Transformation Group


The TG Blog

ARBW #6: A Half-Billion AR iPhones--THEN Apple Headsets

Much has been said about the imminent introduction of the new Apple iPhone and iOS 11 operating system, particularly by Robert Scoble and me. I have called it the trigger point into the transformational era for AR and VR. Currently, we are in the pre-trigger moments where most brands and professionals care little about immersive technologies, but after the launch in the next two or three months, they will abruptly feel pressures from customers, employees and competitors to adopt and deploy new strategies.

But for Apple, it seems to be the opening act, as the above patent sketch reveals. Filed recently by the Cupertino company, it confirms to us that Apple realizes what must start in handsets will eventually end up in AR headsets and it is important for business strategists and planners to understand that now.

It also confirms what Robert and I wrote in our recent book, The Fourth Transformation, where we predicted that AR would migrate from smart phones to smarter glasses over the next decade.

In June, when Apple announced the AR capabilities coming in their September releases, Scoble and I were both thrilled and concerned. Apple revealed its understanding that if you are going to introduce radically transformative technology to billions of people, it would be a smart market strategy to introduce it on devices that everyday people already use, devices which today are at the center of digital life as we all know it.

But the handset is not as immersive as the headset. The capability of a headset AI will make user experiences far more personal and best of all people’s hands will be free to do all sorts of other things.

Don’t get me wrong what Apple is doing shortly after Labor Day is huge. It fires a cannonball across the bows of corporate ships that are reluctant to change course until they must and that time is coming this year. The Transformation is not only sooner than you may think, it is also larger.

Most estimates I have seen predict by year-end there will be 200-300 million iPhone users walking into stores and visiting sites on AR. That is big enough for me to get excited, but I was unsure of  how the media was coming to this stupendous user estimate, so I turned to my favorite analyst who told me that the real number was about double what I had been seeing.

AR for 1 in 9 People

By year end there will be a half billion iPhones and iPads with AR capabilities—perhaps a tad more. That’s nearly one-in-nine humans on Earth. You can be sure that Samsung and other Android phone makers will follow Apple’s lead next year, making the number faster and the transformation to AR phones larger.

Here’s where I got the numbers.


Mike Boland is co-president of the San Francisco VRARA professional organization and a Transformation group strategic partner. He is a career analyst. Most recently, he founded ARtillry, the first market intelligence service focused exclusively on immersive technologies.

Mike took a look back, then made projections for the near-term future, concluding that by New Year’s Day 2018, there will be a little over 505 million AR-enabled iPhones and an additional 30 million iPads. As the chart shows, he projected that by 2020, Apple will have more than 850 million AR-enabled handheld devices, roughly one device for every nine people on Earth today.

Like I keep saying, the iPhone launch is a trigger point that will change relationships between companies and customers. It is also one of those historic flex points where some leading brands will stumble only to be replaced by startups that most of us have not yet heard of. It means that your customers—particularly the younger ones—are going to expect a new kind of experience that you need to be preparing to provide pretty quickly perhaps by this Christmas.

Such a recommendation would historically have been impossible, but Apple has made AR app development not just feasible, but easy and perhaps even fun in the form of its ARKit developers tools. In less than two months, thousands and thousands of developers have been showing off outstanding tech capabilities online. Robert and I have been posting several of the best every day in our Apple AR World Facebook group.

Richard MacManus, a tech journalist, gushed recently, “I'm betting this will be the biggest expansion of apps in the App Store since the iPad came along in 2010.” I would not bet against him if I were you.

iPhone Architects

But the quantity is not the thing. It is the quality, which I am finding to be overwhelmingly superb. The above demo from Solidhaus, a Las Vegas startup, is comprised of two software components: the phone app shown here and a web-based dashboard where 3D CAD files of the house or building are uploaded.

The result is that a construction worker can see a 3D rendering of a finished room in a structure as he builds the frame for that room. Compare the quality of that experience with traditional blueprints or poring over construction documents. How much time and money will be saved? How many errors will be avoided?


I spoke with Lashan Dias, Solidhaus CEO and co-founder, who told me about a contractor who glimpsed at the app briefly, then continued with his task on a site without commenting. Two weeks later, he requested a copy so he could explain an issue related to part of the home not yet built and Solidhaus would be the best way to do it.

Lashan Dias.jpeg

But that’s not all of it. Solidhaus is being developed, for one purpose, and the contractor found another. So have others who are educators, hobbyists and have AR studios. They have found the product online and contacted the company.

I decided to spotlight Solidhaus somewhat randomly. I have seen dozens and dozens of ARKit demos. They are mostly equal in quality to Solidhaus, and usually I can see purposes for apps that go beyond the reasons that they are being built.

Whatever business you are in, there is probably technology already under ARKit development, that can probably be adapted for your purposes. If not, there are many developers you can find with little effort who can put something up for you in time for this holiday season—and then they can improve upon it in the first quarter of next year.

