Apple Will Win
The AR/VR Wars

Related AR/VR essays: AR Demands Peripherals, Bananas Will Become Smartphones, Monomode and Multimode in Augmented Reality, Claim a Domain in the Wet Web, Tools and Techniques for AR/VR Media, AR Interoperability Opportunities

This essay details my best guesses about the future of augmented and virtual reality. The future I expect is not necessarily the future I want.

tl;dr:

1. AR will devour smartphones.
2. Apple is the only company that can quickly overcome consumer AR/VR design challenges.
3. Apple has positioned itself to distribute the best AR/VR content.
4. Apple will cement its early lead with a new blue-bubble effect.

1. AR Will Devour Smartphones

Smartphones will become obsolete when mobile AR devices hit shelves:

• Your eyes are mice.
• Sufficiently high-resolution AR devices can simulate smartphones at any size on any surface.
• AR peripherals can do everything smartphones can do, but better.

Because AR devices share your POV, AR will provide ubiquitous context where smartphones cannot. Some examples:

• Everything you see becomes permanent and searchable (like rewind.ai).
• Bananas will become smartphones. Every object automatically gets a “touchscreen” and “gyroscope” and “accelerometer”.
• Virtual assistants (e.g. ChatGPT) can assist with whatever is in your field-of-view.
• Staring at food ingredients can show recipes, tips, and local delivery options.
• Glancing at a person can show interests, common connections, conversations, recent photos, and a name.
• Staring at anything can show contextual information from your ambient wikis/games/layers/communities.

2. AR/VR Ecosystems are Inevitable

AR/VR Apps Are Inevitable

Due to technical and UI constraints, AR/VR operating systems must straddle “full-screen” apps and visual “extensions”.

Expect many popular apps to botch the transition to AR/VR. Consider claiming a domain in the wet web before it’s too late.

AR and VR apps will coexist in the same marketplaces:

• All devices will have AR app stores similar to existing iOS/Android app stores.
• VR goggles will offer VR-only apps, similar to MacOS/Windows stores. This will also include VR-only streaming/gaming services, like Netflix and Steam.
• Many VR apps will offer “transparency” mode, which adds your physical surroundings to the app background. Many AR apps will offer “focus” mode, which blocks out your environment.

VR+AR Devices Are Inevitable

All VR headsets will double as AR headsets:

• AR is more useful than VR
• cameras are cheap
• room-scale VR is safer with on-device cameras for bounding areas
• people don’t want to be isolated from their environment for all activities
• people will want to video chat with POV cameras

There will be three main categories of AR devices:

• portable AR glasses for public/casual use
• consumer AR+VR goggles for home/business use
• enterprise AR+VR goggles for professional use

VR+AR Operating Systems Are Inevitable

People multitask. People want to simultaneously send messages, recieve notifications, and watch movies. This means that all VR+AR devices will likely feel similar to modern iOS/Android devices (at first). The notification systems will likely evolve from Apple’s watchOS and Android’s WearOS. Apple and Google have a clear advantage.

This will be a ripe time for Amazon, Valve, Microsoft, and Meta to reveal new AR+VR operating systems. The main challenge will be seamlessly integrating with existing messaging/notification systems. All existing smartphone iOS/Android apps will be able to run in “flat”/“compatibility” mode. Again, Apple and Google maintain a clear lead.

Users follow developers; developers follow users. Apple and Google will likely have a seamless ecosystem for personal/professional use.

Meta’s Oculus devices have cornered much of the consumer gaming market, but they haven’t demonstrated that they can build a serious operating system. It will be difficult to sell gaming-only headsets when general-purpose VR+AR devices are widely available.

Microsoft’s Hololens currently dominates the professional AR market, but it will be difficult to maintain their competitive advantage. Microsoft has proven that it can make great hardware, but they need to overcome Windows Phone stigma and reenter the mobile OS market. Microsoft may also leverage the XBOX ecosystem to grow a AR+VR gaming OS into a general-purpose OS.

3. Content is King

In general, smartphone apps will migrate to AR. New games, movies, and apps will be produced for VR.

Passive Consumption

VR films/series aren’t popular yet, but they will be. VR videos will become more common than VR games. People demand passive consumption.

Microsoft, Valve, Sony, and Google are all well-positioned for VR games, but not for passive VR content. Apple and Amazon have the media relationships and studio experience to create first-party content for VR devices.

