Opportunity Snapshot: Augmented & Mixed Reality Scenarios

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1 developing new growth opportunities and businesses at the intersection of, services and the internet of things Opportunity Snapshot: Augmented & Mixed Reality Scenarios 2017

2 Augmented and Mixed Reality: Stuck in Pilot mode

3 ar and mr Augmented and Mixed Reality Different Markets Carrying Different Trends Market Overview Industry Adoption Characteristics The markets for Augmented Reality, Mixed Reality and Virtual reality have significant challenges to overcome to accelerate market adoption. While the usages and applications have created a tangible picture of the future, both startups and technology heavyweights such as Microsoft and Samsung are struggling to gain traction. Why are we seeing this lack of adoption? While the ecosystem remains developing and fragmented at best, the technology and software just aren t to the point of commercial deployment. Outside of the technological challenges, software and hardware providers face significant business challenges that hold true for any next-gen technology provider. VR MR AR Device occlusion restricts usages in enterprise deployments Content still early in the game Device form factor still early in development Capability is appealing if can be shrunk down Market had false start due to poor device s Recent launches address shortcomings From trepidation of an immature and overhyped market to unclear metrics for ROI and a lack of collaboration across and within ecosystem value chains, end users of these devices have experienced unrealistic perceptions of the true value-add from these devices. Unattractive form factor and battery life and undefined processes around the integration of devices to existing backend IT make it difficult for end users to buy into a business model that integrates this technology. Thus we find ourselves circling in pilot mode. Harbor believes 2017 will bring tangible results from the flurry of M&A and investment activity that has fueled the AR, MR and VR markets to date, driving the development of commercially viable solutions for both enterprise and consumer applications. With a number of product releases scheduled for 2017, the market will be waiting with bated breath to see if device OEMs are addressing industry pain points around functionality and form factor. Though this only goes so far if industry SI s and Software ISV s are unable to establish solutions for simple integration with legacy. Strong Growth Imminent with Varying Timelines of Adoption $600 AR / MR / VR Market Opportunity Scenarios: Global Revenue ($, bn) $242B CAGR: 94.2% Blue Skies: Business & Technology Architectures Align $500 $400 $300 $183B CAGR: 86.5% Business Challenges Overcome but Devices Fail to Mature $200 $100 $ Source: Harbor Research Smart Systems Database $130B CAGR: 77.7% Competing Technologies Prove More Valuable 3 3

4 ar and mr Augmented and Mixed Reality An Ecosystem is Forming Virtual Reality Mixed Reality Business are struggling to understand how to use these devices in their operation due to limitations of occluded form-factors, which limits environmental interaction. Understanding how to content that is useful, interactive and engaging requires a blend of different developer backgrounds from gaming, mobile and entertainment who need help as they don t understand the needs of enterprise businesses. Augmented Reality As MR is in the early stages of development, form factor remains the biggest challenge to adoption. Today, most form factors only exist in beta or developer kits. Valuable componentry such as machine vision increases size and weight of devices limiting where they can be worn. While form factor remains a significant challenge, the level of functionality it offers over its peers is appealing to users and Harbor expects these devices to subsume the AR and VR markets as the technology matures. Google glass launched in mid-2013 and was initially targeted towards consumer markets and the device missed the mark in enterprise usages. Specifically, early pilots were limited by device constraints such as battery life, overheating and sources of connectivity / processing. Recent device iterations from players in the market have focused on addressing form factor constraints allowing users to trial different use cases but have failed to achieve strong market attraction. For instance, Airbus worked with Vuzix and Accenture to a solution for cabin furnishing as part of an aircraft assembly process, reducing the error rate of employees to zero with an Airbus reported 500% increase in productivity. Augmented, Mixed and Virtual Reality Eco Are Forming Cameras Haptics Room Tracking Motion Sensors Display Connectivity & Components 3D Lenses Motion Platform 3D Scanners Augmented Reality Mixed Reality Virtual Reality Device Types Monocular Glasses Binocular Glasses Device Manufacturers Software ISVs Developer Communities System Integrators Key End User Markets Engineering Healthcare Social Education Industrial Commerce 4 4

