Head-Mounted Displays in German Companies A Virtual, Augmented and Mixed Reality Check

1 Executive Summary

2 Different Concepts, Many Commonalities

Whether you look at Virtual, Augmented or Mixed Reality: The terminology is neither self-explanatory nor used in a consistent way. A definition and classification that we find helpful is provided in Figure 1, based on Paul Milgram. It shows that Virtual Reality and Mixed Reality are clearly distinct concepts within the same context. Augmented Reality, on the other hand, is a specific variant of Mixed Reality.

Figure 1

Classification.

In a Virtual Reality application the user is presented an artificial, computer-generated 3-D environment. Special head-mounted devices with small displays react to the user’s head movements and give the user a 360-degrees vision. This immersion in the virtual world fools the user’s brain into believing that s / he really is in that virtual place. 360-degrees panorama videos are a relevant variant of Virtual Reality.

Mixed Reality merges the physical (“analog”) world with a computer-generated virtual world and creates an environment where physical and digital objects co-exist and interact. This may happen by adding virtual, digital content to the physical world (Augmented Reality) or by projecting real persons or objects into virtual spaces (Augmented Virtuality).

The various realities are fundamentally different, each requiring specific hardware and contents. At the same time, there are numerous parallel or overlapping aspects, which allows lumping them together in an analysis of their B2B potential. The obvious commonality is the use of head-mounted displays. These are a new type of device in many businesses and require a new thinking: Work processes need to be modified or designed anew, also for the staff wearing a head-mounted display takes getting used to.

The three concepts also share the need for further convincing use cases. Because innovative head-mounted displays will be broadly used only if their use clearly adds significant value. Only then will the staff be able to work efficiently with the new hardware and related work processes. Business solutions should therefore be developed with care and not implemented prematurely.

3 A Broad Range of Hardware

The first step on the way to the various realities is the hardware. Here the concepts differ significantly. While head-mounted displays for Virtual Reality visually seal their users from their real physical environment, the open view onto this physical environment is a pivotal conceptual element of Augmented Reality and Mixed Reality. As a consequence, head-mounted displays for Augmented Reality or Mixed Reality are transparent or semi-transparent.

Presently we can distinguish five categories of head-mounted displays:

1. Low-End and DIY VR

   Low-end or do-it-yourself head-mounted displays such as Google Cardboard make for a low-cost start into Virtual Reality. A simple cardboard box with two lenses is enough to turn a smartphone into a usable VR display. The processor and memory, sensors and display of the smartphone provide the technical basis. Companies have been using low-end headsets as a free give-away, to let large numbers of potential customers access Virtual Reality product presentations.

2. Mobile VR

   The more expensive mobile Virtual Reality headsets, such as Samsung’s Gear VR or the future Google Daydream, are based on a smartphone, but also use built-in or standardized sensors. These translate the user’s head movements to the virtual world, allowing for an optimized user experience. Like low-end headsets, the mobile devices need no cables, as processing power and energy are provided by the smartphone in the headset. As an intermediate form between low-end and full-featured Virtual Reality they play a lesser role in business applications.

3. Full-Feature VR

   Full-feature Virtual Reality headsets are attached to a high performance PC or a game console, which makes them particularly effective. Oculus Rift or HTC Vive, for example, let the user immerse in an impressive way in virtual worlds. Companies use full-featured headsets in product road-shows or in sophisticated visualizations of objects under design.

4. Smart Glasses

   Smart glasses add contextual information to the user’s field of vision. By now, there are many business applications, for instance in maintenance and repair or in logistics.

5. Next Generation AR / MR

   In Microsoft’s HoloLens, Meta 2 or Magic Leap, holographic images are superimposed over specific real objects that the user sees through transparent lenses. The system recognizes objects and their depth and takes this into account in merging the virtual and the real world.

Figure 2

Low-End and DIY VR (top-left), Smart Glasses with peripheral vision (top-right), Smart Glasses with central see-through (bottom-left), and immersive Mobile VR (bottom-right).

4 Many Potential Application Fields

The five different classes of head-mounted displays have specific application fields in almost all parts of a company. The diversity of potential applications is a consequence of the heterogeneous concepts underlying Virtual Reality, Augmented Reality and Mixed Reality. Figure 3 categorizes the main business application fields.

1. Marketing

   In marketing, activities today clearly focus on Virtual Reality. Many companies hope to benefit from the current hype by offering their customers the new 360-degrees experience. They have to move really fast: At the moment, Virtual Reality still has the attractiveness of a novelty and consumers are easily wowed by a first virtual reality experience. The innovative advertising concepts reflect positively on the product. In particular cheap low-end headsets offer a wide range of opportunities. As an example, McDonald’s in Sweden offered a special version of their Happy Meal. In a limited offer of the children’s meal, the box could be converted to a Google Cardboard-style headset. As a complement McDonald’s published a ski game that immersed the young patrons in alpine VR worlds.

