Extended reality (XR) and spatial computing technologies, including augmented reality (AR), virtual reality (VR), and mixed reality (MR), have seen rapid innovation and adoption over the past decade. Major tech companies like Apple, Meta, Microsoft, Google, and others have invested heavily in developing XR hardware and software to enable more immersive digital experiences and environments.
Apple's recent launch of the Vision Pro represents a major milestone for spatial computing. By providing precise positional tracking, scene reconstruction, and the redefinition of XR product devices, Vision Pro empowers developers to build cross-platform apps that seamlessly blend digital assets with the physical world.
Industry analysts predict strong growth for the XR/spatial computing market in the coming years. One forecast estimates the market growing from around $37 billion in 2022 to over $300 billion by 2028 at a CAGR of 47%. Key drivers of this growth include the rollout of 5G networks enabling new mobile use cases, adoption in industries like design, manufacturing, healthcare for training/simulation use cases, and consumer demand for ever-more immersive entertainment and social experiences.
For venture investors and startups, this represents massive opportunities across the XR technology stack from hardware components to software platforms to application layer services. As Apple Vision Pro lowers barriers to develop spatially-aware apps and users become accustomed to blended digital/physical experiences, funding could rapidly accelerate for startups innovating in areas like smart glasses and other wearables, 3D asset creation tools, real-time spatial mapping and positional tracking software, multiuser services and persistent virtual spaces leveraging the real-world, and vertical applications bringing the benefits of immersion to diverse industries.
This research paper is organized into five main sections:
It begins with an overview of how spatial computing is going to reshape everything by redefining the product standard, specifically the I/O revolution and its significant outcome (Overview).
In order to determine the future trend of the revolution driven by hardware, this research will dive back to the history of why Apple succeeded by outlining their path to success (History).
With references supporting evidence about the success of the previous Apple product, the third section details the benefits of utilizing spatial computing and XR technologies across various industries (Vision Pro).
Taking the reality into consideration, the fourth section analyzes why XR growth has been slow in the past decade by examining limitations around supply and demand. The supply discussion covers lack of technologies, mass production, developers and applications, while demand covers lack of scenarios and user physical issues (Question).
Finally, section five gazes into the future in two parts - first discussing growth by combining research from part 3 and 4 to predict industry impacts, and second discussing risks, yet to be determined. Overall, the research paper provides an introduction to spatial computing technology moves from introducing the concept, to history, current state, analysis, and future outlook. By reading this research, the audience should get a basic understanding about the emerging technologies and hopefully discover some investment/startup opportunities.
Spatial Computing is not a new word. It refers to a set of technologies that enable computers to interact with and interpret the physical world in three dimensions. It merges the digital and physical worlds through tools like augmented reality, virtual reality, computer vision, and sensors. By recognizing and processing the spatial relationships between objects, users can interact in more intuitive ways, such as gestures and voice commands. This technology has applications in various fields, from gaming and entertainment to medicine and industry.
Apple's new product, Vision Pro, has redefined the standards for spatial computing hardware, just as it defined the standards for personal computers in the 1980s and mobile devices in the 2000s. The emergence of each groundbreaking product usually signifies a major transformation in the related industry. By tracing the development history of Apple and Steve Jobs’ personal journey, we can identify how emerging technologies combined with great product design can bring groundbreaking revolutions to existing industries and which industries the Apple Vision Pro is poised to reshape.
Early Competition and Apple I's Superior Performance
In the landscape of personal computing in the 1970s, Apple faced stiff competition. Key rivals included the Altair 8800, introduced in 1974 by MITS and based on the Intel 8080 microprocessor, and the IMSAI 8080, also based on an Intel design. Another competitor was the SOL-20, designed by Lee Felsenstein and Gordon French of Processor Technology Corporation, known for its attractive design. Despite these competitors, Apple I distinguished itself at the first "Annual Personal Computer Festival" with its superior performance.
The Vision for Personal Computer
Apple's vision was that personal computers should be sold as complete sets, a departure from the norm where computers were typically sold as kits. This idea was further refined for the next generation of Apple computers, which were envisioned to have aesthetically pleasing casings and a built-in keyboard. The inspiration for this design came from an unexpected source: the Cuisinart food processors, leading to the use of light-molded plastic for smooth computer cases, a concept brought to life by designer Jerry Manock.
Integration and User Experience
Steve Jobs believed in end-to-end integration, from power supply to software. His insights included recognizing the power supply as a core component of computers and the idea that computer power supplies could operate without fans. This led to a collaboration with Rod Holt, introduced to Jobs by Al Alcorn, which was instrumental in the development of Apple II.
