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ARBW #8: Apple and Google Driving to 2.25 Billion AR Phones by End of 2018

When Apple launches its new phone and operating system tomorrow morning at 10 a.m., it will trigger a series of events that will result in over 2.25 million people with AR smartphones by the end of 2018. This will fundamentally change consumer-facing businesses and probably most enterprises as well.

This seems to me to be an astounding number. Let me explain how I got to it. A few weeks ago, I interviewed Mike Boland, principal analyst for ARtillry, an AR research firm. He calculated that with the upgrade of iOS 11 on existing iPhones, there would be a half-billion AR-ready iPhones by the end of 2018.

This past week, Google made a preemptive response by announcing ARCore, a developer’s kit for the Android operating system. This means that the next generation of Android phones will also be AR phones when they start rolling out at CES in January 2018.

In the view of every technologist I follow, ARCore is not as robust a technology as Apple’s ARKit, but the phones will be mostly lower in price than the iPhones, often by several hundred dollars. This means there will be a lot of them sold.

Matt Miesnieks estimated in TechCrunch, they will likely outsell iPhones by a three-to-one ratio, meaning that by the end of 2018, there will be 1.5 billion AR Android phones in the hands of end users. Add onto that, the sale of new iPhones in 2018. I am among those who believe it will be a blockbuster, particularly among affluent people, perhaps selling 250 million or more phones. A more conservative guess would be 225 million new phones.

That brings us to 2.25 billion AR enabled phones in the hands of users worldwide. That’s a phenomenal number. It may be Apples to oranges, but that is more AR phone users than there are Facebook visitors today.

You could argue that not everyone with an AR smartphone will use AR and that is true. But the most affluent customers are likely to use the new technology. So will your youngest customers. So will many, many everyday people.

Why? Because it is what is new, because people have been hearing about AR for two or more years now and because the most powerful, wealthy and influential tech companies on Earth will be promoting AR aggressively.

Why? Because there will be tens of thousands of apps to choose from on the day the new iPhone technology ships. Because virtually all AR technology is built on the Unity platform, it means that most ARKit apps will also be available in ARCore on the Android phones.

What does this mean to business? It means that the fundamental transformation in personal technology Robert Scoble and I wrote about is about to explode at a speed many times faster than did smartphones back in 2006 when the iPhone first shipped.

It means that consumer-facing companies ranging from retail and brand merchants, medical practitioners, real estate brokers, digital marketers, insurance companies and entertainers who have taken a wait-and-see attitude toward AR had better start moving fast, or face the threat of being gone-or-forgotten before the end of next year.

We think TechCrunch’s Miesnieks offered sage advice: It is time to “Think outside the phone.”

In fact, a great many companies have already begun integrating AR into not just customer-related activities, but company and infrastructure issues as well. If you are not yet among them, perhaps one of your competitors is. In that case, you should start figuring out how to outdo what they have done in AR.

Bucket Lists and Smiles

With tens of thousands of apps at launch, it is likely that by the end of 2018 there will be millions of AR apps working on both smartphone platforms. Some are likely to be jaw droppers and others will simply afford you a nicer smile. Increasingly, I am being drawn toward everyday AR apps that will make life, work, shopping, dating, dining, and learning simpler and easier. These are the apps that will change life before you notice the transformation, the way music on a smartphone changed your world, or texting replaced so many phone conversations.

Consumer-facing business is a lot bigger than just retail, which in itself rounds off to a comfy  $2 trillion in revenues annually. But the medical industry actually dwarfs retail. In the US alone it is $3 trillion annually. When you think about it, it’s mostly consumer facing.

Less than 10 years ago, most Americans still had to hand-carry medical records from one healthcare facility to the next. Now, it is embracing immersive technologies in numerous ways and adopting rapidly. After online gaming and training, healthcare is the third-biggest provider of AR applications, and I would guess it will eventually eclipse the other two.

The diversity of it is what interests me. This week alone I found apps to resolve bucket lists and to entice you into a more appealing smile.

David Parker works with terminally ill patients in a Toronto hospital. He asks them where they had always wanted to visit, but never got around to. Then he creates a VR experience that takes them there. It isn’t just a travel promotion. Patients get to experience the taxi rides, street vendors, and eventually the feel and smell of places. When my time comes, I hope something like what Parker offers will be available to me.

Less dramatically, but offering a significant financial upside is an AR app from Kapanu, a Swiss startup, that is likely to be a universally accepted sales tool  for dental surgeons who can show prospects using a handheld device how much more attractive their smiles will be if the elect to undergo reconstructive surgery. This is a case in point: AR software that lets you see what you will look like before you undergo dental reconstruction. I would guess that just about 100 percent of patients facing this option would prefer to choose after using the app.