The Main Event

As exciting and transformational as all of this is, I see it as merely an opening act. I believe that AR phones, led by Apple and followed by other vendors, will be the center of personal digital life for the next three or four years. What they will accomplish mostly is that people will become accustomed to the AR experience They will expect it in shopping, entertainment, communications, work and learning.

That will lead them to want the superior experience that the AR headset will soon be able to deliver. It is a shrewd play by Apple, who has succeeded with similar such plays before. The Mac’s point and click interface drove the great migration of personal computers into the home, and the iPhone’s touch-and-swipe interface delivered personal digital technology into everything.

Now AR phones bring the relationship between people and technology into a new dimension, but it will require headsets for people to actually dwell in that new dimension, interacting with virtual objects as seamlessly as with real objects.

Gateway Drugs

As we enter into this great AR Transformation, I see the phone being like the mini computers of the 1970s. They filled an important, but transitional phase from the mainframe’s dominance to the personal computer’s ascension.

Boland calls AR-enabled phones “mobile AR” and he likens them to gateway drugs: eventually users want the deeper, more intense experience that only headsets can provide. The above patent drawing indicates that Apple sees what Boland sees and is already working on delivering a headset—superior by far—to what exists today to market. My guess is that will happen in 2019 or maybe 2020—no later.

Magic Number

Adoption will come fast. IDC, predicts 100 million headsets will ship in 2021. I think VR headsets, which dominate today and serve the needs of affluent, experience-addicted gamers, will also do well in big niches such as learning and healthcare, but the dominant device will be AR which will be used by everyday people with the same diversity of purpose as smartphones are used today.

While 100 million certainly won’t make 2021 the headset crossover year, when more people use headsets than handsets. There are 2 billion people with phones today. The phones may survive just to serve as storage for power, memory, CPU, and GPU to be enjoyed by a connected headset.

But, 100 million makes 2021 the year that headsets will go mainstream, when marketers start to treat them as a channel, when recruiters start communicating with prospects immersively, when the glasses become so fashionable and affordable that those wearing them will bop about unnoticed, and when customers start buying products just by moving their eyes.

Will Apple be the dominant player? Scoble has already declared that he believes it will be. I wouldn’t bet against him either. I also wouldn’t bet against Apple. It is already the world leader. It has a history of pre-empting tech markets and for the next one-to-two years, it may have the entire field to itself.


Elsewhere in AR World

Google Blocks allows AR 3D modeling

If Apple is the clear front runner, then Google is the leading contender.  It was actually the first to launch an AR phone when it partnered with Lenovo last summer to launch the Phab 2 phone containing Google’s promising Tango AR software. Tango’s ability to measure and map a room in 3D excited us back then, but the phone itself was an awkward device poorly marketed and generated tepid sales.

Undaunted, Google has introduced more AR and VR technologies than any other company, and until the AR iPhone comes to market, Google is the best seller in AR devices with the primitive, but inexpensive Cardboard. This week it introduced Blocks, a free app that lets users very easily design and develop AR and VR models. But the product seems to have been lost in the noise being generated by AR iPhone apps.

My biggest hope for Google is in headsets, where it has a secret weapon. Late last year it acquired Eyefluence, a startup that was working on a heavily patented interface that uses eyes to do everything including typing with great ease and speed. As far as I know, Apple has nothing like that, but with them one rarely knows all the hidden secrets.

Where I think Apple will trounce Google, however, is in marketing where Apple usually gets it wrong, and Google often misses.

‘Alexa, Hand Me Those Size 6 Red Pumps’

I take Amazon far more seriously than HP as a fierce competitor in AR. Its use of AI in Amazon Echo is taking it in the same direction as Apple AR is going, but from a very different starting point. It recently put a small screen on an Echo version which is another step.

Now, the world’s largest online retailer has filed a patent to let online shoppers try on jewelry, eyeglasses and presumably clothing, while in the comfort of their own homes or while on a VR backpacking trip. The planned system uses sensors to make reflective surfaces like a mirror or TV screen accurately reflect the online shopper.

(Thanks to ARBW subscriber Rob Mowery for pointing this one out. He gets a free Kindle version of The Fourth Transformation for the usable news tip.)

Facebook User Growth Slows

Facebook smashed analyst estimates when announcing quarterlies this week, but some analysts expressed concerns that user acquisition has slowed. I think this can be explained because it now has over two billion users leaving a paucity of untapped prospects.

The challenge now is for Facebook to get its highly engaged user-base to become even more engaged. That is where AR comes in. Back in February Mark Zuckerburg told his worldwide developers that Facebook is going to evolve from the world’s leading social network into the world’s leading social AR platform.

Thus the same amount of people will spend more time on Facebook playing virtual Frisbee with friends all over the world. Simultaneously, Facebook will be serving up more ads to them, and probably they will generate greater revenue per user as those ads become more contextually personalized.

Shel IsraelComment