Funding and Building the Perfect User Experience
The process of financing for the production of Apple II was a critical phase. Mike Markkula co-wrote the business plan with Jobs and became a partner, enabling Apple to register as a limited liability company. Markkula was pivotal in marketing, while Regis McKenna brought public relations expertise. The artistic direction in the team, including Rob Janoff who designed Apple's logo, underscored Apple's design philosophy of simplicity.
Learning from Xerox PARC
A significant leap came from the visit to Xerox PARC, where Jobs and his team were exposed to several cutting-edge technologies like user-friendly interfaces, graphical user interfaces (GUI), and bitmap displays. The computer prototype Alto and the object-oriented programming language Smalltalk were particularly influential. Although Xerox's graphical interface was rudimentary, Jobs' team significantly refined this idea, applying it to commercial product development.Redefining the MouseA prime example of Apple's innovation was the redesign of the mouse. Xerox's version was complex, expensive ($300), and not smooth in operation. Jobs envisioned a mouse with a single button, costing $15, and operable on most surfaces. This was not just a technical improvement; it was a conceptual leap. Apple's engineers enhanced the mouse to enable dragging windows and files, and placing files into folders, making the "desktop" concept a reality.
In summary, Apple's journey in the 1970s and 1980s was marked by a series of innovations that combined emerging technologies with visionary ideas. This blend not only led to the creation of groundbreaking products but also set new standards in the personal computing industry.
Steve Jobs’ Departure from Apple and the Beginning of NeXT & Pixar
In 1985, a significant shift occurred in Steve Jobs' career when he left Apple following internal conflicts. This departure marked the beginning of two new ventures: NeXT and Pixar, which both spurred significant changes in the respective industry, and expedited the adaptation of computers by various industries.
At NeXT, Jobs focused on creating high-end computers aimed at the educational sector and businesses. NeXT computers were known for their advanced graphics and huge-volume data processing capabilities, as well as for the introduction of NeXTSTEP operating system, foundation for the later macOS. Despite limited commercial success, NeXT was instrumental in developing technologies, both hardware and software, that would later be integral to Apple's resurgence. What often went neglected was Job’s vision to leverage the unmatched computational powers to tackle and transcend existing limits in various industries. Products were instead envisioned from bottom up, were customer needs and application scenarios were examined to lead research and development.
The very perspective led to Jobs’ next venture, Pixar, a small graphics division recently spun-off of Lucasfilm. Under his leadership, Pixar devoted to development that on the long-term help transformed themselves into a major animation studio. Specialized computers and workstations were constructed to unleash the power of massive calculation; the data points that could be processed by a computer is unimaginable especially compared to the traditional hand drawing method, and the efficiency boost during the animation production process was humongous.
The release of "Toy Story" in 1995, the first fully computer-animated feature film, marked a culmination of computer development and digitized modeling technologies. Pixar's success in creating compelling stories with cutting-edge computer animation technology redefined the animation industry and set new standards not only for storytelling, but most importantly technical excellence that would in turn sets up the digital world that we live in today.
Steve Jobs' Return to Apple and the Era of iPod, iPhone, and iPad
Jobs' return to Apple in 1997 heralded a new era for the company. He began by streamlining Apple's product line and focusing on innovation. A key turning point was the launch of the iPod in 2001. The iPod, a portable music player, revolutionized the music industry and how people consumed music. It was not just a product but a cultural phenomenon, laying the groundwork for future innovations.
Following the success of the iPod, Apple continued to innovate with the introduction of the iPhone in 2007. The iPhone was a breakthrough, combining a phone, an internet communicator, and a music player in one device. Its touch screen interface and app ecosystem changed the smartphone industry forever, setting new standards for mobile computing.
The iPad, introduced in 2010, was another game-changer. It carved out a new category between smartphones and laptops, creating the tablet market. The iPad's user-friendly interface, coupled with its portability, made it popular for both personal and professional use.
Jobs' second tenure at Apple was characterized by a series of innovative products that were not just technologically advanced but also deeply integrated into the fabric of everyday life. His vision extended beyond technology to create products that were intuitive, elegant, and user-centric. This period solidified Apple's reputation as a leader in innovation and design, with Jobs at the helm guiding the company through one of the most remarkable comebacks in business history.
Each of these technologies marked a significant shift in their respective industries, showcasing Steve Jobs' ability to leverage emerging technologies to create products that not only innovated but also set new industry standards and changed consumer behavior.
Apple Vision Pro is a revolutionary product from Apple, representing their most ambitious and advanced creation to date. It's a mixed-reality headset that integrates incredibly advanced technology into an elegant and compact form, designed to offer an unparalleled experience every time it is used.
Integration of Digital and Physical Spaces: Apple Vision Pro seamlessly blends digital content with your physical environment, allowing for a novel and immersive experience. Users navigate through this mixed reality using their eyes, hands, and voice, making the interaction intuitive and natural.