That is likely to be the same for car shoppers wanting to get a sense of a new car from inside and out before having to visit the showroom sales representative. Likewise, being able to see what that new room you are about to add on to your home will look like before the contractor starts smashing down exterior walls.

It’s the little stuff in one application that moves lots of seemingly unrelated niches. It was a free online service that replaced the Yellow Pages, a major revenue source for phone companies of yore. These little services are starting up in AR wherever I look and each one promises to spillover in multiple directions.

Of course AR is also being used to train dentists, as it is many other medical practitioners, such as Justin Barad who started off at Activision as a game developer as a part-time job when he was in high school. Family health issues motivated him to pursue a medical career where he would create a VR application for teaching orthopedic surgery while a resident at UCLA hospital.

To study how to repair something as delicate as a knee tendon, the school provided him access to a frozen cadaver stored in a lab freezer. He got to work on it once, then was expected to know how to do the procedure to pass his exam six months later. Barad wanted more experience not just for the exam, but for when he would cut into the knees of an actual human being who was counting on him to do it once and get it right. He returned to his game development experience and created a VR model that he could use to practice, so that the first time he worked on a human he would already be experienced.

It worked so well that he founded, a surgical training platform capable of teaching students how to practice and master any orthopedic procedure. Barad told me, “Surgeons trained on our platform can expect doubling of their performance scores when compared with conventional training which we have demonstrated in randomized blinded studies including one at UCLA.”

For me there is comfort in knowing that the person about to cut open me or someone I love did not learn his trade on a frozen cadaver. This is mainly an issue for graduating trainees (chief residents and fellows) and more senior surgeons as they try and learn how to use new technologies. 

AR Marketing

For better or worse, digital marketers are starting to jump on-board the immersive technologies bandwagon. With two billion AR device holders walking around, you can bet they are about to jump faster, higher and sooner. Personally, I think it was Pokemon that got marketers thinking, and it will be ARKit, that will get them doing.

Here are a couple of early examples that I think foreshadow what will become common marketing practices:

  • Dew and the Dead. In a clever pairing, AR versions of The Walking Dead TV series characters will pop-up near Mountain Dew displays much like Pokemon pop up in parks and playgrounds. The idea is, of course, to sell the branded sugar water. There are ten zombie variations. The idea is to collect all ten and get some sort of bonus.

I didn’t stick around for details. I’m just not the demographic. I’m a diabetic who prefers the Grateful Dead to The Walking Dead, but I do see the power of this. Mountain Dew is owned by Pepsi Co and The Walking Dead is an AMC property.  Between just those two entities, there must be dozens of paired marketing possibilities based on demographic target matches. The folks over at Coke will find someone to pair with in a similar manner, or for that matter, breweries will pair with pro sports teams and so on.

The possibilities are almost endless, and just when you get tired of this variation, there are countless other possibilities. Hell, with two billion people on AR phones, there will be many, many marketers getting into many, many acts.

What I cannot tell you is whether such encounters are marketing, ads, product showcases, merchandising or what. I guess it doesn’t matter. What matters is that digital marketing as a category is about to be transformed very rapidly.

  • Strokes of Tiltbrush. Tiltbrush is an VR/AR technology from Google that lets you paint on an immersive canvas. I first saw it in 2016 in a McDonald’s Activation exhibit at SXSW, created by Groove Jones, an immersive technology studio (and a Transformation Group Partner).

The magic in this otherwise traditional Hyundai ad is created with Tiltbrush. You may see this ad on TV and not realize the source of special effects is immersive tech. When you see it on an AR handset, it will be more spectacular. I mention it here because AR is becoming a standard tool of the advertising industry, and in a short while, most of the ads you see anywhere will have AR components. If you are a brand that advertises, I would advise you to start investigating sooner, rather than later.

I said for better or worse a few paragraphs up because marketing has a long tradition of overdoing messages of any kind, so that instead of being warmly received, they just generally annoy people. And as I also noted, there are many, many possibilities.

If you think of all the marketers backing all the brands you find in your local market or department store, you can cringe at the possibilities of walking down aisles into a sea of augmented zombies, critters and cute cartoon characters, each trying to entice you into participating in their allegedly special offers.

This will be charming at first, but can get overwhelming and onto the edge of obnoxious in a very short period of time.

Tomorrow’s launch will be the beginning of an era that I believe is destined for rapid evolution. Among the ways it will transform marketing is to blur lines between marketing, advertising, social media, communications, product showcasing, displays and in-store promotions.

Digital Marketers are starting to understand the potential for AR in geospatial marketing. Like the Eagles sang in Hotel California: "This could be Heaven or this could be Hell." If it turns out to be Hell, then YouTube can already show you our chilling shared future. Keiichi Matsuda, a creative advertiser himself has produced a series of disturbing videos showing the dystopian overtones of marketing AR running without personal filter capabilities.

