NETWORK STRATEGIES AUGMENTED REALITY REAL-WORLD VIEW


Mobile operators are starting to find their feet in a new market segment, but the places in the value chain are still up for grabs. By Anne Morris


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fforts by mobile operators to tap into the augmented reality oppor- tunity have to date been few and


far between and it is still unclear exactly what role they will have to play in the value chain. But with analysts predicting a sizeable revenue opportunity in the space over the next few years, some telcos are starting to take the bull by the horns. Augmented reality promises to enrich


the experience of the mobile user thanks to its mix of “real-world views” and super- imposed visual information such as sound, video, graphics or GPS data. So far, AR usage has been limited to gimmicky and “fun” applications such as games and marketing applications, while large brands like Amazon and eBay have implemented standalone AR-based appli- cations to help drive product awareness. As is often the case with new technology, there was also a great deal of confusion initially about what AR actually is, and many companies used the term incor- rectly for marketing purposes. The initial hype and confusion


surrounding augmented reality is now past, and the technology is ready to enter the mainstream, according to Spain’s Telefonica, which is at the vanguard of AR development. “In future we will not even need to say ‘AR’, says David Marimon, initiative leader at Telefonica’s research unit, Telefonica I+D. “The term will phase out. Soon it will become a normal part of our usage.” In addition, there have been AR efforts


from operators like Bouygues Telecom in France and Japan’s NTT DoCoMo. But while analysts predict rapid growth for the sector, the statistics show that the market opportunity remains small at present. Juniper Research predicts the mobile


AR market will be worth $1.47 billion by 2015, with location-based services and games accounting for over half that sum (see chart). The following year, its worth


December 2011/January 2012 www.totaltele.com


will be double that, according to ABI Research. “If the [AR] market develops as we


expect, it will generate more than $3 billion in 2016,” says ABI Research senior analyst Mark Beccue. But the market barely exists


today. “In 2010 revenue


amounted to only $21 million,” says Beccue. “It’s not a mass-market proposition by


far,” says Craig Cartier, ICT analyst at Frost and Sullivan. “A lot of the apps are just new ways of looking at a cool map,” he says. Early leaders in the AR space


are


companies like Layar and Metaio, which have launched augmented reality brows- ers to expand the AR capability on smartphones. And Qualcomm now provides an AR software developer kit for AR-based applications on Android smart- phones, with a big focus on games. However, these efforts alone will not


drive the sector to become a multi- billion-dollar opportunity. “The AR market won’t get there if it is


limited only to dedicated AR apps such as early entrants Layar and Wikitude,” Beccue adds. Mobile AR functionality and capabilities will improve rapidly and new platforms are emerging to enable app developers to build AR capabilities


Mobile AR market 2015


Social Networking 2%


into all types of apps. This movement will rapidly advance the growth of mobile AR, Beccue says.


Monetising AR From the point of view of the mobile operator, it is unclear what role – if any – they will have in the AR value chain, not to mention if and how AR-based services and applications can be monetised. So far, mobile operators have made only limited moves to embrace augmented reality. “Telcos will just treat AR as another


application category,” says Cartier at Frost and Sullivan, noting that mobile operator efforts to beat software develop- ers at their own game have not been a shining success, as exemplified by mori- bund cloud synchronisation and back-up service Vodafone 360. Cartier sees some potential for opera-


tors with in-app billing or partnerships on niche applications, but says it’s not clear how far such measures would go beyond pure marketing. Operators that have dipped a toe in the


AR market have largely done so as appli- cation or software developers, or have promoted services developed by third parties, according to a paper published in February by the Telco 2.0 Initiative founded by consultants STL Partners. “Telcos are unlikely to corner the


Enterprise 23%


Lifestyle & Healthcare 10%


Education & Reference 6%


LBS 26%


Games 25%


market by seeking to develop a key tech- nology,” the consultants wrote in the paper. “Instead, they should look to lever- age their position as the discovery and delivery segment, an essential part of the ecosystem for subscribers to discover many AR experiences. However, while this differentiates telcos from other market segments and generates greater sales of higher margin devices, it doesn’t offer great monetisation directly from AR.” Telcos that have done more than think


Multimedia 8%


Source: Juniper Research


about AR include Bouygues Telecom of France, which released mobile AR look-up


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