2. Product Presentations, Virtual Showrooms and Visualization

   Virtual Reality conveys vivid impressions of remote objects, as if the user was standing right in front of them. This leads to a large number of B2B application scenarios. You might think of virtual presentation of products before they start being sold, and of personalized presentations of the current range of products. Audi AG for example provides their dealers with VR stations that visualize specific configurations of their cars.

   Real estate vendors may use VR to present out-of-town offerings or development projects in a 360-degrees view. Here full-feature VR headsets are used, as their high resolution gives the users a particularly immersive product experience. Also wireless mobile headsets are used frequently, due to their flexibility and ease of transportation.

   Augmented Reality may also be used in product presentations. Smart glasses can display interactive explanations of product features that are in the user’s focus. Here the next-generation AR / VR headsets promise to deliver a still better user experience.

3. Instruction, Training and Simulation

   New visualization technologies are the basis for innovative instruction formats, they make professional training independent of specific locations and thus reduce training costs. Early adopter companies have started to educate their staff in a virtual reality, with assembly and maintenance jobs being trained in a realistic immersive environment. For example, National Grid, the British power grid operator, introduced VR in their training program, focusing on interactive instructions using virtual 3D models of important components or complete facilities.

   Physicians, too, use VR in life-size and real-time simulation of complex surgery. Here, full-feature VR headsets are the hardware of choice, as for most of the training applications the performance of the high-end equipment is barely sufficient. We also foresee a broad range of application scenarios for next-generation AR / MR head-mounted displays in the field of instruction, training and simulation.

4. Design and Product Development

   Using a 360-degrees visualization of a new design helps companies make design and product development simpler and more flexible. Design ideas can be reviewed and adapted on a regular basis, long before the first physical 3D models are built. Using full-feature VR headsets, the immersive demonstration of draft designs conveys a very accurate feel for size and proportions. Early user acceptance tests can also be run in virtual reality.

   The Italian carmaker FIAT is using VR for realistic comparisons of configuration options, in part without ever having physically produced these configurations.

5. Conferencing and Collaboration

   Virtual meetings reduce the costs of traveling and make work processes more flexible and efficient. Ford is using virtual reality in their collaborative development processes. Engineers on different continents use VR to work together simultaneously on the design of new cars but also on the development of autonomous driving technologies.

   It is still an open question whether Mixed Reality will be a reasonable complement to the established conferencing systems. Next-generation AR / VR headsets promise to let real persons convene in virtual or remote conference rooms via 3D projections. But it remains to be seen if and when new hardware can deliver these extremely demanding applications in acceptable quality.

6. Maintenance and Repair

   For technical field staff smart glasses can be a great help in maintenance or repair jobs. The technician is given information tailored to the job at hand by projecting relevant sections from the service manual in her / his field of vision. This leaves her / his two hands free for the manual tasks of the job. Smart glasses also support consulting remote experts. The built-in camera shows them the local technician’s field of vision, so the experts can give well-focused advice. Smart glasses can thus significantly improve the efficiency of maintenance and repair work.

   Tests of Microsoft’s HoloLens in the International Space Station also document the usefulness of AR / VR in maintenance and repair. In the so-called Remote Expert Mode, engineers on the ground can see through the astronaut’s eyes and support their maintenance and research tasks efficiently. Procedure Mode offers true virtual reality and projects information as holographic illustrations into the astronaut’s field of vision.

7. Logistics and Navigation

   Processes in logistics and navigation can be optimized by using smart glasses, too. Machine-reading barcodes through the smart glasses’ camera helps a storekeeper identify and pick the correct parts quickly and reliably. Using smart glasses to determine the position and to support the navigation of security personnel can significantly improve work processes. In the short term, logistics is considered to be the most promising B2B application field for head-mounted displays. Here, numerous solutions can be implemented quickly using currently available smart glasses.

   At Volkswagen AG, picking staff in logistics may choose to use smart glasses. They assist by showing helpful information like the right shelf space or part number, so that both hands can be used in picking.

8. Production

   A number of use cases have been put forward regarding manufacturing processes. Most of them are for Augmented Reality headsets. Production flows can be improved by providing specific additional information, e. g. by having assembly information immediately available. With this kind of support, even unskilled workers may be able to take on more demanding tasks. The smart glasses can even be linked directly to systems for production planning or quality control. The experience of early adopters is that, if Augmented Reality is implemented in the right way, error rates will drop and production speed will increase. Airbus is using smart glasses to support their technicians in installing cabin interiors in the A330 aircraft. Thus the time to mark the points of installation was reduced by more than 80 percent.

