13

present their prototype at the Biomedical Circuits and Systems conference in Beijing in late
November 2009. Though such a product is years away from commercial viability, the
technological feasibility is clearly within reach. As the director of the Human Interface
Technology Laboratory in New Zealand put it, "A contact lens that allows virtual graphics to be
seamlessly overlaid on the real world could provide a compelling Augmented Reality
experience" for all members and sectors of society in the not-so-distant future (Venkatraman,
2009).

IV. Adopter Groups

Adoption: via Moore and Rogers
In the following analysis of society’s adoption of AR, I will speak in terms of Geoffrey Moore’s
“Chasm” model, an adaptation of Everett Rogers’s “Diffusion” model. The basic concepts at
hand are outlined in the following figure:

AR

(Moore, 2002)

I would argue that AR has just landed on the Pragmatist’s edge of the chasm, as indicated
above. The Technology Enthusiasts (Innovators), like Ivan Sutherland in the ‘60s, have been
experimenting with AR for nearly 50 years, conducting research and awaiting improvements in
component technologies (e.g., cameras, processors, displays, etc.) These advancements have
made AR applications accessible and affordable to the Visionaries (Early Adopters), such as Tom
Caudell at Boeing. Subsequent technological breakthroughs have finally put AR applications
within the reach of the Pragmatists (Early Majority). Members of this group, such as
 14

Recovery.gov, are now bringing AR to the Conservatives (Late Majority) through their
acceptance of simple mobile applications. Further support of this movement is found in Layar’s
recent announcement that it will receive over $1 million in venture capital funding to further
develop its product offering (Marshall, 2009). The Conservatives are now beginning to
experience regular exposure to AR through its prevalence in the marketing of consumer goods.

The combination of a proliferation of smartphones throughout global societies, a familiarity

with mobile applications among “non-technical” consumers, and an inescapable presence of
marketing campaigns will likely continue to create a level of consumer acceptance, even among
the Skeptic/Laggards adoption group.

The primary question that remains with respect to adoption groups is, “Can we truly think
about all augmented reality applications as operating along a single adoption life cycle?” After
all, the disruptiveness of the various current (and future) applications spans a broad spectrum.

V. Marketing AR
Actions to influence decisions
Everett Rogers identified five factors that significantly influence the rate of adoption of any
given innovation. When evaluating technology adoption, a particular consumer’s perception of
each of these five factors represents a relevant basis for marketing decisions (Rogers, 2003).
Before applying this framework, however, we must be clear in our definition of the ‘adopting
consumer.’ The following analysis is based on the perspective of the end consumer who would
ultimately use an AR application in his everyday life, as opposed to a company that would
purchase AR technology in order to integrate it into its products or services for its end
customer.

Relative Advantage: AR must be judged against that which it aims to replace. In most cases, AR
replaces the act of manually retrieving information regarding one’s immediate surroundings. A
mechanic, tourist, or commuter would likely perceive a direct feed of information relative to
the respective job, historical monument, or intersection he faces as advantageous to the
 15

alternative means of retrieving the same information from a physical, static source such as an
instruction manual, guide book, or map.

Compatibility: AR faces some significant challenges in terms of this property. Many AR

applications require that the user alter his typical behavior or use a particular device to which
he is not accustomed. For instance, readers of Esquire Magazine are not used to depending on
a computer and web cam in order to get the full experience of their favorite periodical. On the
other hand, users are becoming more and more dependent on their cellular phones as a
resource for real-time information. Companies can leverage this by making the use of AR as
simple as snapping a photo.

Complexity: AR is a technology that operates through a system of interacting components,

which can potentially be perceived by the average consumer as either extremely complex or
completely straightforward, depending on the manner in which the application is packaged. If
an application requires a user to wear a space-age apparatus complete with GPS antennae, a
laptop backpack, and heavy goggles, then adoption of that application will be slow, if not
impossible. Conversely, if anyone from eight to eighty years old can effortlessly activate the AR
Lego kiosk, then rapid adoption is more likely.

Trialability: Certain AR applications are extremely easy to try out. In the case of Esquire
Magazine, the only required materials are the magazine, a computer with a web cam, and an
internet connection. If one wanted to try out the newest AR iPhone apps, he could theoretically
go to the nearest Apple store or Best Buy and “test drive” multiple applications. Owners of
compatible smartphones can download the Yelp app for free.

Observability: Aside from direct use of an application, it is relatively difficult for one to observe
any tangible results of AR technologies. Additionally, there are few (if any) applications
currently in use today that would affect someone in a way that would inspire them to go out
and tell all of their friends. If and when the medical field’s use of AR directly results in lives
 16

saved (or when another, equally impactful application is introduced), a compelling level of
observability may be reached.

VI. The Future of AR

Trend or Revolution?
Augmented Reality is, by all definitions, one of the most noticeable “buzz words” of 2009. In my
research for this project, I set up a twitter search for “augmented reality” and found an
overwhelming and constant stream of comments and links to articles, blogs, and images.
Virtually every major business publication has covered AR in some respect over the last year.
Business models are being developed around AR technology at an astounding rate. With that
said, the question remains: Will this be the “next big thing,” or will we look at AR a year from
now as “just another fad?”