5 ar and mr Augmented and Mixed Reality Case Studies Defined Emerging Tech Feedback Loop: Solidifying Use Cases & Improving the Technology Engineering Healthcare Social Education Industrial Commerce MR Engineering Use Cases Training Design Demonstration VR Education Use Cases Training & Education Simulations Data Visualization M2: with a more balanced and comfortable than Hololens, the M2 addresses critical painpoints around functional usage. Offering a 90-degree field of view, versus the 30- degree field of vision with the Hololens, the M2 aims to establish duration with usage in enterprise environments, particularly for and engineering applications. If AR and MR technologies seek to establish a competitive alternative to traditional technologies, reducing form factor and improving the user experience in terms of comfort and advanced optics are critical for product development. The M2 aims to do just that at a reasonable price point for commercial and enterprise deployments. AR Industrial Use Cases Maintenance & Field Services Warehouse & Picking Manufacturing & Assembly z Warehouse & Picking: Use Case ROI Example In a pilot program, DHL deployed augmented reality devices for employee operations around picking and placing. The pilot proved augmented reality resulted in a 25% efficiency gain during the picking process. R Series: hands-free, untethered with a completely integrated system requiring no additional computing or power sources. The R7HL device, which has been ruggedized, was tested for drop, shock, vibration, low pressure and temperature extremes. The device is also ed with safety features to make it safe for environments with potentially flammable gases, vapors or mists such as oil exploration & production, utilities, chemical production, airport refueling and pharmaceuticals. With these critical features, ODG s R-7 and future R-8 & R-9 series address form factor pain points as well as industrial functionality requirements that are currently underserved in the market. 5 5

6 robotics and ai Custom and Configured Research Interactions Help Support Strategy Player Profiles, Ecosystem Maps, Analysis and Database Harbor Research has completed 500 player profiles on top companies in the IoT market including mapping their customer, competitor, investor and partner eco. Smart Systems Market Model and Forecast Harbor s proprietary device demographics database and model helps strategic business developers evaluate opportunities, make decisions around pricing models and craft marketing and sales strategies. Research Briefs, Data Books and Playbooks Harbor s research on markets and technologies within the overall Smart Systems and the Internet of Things arena that provide a forward-looking, distinct perspective on new market and technology growth opportunities. Explore our editorial calendar for our latest research Market, Technology and Event Briefings Briefings provide your team a download on current market dynamics and trends, emergent technologies, or a company s movements. Strategic Business Reviews Focused Market Intelligence Tracking We employ proprietary algorithms to scour news sites, blogs, trade publications and social media feeds for curate information about markets, technologies players and events all organized against our Smart Systems and IoT taxonomy. On-Going Queries and Analyst Support Acting on-call, our analysts will pull and aggregate specific data, profiles or explanations in configured responses to answer your specific questions and meet your unique needs. Configured Research and Analysis Recognizing that many clients have needs that reach beyond published reports, Harbor conducts configured research and analysis on topics that are emerging across the landscape providing updates based on specific areas clients are focused on. Custom Market Modeling and Forecasting We have ed our market map and forecast model for configured and custom modeling. Leveraging our extensive device segment coverage, clients can create custom forecasts to look at quantifiable elements beyond shipments and associated revenues. Clients will have the opportunity to attend a collaborative session with analysts from Harbor Research on a bi-annual basis. These discussions address strategic questions about market, technology and player opportunities your team is focused on. 6 6

7 robotics and ai If You or Your Colleagues Would Like to Learn More: Contact Us Boulder USA Alex Glaser Harbor Research, Inc Broadway Suite 201 Boulder, CO USA p f m aglaser@harborresearch.com Contact Us Zurich Europe Glen Allmendinger Harbor Research, Inc. Badenerstrasse Zurich Switzerland p f m gallmendinger@harborresearch.com Thought Leadership As much as we would like to say there is a simple linear process and recipe to drive new innovation, the nature and complexity of the Internet of Things makes that impossible. Harbor brings order to that complexity, by framing opportunities with a holistic view of the market. Unique Process We provide our clients with rigorous analysis and insight to support critical new business and development decisions. Our research, content and modeling provides an ideal context for discovery, ideation and planning. Vibrant Community Building new ventures for the internet of Things requires new and very different modes of and development In working with a vast set of market leaders and disruptive players we push the boundaries of collaboration to include many new and unfamiliar participants. How should we conceive our business opportunity map? How large and how fast are these opportunities developing? Where are the most significant growth opportunities? Where are the biggest disruption opportunities? How can we best use technological and market uncertainty to our advantage? How will competitive structure evolve? About Harbor Research: Harbor Research is a strategy and technology research firm that works with leading technology innovators, product OEMs and service providers. We bring together a unique combination of domain knowledge, facilitation processes and an extended community of partners and expertise that enables our clients to discover, and develop and services. Since our inception in 1984, we have actively sought out clients whose strategic and business development mode exhibits a desire to drive disruption and manage change effectively, both in their organization and across their relationships in the marketplace. These clients are the foundation of our community of forward looking players who can benefit most directly from the breadth of knowledge and process skills embodied in Harbor. The relationships and interactions we help foster serve as a platform for deep insight and value creation across the Internet of Things. 7 7