Design and Technology: The device features a singular piece of three-dimensionally formed laminated glass that flows into an aluminum alloy frame, which wraps gently around the face. This design houses an array of advanced cameras and sensors that enable clear vision, environment understanding, and hand input detection. Additionally, speakers positioned close to the ears provide rich Spatial Audio that blends with real-world sounds.
Display and User Interface: The headset is equipped with custom micro-OLED displays that offer more pixels than a 4K TV for each eye, ensuring stunning clarity. Users can interact with the digital environment through the Digital Crown and a top button, which are used for navigation and taking spatial videos and photos, respectively.
App Ecosystem and Usage: Apple Vision Pro transforms the use of apps by offering an infinite canvas. This feature allows users to arrange apps anywhere, scale them to the perfect size, and move seamlessly between them. Familiar apps like Safari, Photos, Music, and Messages are available and transformed to function in this new spatial context. iCloud integration ensures content synchronization across devices.
Entertainment and Creativity: The device can transform any room into a personal theater, offering an immersive experience for movies, shows, and games with its Spatial Audio and high-resolution displays. It also features an all-new App Store with apps built specifically for visionOS, supporting both new spatial experiences and compatible iPad and iPhone apps.
3D Interaction and Collaboration: Apple Vision Pro brings 3D objects to life, allowing users to interact with them as if they were physically present. This feature enhances various applications, including entertainment, design, and education. The device also facilitates collaboration and connection, with life-size FaceTime video tiles and the ability to collaborate on documents in real-time.
Privacy and Security: Apple places a high emphasis on privacy and security with Vision Pro. It features Optic ID, a secure authentication system that uses iris uniqueness for authorization and data encryption. The device processes data from cameras and sensors at the system level, ensuring privacy and security for the users.
Apple Vision Pro represents a significant leap in spatial computing, offering an immersive mixed-reality experience with advanced technology and an intuitive user interface. Its potential impact spans across entertainment, work, and creative industries, promising to transform how users interact with digital content and the physical world.
The discussion around the growth rate of Extended Reality (XR) over the past decade can be framed within two major aspects: the supply of XR in terms of hardware and content, and the consumer demand for XR technologies.
Technologies: The development of XR technologies has seen significant advancements. However, these technologies still face challenges in achieving the seamless, high-quality experience expected by users. Issues like latency, resolution, and realistic virtual interaction remain technical hurdles that impact the overall appeal of XR products.
Lack of Industry Solutions: XR technology's growth has been partly hindered by the lack of tailored solutions for various industries. While there have been strides in fields like gaming, education, and training, XR lacks widespread industry-specific applications that can demonstrate its utility and encourage adoption.
Mass Production: The mass production of XR devices poses another challenge. Producing high-quality, affordable XR hardware is complex and costly. This complexity slows down the rate of production and the subsequent adoption rate, as potential consumers may find the cost prohibitive or the available devices not meeting their expectations in terms of quality and functionality.
Developers and Applications: The ecosystem of developers and applications is crucial for XR's growth. Currently, there is a relatively small pool of developers specializing in XR, and the number of available applications is limited compared to more established platforms like mobile or PC. This scarcity limits the utility and appeal of XR devices to a broader audience.
Lack of Scenarios: One of the reasons for the slow growth rate of XR is the lack of compelling use-case scenarios for the average consumer. While specific applications in gaming, training, and education have shown potential, there is still a need for more diverse and everyday use-cases that can attract a broader audience.
Users’ Physical Problems: Physical discomfort, such as dizziness and eye strain, associated with prolonged use of XR devices, is a significant barrier to adoption. These issues stem from the technology's immersive nature, which can be intense for many users. Addressing these ergonomic and health concerns is crucial for making XR more accessible and comfortable for a wider range of users.
However, counter arguments supporting the idea that XR and spatial computing are the future, particularly in light of Apple's Vision Pro release, are compelling and multifaceted:
Innovative Hardware Design: Apple's Vision Pro demonstrates a significant leap in hardware design for XR devices. Unlike previous models, each hardware component of the Vision Pro has been deliberately designed in-house, including its stereoscopic display with micro-OLED screens, ensuring the highest-resolution display on the market. This design approach addresses previous challenges of image quality and resolution in XR devices.
Advanced Rendering Techniques: Apple Vision Pro employs foveated rendering, a technique that leverages the natural focus area of human vision to render graphics in high resolution only where the user is looking. This optimizes computation and creates a more seamless and clear user experience, effectively addressing the issue of rendering quality that plagued earlier XR devices.
Low Latency and Enhanced Performance: The Vision Pro achieves a latency of only 12 milliseconds, with a high frame rate screen and a dedicated R1 chip for processing sensor information. This low latency is crucial for a realistic and comfortable user experience, addressing the previous barriers of high latency in XR devices.
