What’s the AR Cloud? Why is it important? How will it unlock AR’s next era? 

ARtillry’s latest intelligence briefing examines the AR Cloud, the ‘Internet of Places’ and AR’s opportunity in location-targeted retail commerce. Preview the report, or subscribe.

Executive Summary

Among several areas where AR will apply, one of the most exciting and potentially lucrative is local commerce. This includes consumer spending that’s consummated offline, and usually in proximity to one’s home. AR will join the tools that help us discover products and qualify buying decisions.

As background, it’s often overlooked that most consumer spending happens offline in the physical world. Despite the attention to e-commerce over the past decade, it only accounts for eight percent of consumer spending. The remainder – about $3.7 trillion in U.S. spending – is brick & mortar.

But that’s not to downplay digital technologies. Online media – including desktop and mobile – have a big influence on that offline spending, to the tune of about $1.7 trillion in U.S. consumer spending. This is known in the search and advertising worlds as “online-to-offline (O2O) commerce.”

This is where AR could have an impact. Just think: is there any better technology to accelerate O2O commerce than one that literally melds physical and digital worlds? Indeed, AR can shorten gaps in time and space that currently separate digital interactions (e.g. search) from physical-world outcomes.

This will play out in several ways, including informational overlays that add context and commerce to items you point your phone at. It’s everything from restaurants, to shoes you see worn on the street. Not only does it offer consumer utility but it taps into high buying intent, which leads to monetization.

But before we get too utopian and carried away in blue-sky visions – as is often done in XR industry rhetoric, trade shows and YouTube clips – it’s important to acknowledge realistic challenges. There are several interlocking pieces required, including hardware, software and the AR Cloud.

Coined by Super Ventures’ Ori Inbar, the AR cloud underpins the AR future many of us discuss. In short, it’s a cloud repository of geo-relevant data and object blueprints that will empower far-flung AR devices with contextual and situational awareness. It’s the active ingredient in an “internet of places.”

But how will the AR cloud be built? Who will own it? How will information be indexed and accessed? And how will AR devices translate that data into AR magic on the front end? These are key questions that will define the next era of mobile AR. And they’re the questions we begin to tackle in this report.

Excerpt: Enter the AR Cloud

The AR Cloud is like dark matter. Still theoretical, it’s a missing puzzle piece whose adjacent pieces provide evidence of its existence and possible shape. Replace the puzzle metaphor with theoretical physics equations and that’s dark matter. We know it has to be there if the equation is to balance.

The AR cloud is similarly something we know needs to happen for AR’s fully intended vision to materialize. It’s the critical, yet still non-existent, piece of nearly every glowing and futuristic AR vision that you may have heard in conference presentations, generalist op-eds or YouTube clips.

So what is it exactly? Though its still-theoretical status dictates that it will take shape in unknown ways, it’s generally a cloud data repository that enables AR devices to perform wherever they are. That includes sending geo-relevant data and object-recognition blueprints.

Stepping back, AR mapping and scene awareness happen when smartphones scan their surroundings. This applies a combination of computer vision, object recognition and GPS data. But the issue is that all that data can’t be stored locally on your phone.

Simplified view: Full year-by-year detail and category segmentation available in full report.

ARCore and ARkit perform well in individual AR sessions including mapping a given space using surface detection, localization and inertial odometry. But to map large (outdoor) areas, or come back to previously mapped areas requires more computational muscle than smartphones offer.

That’s where the AR cloud helps devices to “recognize” scenes, rather than exhaust computational muscle (and battery life) mapping already-chartered territory. It will register devices’ location, then serve mapping and object recognition data tagged to that location.

Why is this important? It advances the industry by giving app developers the capability of a Google – a la Google Lens and VPS. Instead of having to build or worry about those extensive and enabling data sets, developers can focus on UX and business models.

To that end, the AR cloud will enable the consumer AR industry to reach ARtillry Intelligence’s revenue projection of $14 billion in 2021. But several questions still remain. How will it all come together? Who will build the AR cloud? Who will own it? And where are opportunity gaps?

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This report highlights ARtillry’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillry Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For any market sizing, ARtillry Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 15 years in research and intelligence in the tech sector. This includes the past two years covering AR & VR as a main focus.

More about ARtillry Intelligence methodology can be seen here, and market-sizing credentials can be seen here.


Disclosure and Ethics Statement

ARtillry has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillry remains independent of players and practitioners in the sectors it covers. It doesn’t perform paid services or consulting for such companies, thus mitigating bias — real or perceived — in market sizing and industry revenue projections. Disclosure and ethics policy can be seen in full here.

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AR Cloud and the ‘Internet of Places’