The Experts Weigh In

Notable quotations:

• Gartner research firm has placed AR on its “hype circle” for emerging technologies and
reports that it is traveling toward its “peak of inflated expectations” (MANJOO, 2009).
• Martin Agency's chief digital officer: "It's the flavor of the day…every client had to have a
Facebook app, then a viral ad, then it was an iPhone app, and now it's augmented reality"
(MANJOO, 2009).
• Layar cofounder Maarten Lens-FitzGerald: "AR is going to be huge…[possibly] as big as the
Web" (MANJOO, 2009).
• Vernor Vinge, author of the novel Rainbow’s End describes, “A vibrant, realistic world
completely dominated by AR. The characters wear contact lenses adding text and graphics
to everything they see” (Duff, 2009).
• BusinessWeek: “Augmented could live up to its meaning: something that adds to what we
have” (Wildstrom, 2009).
• Greg Davis, North American general manager of Total Immersion: "There have been game-
changing events [with] consumer access to AR on PCs and mobile phones" (MANJOO, 2009).
 17

• Christine Perey, principal at Perey Research & Consulting: “By 2012 there will be 150 to 200
million [mobile AR] users… about 3% of the world's mobile-user base” (King, 2009).

IMHO (or, for the Skeptic/Laggard: In My Humble Opinion)

From the perspective of a self-proclaimed (or aspiring) Innovator/Techie, I believe that AR will
eventually achieve widespread use among every “segment” of adopters.

The primary support for my prediction stems from its ever-increasing presence in marketing
strategies and the area of consumer goods. As more and more “ordinary folks” recognize the
technology within familiar environments and come to appreciate it for its novel attributes, they
will begin to imagine other potential uses and seek out more “useful” applications.

Second, I am confident that the ubiquitous nature of smartphones and other personal portable
devices will play a vital role in the introduction of AR into mainstream culture. Everyone from
the grade-school student to the senior citizen carries a cellular phone these days – a trend that
is not likely to slow. Furthermore, devices are becoming increasingly sophisticated, making AR-
capable platforms commonplace in the average American pocket. If the applications are
inexpensive, easy to use, and provide value to the consumer, there is nothing preventing a level
of rapid adoption.

Lastly, after observing the utility that can now be gained and the potential for life-changing
developments through the use of AR, I am convinced that the demand for applications will
continue to rise. As economists teach us, where there is demand, there is supply – and where
those two meet, there is a market. Ultimately, only time will reveal the magnitude of influence
from this currently uncertain technology.
 18

VII. Works Cited

(2009, January 24). Retrieved November 2009, from ubergizmo.com:
http://www.ubergizmo.com/15/archives/2009/01/lego_digital_box_kiosk_uses_augmented_reality_in_
retail_stores.html

Azuma, R. T. (1997). A Survey of Augmented Reality. Malibu: Hughes Research Laboratories.

Duff, M. (2009, November 13). Augmented Reality may be next big thing, but it's still science fiction.
Lubbock Avalanche-Journal .

Feiner, S. K. (2002, April). Augmented Reailty: A New Way of Seeing. Scientific American , pp. 48-55.

King, R. (2009, November 4). BusinessWeek.com. Retrieved November 2009, from MSNBC.com:
http://www.msnbc.msn.com/id/33603482/ns/business-businessweekcom/

MANJOO, F. (2009, November). Augmented Reality Is Both a Fad and the Future -- Here's Why. Fast
Company .

Mark A. Livingston, L. J. (2002). AN AUGMENTED REALITY SYSTEM FOR MILITARY OPERATIONS IN URBAN
TERRAIN. Proceedings of the Interservice / Industry Training, Simulation, & Education Conference (I/ITSEC
'02). Orlando, FL.

Marshall, M. (2009, October 28). Retrieved November 2009, from VentureBeat.com:

http://venturebeat.com/2009/10/28/augmented-reality-company-layar-gets-1m-boost-launches-on-
symbian/

Moore, G. (2002). Crossing the Chasm.

PR.com . (2009, November 18). Press Release Distribution. Retrieved Novmber 2009, from PR.com:
http://pdf.pr.com/press-release/pr-193907.pdf

Presselite. (n.d.). FireFighter 360. Retrieved November 2009, from http://www.firefighter360.com/

Rogers, E. M. (2003). Diffusion of Innovations, 5th Edition.

Rosen-Amy, S. (2009, October 28). Sunlight Labs Unveils Recovery Act Augmented Reality Mashup App.
Retrieved November 2009, from OMBwatch.org: http://www.ombwatch.org/node/10518

S Pavlopoulos, S. D. (1997). An augmented reality system for health care provision via telematics
support. Studies in health technology and informatics .

Sviokla, J. (2009, October 29). Harvard Business Publishing. Retrieved November 2009, from Harvard
Business Voices:
http://blogs.harvardbusiness.org/sviokla/2009/10/how_will_augmented_reality_aff.html
 19

Tobi Blog. (2009, November 16). Retrieved November 2009, from Tobi, 1-to-1 Shopping:
http://www.tobi.com/editorial/tobi-blog

Various. (2009, November 21). Augmented Reality. Retrieved from Wikipedia:

http://en.wikipedia.org/wiki/Augmented_Reality#Definition

Venkatraman, V. (2009, November 12). Contact lenses to get built-in virtual graphics. Retrieved
November 2009, from NewScientist.com: http://www.newscientist.com/article/dn18146-contact-
lenses-to-get-builtin-virtual-graphics.html

Wildstrom, S. H. (2009, November 17). Augmented Reality: Not That Real Yet. Retrieved November
2009, from BusinessWeek.com:
http://www.businessweek.com/magazine/content/09_48/b4157075333212.htm