Apple (NASDAQ: AAPL) and Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google recently unveiled new augmented reality (AR) software kits to help developers create better AR apps.
Apple's play is ARKit, which will launch with iOS 11 later this month. Google's play is ARCore, which will initially launch on the Pixel and Galaxy S8 devices running on Android 7.0 and above. ARCore will also replace the older Tango AR platform, which was introduced three years ago.
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These moves indicate that Apple and Google are eager to follow Microsoft's (NASDAQ: MSFT) move into the desktop AR space with HoloLens, which hasn't been commercially launched yet. As for the mobile AR market, which company is better equipped to build a bigger ecosystem -- Apple or Google?
Understanding the AR market
Augmented reality refers to digital overlays projected onto real-world surfaces. Niantic's Pokemon Go employs rudimentary AR by projecting Pokemon into real-world environments with a camera. Microsoft's HoloLens uses advanced AR, which allows users to play Minecraft on coffee tables and manipulate 3D models on their desks.
The magic of AR is created by motion sensors, which detect a user's movements, and computer vision chips and 3D cameras, which "see" surfaces in three dimensions. Developers create software that places objects onto those surfaces, which "augments" their reality.
The AR market is generally considered to be a bigger growth market than virtual reality (VR) since AR apps have more real-world applications than VR software, which obstructs a user's vision and is mostly geared toward gaming and entertainment. Digi-Capital estimates that the AR market will be worth $83 billion by 2021, compared to a $25 billion value for the VR market.
Google: If at first you don't succeed...
Google spotted the potential of AR years ago. That's why it launched the Google Glass in 2013. Unfortunately, the device's awkward appearance and privacy concerns resulted in its discontinuation in 2015. However, Google recently reintroduced a new version for enterprise users.
Google also bought a stake in Taiwanese chipmaker Himax (NASDAQ: HIMX), which supplies the LCOS (liquid crystal on display) chips that power Google Glass. It invested in Magic Leap, a secretive maker of AR headsets, but the start-up reportedly lags far behind Microsoft in AR technologies.
Google dabbled with Project Tango, but the framework only made it to two unpopular phones -- Lenovo's Phab 2 Pro and Asus' Zenfone AR. Therefore, ARCore is widely seen as Google's attempt to reset and refocus its AR efforts on high-end devices like the Pixel and S8. This means that lower-end and mid-range Android phones will likely remain out of the loop at first, similar to the way Google Daydream only brought VR features to premium devices.
Apple: Could an AR headset arrive soon?
Apple's next iPhone will reportedly sport a depth-sensing camera and a 3D-sensing computer vision chip. Over the past two years, Apple acquired a number of AR/VR firms, including Metaio, Faceshift, Emotient, Flyby Media, and computer vision firm SensoMotoric Instruments. It filed mysterious patents that illustrate an AR headset for the iPhone, assembled a "secret" AR/VR team, and hired Virginia Tech professor Doug Bowman, one of the top VR experts in the country, to lead those efforts.
All these moves, along with the recent introduction of ARKit, indicate that Apple could introduce an AR headset with the iPhone 8 (or next year's iPhone), which will become the company's answer to HoloLens.
CEO Tim Cook has declared that the AR market is "big and profound", so making it easier for developers to create depth-sensing AR apps for iOS 11 could truly represent a huge leap forward for mobile apps.
How the battle will unfold
It's too early to predict a victor in the upcoming mobile AR fight, but I believe that Apple has an early advantage with its unified hardware and OS. Apple has much less trouble than Google in keeping its users on the same page, which makes it easier to introduce new technologies like the Apple Watch, Apple Music, Apple Pay, and AR apps.
Google will likely struggle with fragmentation, since just 13.5% of all Android devices have been upgraded to Android 7.0 and 7.1. So even though Android controls a much larger percentage of smartphones than iOS, the initial versions of ARCore and ARKit might actually reach a comparable number of devices.
Early developers would likely favor ARKit over ARCore because they would only need to test their apps for the latest iPhones instead of several premium Android devices with different hardware configurations. As a result, popular AR apps might appear first on iOS before being ported to Android -- which is precisely what happened in the earlier days of smartphone apps.
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