Many beloved films will be “rereleased” in VR. AI will do most of the 3D conversion. The “letterboxed” style will display the 3D film in a rectangle room-tracked or head-tracked. Some platforms may also offer impressionistic AI-generated continuations beyond the original borders.

Theaters will face mass extinction. “Flat videos” will become a retronym.

Editing Tools

Editing tools matter.

The AR/VR medium is largely unexplored because of underpowered software suites. As AR/VR devices become common, content creators will continually push the boundaries of the medium.

Adobe/Unreal/Unity/etc. must coordinate with content studios (Disney/Netflix/HBO/etc.) and hardware manufacturers (Microsoft/Google/Samsung/etc.) to agree on AR/VR standards. It will take years for these hardware and software and content companies to iterate together.

Produce AR/VR content on flat screens makes certain tasks difficult. Major AR/VR editing suites will run on AR/VR devices.

Apple can vertically integrate iMovie/FinalCut with their AR/VR hardware to produce seamless 1st-party experiences.

A good example of tech empowered by Apple’s vertical integration is spatial audio. Apple produces the AirPods, streaming devices, Apple Music, and GarageBand/Logic.

Studios

Apple and Amazon produce exclusive content for their streaming services.

But only Apple will be able to create content on its own editing tools and its own hardware. This gives Apple opportunities to (1) release new devices with exclusive launch-day content and (2) dogfood all of its products before hitting the public. Apple will define “next-generation” each generation.

First-to-Marketplace

• Apple dominated digital music sales by launching its iPod with iTunes.
• Apple dominated mobile software sales by launching the iPhone with the App Store.
• Apple will dominate AR+VR by launching AR+VR devices with an app/media marketplace.

Android-flavored competitors to Apple’s App Store will exist, but Apple will continue to attract most of the paying customers.

This is a critical time for Microsoft to revive its mobile marketplace. In order to succeed, they will need to (1) overcome previous Windows Phone stigma, (2) create a stellar AR+VR operating system for general use, and (3) launch their devices with extremely high-quality apps.

Acquisitions Change Things

Google, Meta, and Microsoft need exclusive content for passive consumption. They should acquire small production studios with dedicated fanbases.

Amazon needs a better social network to integrate with its devices. All companies should consider acquiring Reddit, VRChat, and Roblox.

All non-Apple companies should consider acquiring Adobe competitors that specialize in making editing software for AR/VR.

4. Nobody Wants To Be Alone In VR

People hunger for shared experience.

Metcalfe’s Law drives corporations to create large networks disconnected from their competitors. When monopoly is not possible, organizations are incentivized to join an interoperable system.

Major network failures are rare but informative:

• Bell
• AOL
• Myspace

The Blue Bubble Effect

Apple has laid plumbing for shared experience across their operating systems. iCloud allows you to collaborate on notes, docs, browser tabs, etc. Shareplay allows you to consume live media with others via FaceTime. You can also share audio with multiple sets of headphones. Because Apple creates closed hardware, they can gimp competitors and establish walled gardens where nobody else can.

Unlike Meta, Apple doesn’t need to create an entire metaverse. Apple only needs a single gimmick to draw more Apple users into their ecosystem.

Apple has proven its strategic prowess with the Blue Bubble Effect. They will be early enough to AR/VR to make industry-defining impacts. For example, Apple users may be able to choose virtual accessories that only other Apple users can see in AR.

Much of Apple’s leeway here depends on AR/VR interoperability design.

Third Places

Meta is attempting to establish early network dominance in AR/VR with their Metaverse. If successful, they will become an AOL of the future. This is a solid strategic move, but they are spectacularly failing where Roblox and Minecraft and VRChat thrive.

It is unclear how people will want to spend time together when AR/VR is ubiquitous. The following communication channels will continue to thrive:

• direct messaging (e.g. SMS, WhatsApp, email)
• friend-based networks (e.g. FB, Instagram)
• pub/sub social networks (e.g. YouTube, Twitter, Twitch, RSS, Substack)
• interest-based forums (e.g. Reddit, Pinterest, Slack, Discord, HN, Craigslist)
• synchronous games/activities (e.g. CoD, WoW, Minecraft, Roblox, VRChat)
• dating apps (e.g. Tinder, Hinge)

Pokemon Go hints at one future of AR/VR social interaction. Asynchronous ambient games offer contextual/passive/local entertainment that can disrupt all other social networks.