By Sarah McBride
SAN FRANCISCO, May 23 (Reuters) - When Google (NASDAQ:GOOGL) GOOG.O
introduced its Google Glass smartglasses four years ago, it
turned to Glass-sporting skydivers buzzing a San Francisco
convention center, Glass-adorned models at a glitzy fashion show
and a Twitter campaign to notify early "Glass Explorers" of
their luck in snagging a pair.
This year, when Microsoft MSFT.O showed off an early
edition of its HoloLens augmented-reality goggles, it took the
opposite approach: targeting the software developers it needs to
make the device useful. No stunts. No fashion spreads. No
consumer marketing at all.
The discreet launch reflects the daunting hurdles
confronting the nascent industry of augmented reality, known in
the industry as AR. Such devices overlay images as holograms
onto a user's real-life field of vision, with the goal of
improving efficiency at businesses ranging from doctors' offices
to factory floors.
Some industry veterans see it as an even bigger opportunity
than its cousin, virtual reality, which completely immerses
users in an artificial world. But early efforts around augmented
reality, including Google Glass and Microsoft's own predecessor
to HoloLens called Kinect, have sputtered.
"They're taking a more measured approach with HoloLens, and
it's the right strategy," said Tipatat Chennavasin, general
partner at the Venture Reality Fund, which invests in
augmented-reality and virtual-reality start-ups. "You don't want
to overhype it and get people very disappointed, and that's what
happened with Google Glass."
The market research consultancy Digi-Capital predicts the AR
industry could be worth $90 billion annually by 2020. That's
triple the projections for total sales in virtual reality.
Google, Microsoft, Facebook (NASDAQ:FB) and Sony are among the many tech
firms that are betting on augmented reality, virtual reality or
both. The traditional methods of interacting with a computer -
usually featuring a keyboard or a touch screen -- will
eventually seem quaint as these technologies proliferate, many
in the industry believe.
"Microsoft has a huge opportunity here, that is: to create a
market for holographic, mixed reality and to dominate it," said
J.P. Gownder, an analyst at Forrester Research. Success, he
said, would mean selling hundreds of thousands of units by the
end of 2017 to businesses.
But history suggests augmented and virtual reality still
have along way to go.
Virtual reality developers, newly energized by the release
of Facebook's Oculus headset, have focused on gaming, but no
"killer app" -- must-have software that motivates someone to buy
a device -- has yet emerged. Many users still experience
problems with nausea, which plagued earlier virtual reality
efforts.
Google announced last week a big virtual reality initiative,
and players in the space ranging from start-up Leap Motion to
smartphone maker HTC have generated plenty of buzz. But many of
the promised products have yet to hit the market.
Augmented reality, meanwhile, seems destined at this stage
for specialized niches in industries such as medicine and
manufacturing. Google has shifted its focus too and no longer
sells Glass to consumers, who found few useful things to do with
the devices. Glass is still available to developers.
"It took Google a long way to evolve to a more substantive
approach," said Ian Shakil, chief executive of Augmedix, a San
Francisco startup that recently raised $17 million for a
smart-glass system for doctors that automatically records
patient data.
LEGACY OF KINECT
The HoloLens traces its lineage to Kinect, an add-on for
Microsoft's Xbox gaming console that was introduced in 2010.
Kinect turned user gestures into commands, and deployed sensors
and cameras to map the rooms where it was set up, creating the
foundation for a more immersive gaming experience.
Consumers liked Kinect, but it never lived up to its full
potential, in part because it spawned no blockbuster games.
Microsoft failed to persuade top gaming studios to invest
seriously in Kinect, developers say, and by 2014 it was no
longer being included with Xbox consoles.
But the Kinect technology found a second life in the
HoloLens, which enables users to control holograms through
finger bends in a motion called the "air tap." Kinect developer
Alex Kipman and much of his team also led the creation of
HoloLens.
The new product, which sells in its developer version for
$3,000, featured prominently at Microsoft's recent software
developers conference in San Francisco, with participants
donning goggles to take a tour of Mars led by a hologram of
astronaut Buzz Aldrin. They also played with the "air tap,"
which controls a hologram's movements much as a mouse
manipulates icons on a computer screen.
But Microsoft makes it clear the playfulness takes a back
seat to purpose. It plans to "cultivate a thriving developer
community and to foster a vibrant app ecosystem," according to a
company spokesperson.
Tim Gabrhel, a developer at IT consultancy Concurrency who
attended the Build conference, talked about how useful HoloLens
would be for maintaining industrial-scale printing equipment.
Workers probing malfunctioning parts, he explained, could get
tailored instructions beamed onto the screen, or perhaps a
hologram of a skilled technician showing how to make repairs.
Ronald van der Putten, a software architect at Honeywell,
said the HoloLens could allow hands-free scanning in warehouses.
Brandon Haase, an engineer at Valorem Consulting, said he
could see uses in insurance: creating inventories of homeowners'
belongings by wearing a HoloLens during a walk-through of a
house, for example.
James Ashley, a software developer in Atlanta and an expert
on Kinect, said Microsoft was aiming to "fix a mistake seen with
the Kinect, that the Kinect was for gamers" only.
"They're trying to align this new technology with their core
business" of building technology for corporations, he said.
Eventually, perhaps some time in 2017, Microsoft will likely
unveil a consumer version of HoloLens, said Gownder, the
analyst.
"Over time, less expensive hardware would create a larger
market," he said, adding he expected the first consumer HoloLens
to be priced under $1,500.