Versatile AR and VR Capabilities: The Vision Pro is not limited to virtual reality but also encompasses augmented reality, offering users the ability to toggle between these two modes. This versatility is achieved through passthrough AR, which uses outward-facing cameras to record the outside world and feed it back to the user, enhancing the field of view and user experience.
Potential to Replace Traditional Computing Interfaces: The performance of the Vision Pro suggests that spatial computing can be a viable way to do work and practical tasks, not just entertainment. This aligns with the long-term vision of spatial computing to replace traditional computing interfaces like laptops or desktop computers, making it a significant step towards ubiquitous computing.
Diverse Applications Beyond Entertainment: Spatial computing has potential applications across various professions, from architecture to medicine. For instance, architects could use augmented reality to visualize building plans more accurately, and doctors could enhance their skills by practicing surgeries in a virtual environment.
Enhancing Human Senses: High-powered mobile computing headsets like the Vision Pro represent the first step in enhancing natural human senses beyond mere information processing. They open possibilities for improved human vision, including seeing microscopically or across the electromagnetic spectrum, thus significantly expanding human capabilities and interactions with the world.
Growing Software Ecosystem: As the hardware for mixed-reality headsets improves, it's expected that the software will follow suit. The emergence of new ways of perceiving and interacting with the world through spatial computing promises a transformation in computing interfaces, moving beyond the traditional 2D screens, keyboards, and mice.
In summary, the advancements and capabilities demonstrated by Apple's Vision Pro and other emerging XR technologies suggest a strong future for spatial computing. These innovations address previous limitations and open up new possibilities for enhancing human interaction with digital and physical worlds, suggesting that XR is not a fake trend but a significant step towards the future of computing and human experience.
The emergence of XR and spatial computing technologies presents significant investment opportunities across various sectors, particularly in consumer, healthcare, and education industries.
Expanding on the framework provided, here's a detailed exploration of the investment opportunities in the consumer, healthcare, and education sectors with the advent of XR and spatial computing technologies:
E-commerce: The integration of XR in e-commerce platforms can vastly enhance the online shopping experience, leading to more informed purchasing decisions by consumers. This technology allows customers to virtually try on clothes, preview furniture in their homes, or even test electronic gadgets in a simulated environment. The resulting improvement in customer satisfaction and reduction in returns offers a lucrative investment opportunity in platforms and technologies that bridge the gap between virtual and physical shopping experiences.
Entertainment: The entertainment sector stands to be revolutionized by XR technologies. In gaming, the shift towards 3D environments offers a more immersive and interactive experience, potentially increasing user engagement and expanding the gaming market. Similarly, the fields of broadcasting and streaming can leverage XR for creating immersive TV series or movie experiences, transforming the way audiences consume content. Investments in companies developing XR content and delivery platforms for entertainment could see significant returns as these technologies become mainstream.
Augmented Surgery: In the healthcare sector, AR-aided surgery represents a significant advancement. By overlaying critical information such as imaging data directly into the surgeon's field of view, AR technology can enhance accuracy and reduce risks during procedures. This application has profound implications for surgical training and execution. Investing in companies developing AR technologies for surgical applications could provide substantial benefits, given the potential for these technologies to improve patient outcomes and surgical efficiencies.
Patient Self Care: XR technologies also offer opportunities in patient self-care, with tools that provide professional assistance for self-check and diagnosis. These tools can guide patients through various health checks or rehabilitation exercises, offering real-time feedback and instructions. This not only empowers patients in their healthcare management but also has the potential to reduce the strain on healthcare systems. Investments in developing such XR applications for patient self-care could tap into a growing market focused on preventative care and patient empowerment.
Virtual School: In education, XR technologies can provide richer tools for learning and expression. Virtual schools can simulate diverse learning environments, from historical sites for history lessons to distant planets for astronomy classes. This immersive form of education can enhance student engagement and cater to different learning styles. Investment in XR content development for educational purposes, along with the technology to deliver these experiences, presents a promising opportunity, especially in the wake of the digital transformation accelerated by the global pandemic.
Revolutionized Learning Scenarios: Beyond the traditional classroom, XR can revolutionize learning scenarios such as laboratories or field studies. For instance, chemistry students could conduct virtual experiments with no risk of hazardous materials, or biology students could explore the human body in 3D. These applications suggest significant potential for investment in companies that specialize in creating these virtual learning environments and scenarios.
In conclusion, XR and spatial computing technologies are opening up a world of opportunities in consumer, healthcare, and education sectors. From transforming shopping and entertainment experiences to revolutionizing surgical procedures and education methods, these technologies offer fertile ground for investments that seek to capitalize on the next wave of digital innovation.