Figure 3

Application Fields.

Table 1 summarizes the potential B2B application fields of Virtual Reality, Augmented Reality and Mixed Reality, assigning the best-suited headset types to the different use cases. The basically complementary character of VR headsets and AR / MR headsets is obvious. Different application fields require different types of headsets, a “one fits all” device is not yet available. The next-generation AR / MR headsets promise to be suitable for a larger spectrum of applications, but it remains to be seen if they can live up to this expectation.

5 On the Way to a Billion Euro Market Segment

Till the end of the decade, German companies will spend some €840 million on Virtual Reality, Augmented Reality and Mixed Reality. Only a small share of this sum will be for hardware. Here the B2B market is fundamentally different from the consumer market segment, where hardware sales dominate.

Almost 90 percent of the sales figure in the B2B market segment will be allotted to development, licensing and maintenance of bespoke solutions for individual companies. Typically, these solutions are not available off the shelf but have to be implemented on an individual basis to fit the different requirements and deployment objectives. In particular the implementation of interfaces to existing IT systems can be costly. Updates and new releases that must be developed individually cause additional costs.

In a breakdown by application field, Logistics, Maintenance & Repair and Production already show significant sales figures. Here AR applications based on smart glasses have been available for some time. The application field Product Presentations & Visualization will experience strong growth in the coming months. In a longer-term perspective, Conferencing & Collaboration is an application field with great potential. However, the sales volume in this field depends on how convincing solutions based on the HoloLens and its competitors will be for the users.

By 2020, B2B sales of hardware for Virtual Reality, Augmented Reality and Mixed Reality will grow to €88 million. This figure includes only those headsets that companies buy for their staff and customers. Hardware sales are small in comparison to related services. This is due to the fact that companies use standardized or even consumer headsets without major modifications. Hardware prices can be expected to drop significantly over the next few years. Sales growth will initially be driven by full-feature VR headsets and smart glasses. Give-away cardboard headsets will quickly lose their novelty and become irrelevant for the B2B market. Mobile VR headsets are mostly consumer devices, thus less important for the B2B market than for the overall market. Starting in 2018, next-generation AR / MR headsets will command a significant share of hardware sales.

Figure 4

Market Volume.

In the next five years, Virtual Reality, Augmented Reality and Mixed Reality will become a significant B2B-market in Germany, with an annual growth rate of 37 percent. One of the driving forces is the outstanding expertise in German research institutes, some of whom have been working in this field for 20 years. The future growth will benefit device vendors, well-established IT service providers and innovative start-ups alike. Specialized advertising agencies, too, may earn their piece of the VR / AR / MR cake by implementing 360-degrees campaigns.

6 Outlook: A Headset in Your Professional Outfit

A multitude of potential applications and the technological evolution of the hardware will accelerate the dissemination of head-mounted displays in companies. Virtual Reality, Augmented Reality and Mixed Reality promise a growth in productivity and cost reductions. They offer the opportunity for more efficient work processes, innovative concepts in marketing, visualization and training as well as new forms of collaboration.

Each of the three segments, Virtual Reality, Augmented Reality and Mixed Reality, will continue to grow in the German business environment. The important drivers of this growth are not just new hardware, but in particular the improved quality of B2B solutions based on this hardware. Over the next few years, the three concepts will evolve along divergent paths. Each of these market segments will show specific characteristics:

1. Virtual Reality

   VR headsets will establish themselves both in the consumer market and in the B2B market. Companies may profit immediately, as their staff may get acquainted with the new devices away from the job and thus be more open towards using them at work. The most important B2B application fields will be marketing, visualization & simulation and collaboration. Due to their closed character, VR headsets will mostly be used in short sessions.

2. Augmented Reality

   For years to come, Augmented Reality will be relevant primarily in the B2B market segment. The look of the headsets, which takes getting used to, and the public concern about privacy infringements will block a success in the consumer market. On the other hand, augmenting what we see around us by digital content holds enormous potential for industrial applications. The context-related information added by smart glasses and their hands-free use can help to optimize processes, in particular in logistics, production and maintenance.

3. Next-Generation AR / MR

   The announcements of Microsoft’s HoloLens, of Meta 2 or Magic Leap created huge expectations. However, the demos published so far offer only a limited impression of their real potential. Thus it is still open how quickly the promises of the stunning demos can be exploited in serious business applications. In principle, the next-generation headsets with their semi-open character might be used in numerous established AR applications. In the medium term we may thus see smart glasses being substituted by next-generation headsets. By projecting holographic objects, they promise an improved user experience and may open up additional applications fields, e. g. in conferencing and professional training. The vendors have identified the B2B market segment as the main application field for the new headsets and are working on innovative applications.