As a champion of immersive media and the customer, I love the concept of being able to receive marketing messages on demand. I’d like to be able to declare that I am hungry for sushi and have all the sushi restaurants within walking distance show me AR renderings of their wares, along with special offers and a look-see at the ambiance of the table where I will be seated.

That sort of contextual promotion is not far off technologically speaking. While I look forward to the promise of it for both buyers and sellers, I feel trepidation that I will not be in control of what I see. This will get worse once we make the inevitable migration from AR handsets to AI-enriched headsets.

Matsuda seems to be showing us an answer to the question: What could possibly go wrong?


If you are an ARBW subscriber, you probably have received an invite to attend my first ever online class called AR & the Future of Work to be held on October 2. We have timed it to closely follow the Apple AR launch, but it covers all aspects of AR and business.

As an ARBW reader, I invite you to take the class at a $20 discount. If you register today, it will cost you a mere $77. Tomorrow, after the Apple announcement, we will raise the price to $147.

To learn all the details just go to The registration box is at the bottom of the page. Enter the code ARBW2 and get a $20 discount.



In the myriad ways, great and small, that AR will change life and work, is the death of the manual.  This is a good thing: Whether it is for your car, learning how to fly a plane, or ensure safety in maintaining nuclear power plants, all manuals generally suck. They are tedious, confusing, time-consuming and counter-productive.

Everywhere I look there is movement that would indicate that most of the world’s user manuals will be replaced with better, easier-to-understand and retain AR video that lets you see what to do in the same way that OSSO VR shows orthopedic surgeons how to cut open and repair your knee.

When ARKit is released tomorrow, it will ignite and explosion in AR’s replacement of consumer user manuals. I have seen dozens of demos, each clearly superior to paper or online text-based manual. This makes technology your pal at the point when frustration with operating some gizmo is churning you in frustration.

Recently, Robert Scoble and I sat down with of Wolfgang Stelzle, CEO and founder of German-based RE’FLEKT and Dirk Schart, head of PR and Marketing. RE’FLEKT develops AR and VR apps for big companies such as Audi, BMW, Bosch, Porsche, Hyperloop, and Atlas Copco/Leybold.

Some of their stuff is highly sophisticated and as the above clip shows, is designed to save lives for Daimler, another client. But nearly always, AR is used almost immediately to replace manuals, which Stelzle told me, “waste energy, money and time and cause dangerous mistakes.”

During a recent workshop at Audi a European Audi event Schart asked a room of approximately 70 professionals if they ever used their car manuals: only one person raised a hand.

“No one reads their manual,” he told me. “No one knows and uses all the features their car. With AR, every customer has an easy way to learn their car, coffee machine or other device. Think about what AR manuals will do in terms of increasing customer satisfaction and reducing support costs.”

Often RE’FLEKT makes AR manuals for devices such as the Leybold Hyperloop Vacuum pump, which may someday suck-and-push passenger cars in a tube that between of San Francisco and Los Angeles, if Elon Musk has his way. I wondered why Stelzle and Schart seemed so excited about the imminent launch of AR coffee maker manuals in ARKit.

Schart was quick to point out that history of the last decade shows that as consumers go, so goes the enterprise and RE’FLEKT’s is to use AR to help enterprise workers be able to operate the most sophisticated machinery in the world as easily as operating a home coffee pot.

RE’FLEKT, of course is not alone: many other enterprise players see AR/VR in similar lights. For example, Caterpillar has also recently switched from paper to AR and so, I am certain will a global enterprise near you.

 What about Headsets?

RE’FLEKT, like other enterprise players, makes technology for headsets as well as handsets.  Headsets are more expensive and are a strange new device for most people: But they are far superior as immersive technology devices.

Since my last edition of ARBW, there have been all sorts of announcements related to headsets. Pricing of the HTC VIVE and Oculus RIFT have been recently slashed from about $600 to about $400. Just about every major Microsoft partner has introduced relatively attractive headsets, that the Redmond company insists on calling Mixed Reality. In truth, they are just VR headsets designed to let in surrounding reality, often in the way welder’s goggles allow it.

Ultimately, Robert and I believe that headsets will replace handsets as the center of digital life for most people. But headsets, despite impressive refinements from this time last year to today, are still limited in functionality, mobility, battery, power. They are ot yet ready for most people and most people are not yet ready for headsets. We think that will happen sometime after 2020, so if you are a business strategist, you should be thinking about them already.

As for the imminent AR Android and Apple phones: they will be a roaring success until such time that headsets can appeal to mass markets the way phones do today.

Shel IsraelComment