Creating Business with New Reality (AR/VR) Value Chains

ar1One way to interpret AR/VR ecosystem is classifying it as a platform, what I am referring in this blog as “Platform 4.0”. Followed by personal computer, web, and mobile, AR/VR platforms fundamentally are transforming how present-day consumers interact in the physical world. One way to define AR/VR is as follows,

  • VR: Immerses users in an imagined or replicated world
  • AR: Goes closer to reality overlaying digital imagery onto the real world.

AR/VR offers significant business opportunities, but a holistically understanding on how to create a business from this very promising platforms is very critical. As per Statista, by 2021, the augmented and virtual reality market is expected to reach a size of $215 billion. For AR alone, ARtillry Intelligence projects consumer AR revenues to grow to $14 billion by 2021. The business models for capturing the market opportunity of AR/VR platforms preferably should encompass on upstream and downstream of “New Reality Value Chains”. The upstream part of value chains covers the core of AR/VR development needs and downstream part of value chains address the various channels to serving AR/VR demands.  The term ‘business model’ in this blog ties to either a segment of upstream or downstream of AR/VR value chain. While the detailed characteristics of each business model are slated for a separate blog, tried to summarize the various models with “AR/VR Business Opportunity Framework” as depicted above.

As mentioned above, while “New Reality Value Chains” offers significant business opportunity, the potential market opportunity sizes vary by business model and respective focus segment. With further market analysis, the indicative percentage market opportunity size by each of the business segment is shown in the chart “AR/VR Business Models and Market Size” below. Hardware, eCommerce, and Ads contribute to >2/3rd of market share. Another key observation is immediate whitespaces in Apps, Subscriptions etc. can be target areas to evolve innovative business models.

AR 2

The above-mentioned business models and their growth potential is estimated to be varying across verticals. The “AR/VR High Impact Sectors” with most promising opportunities are Games, Healthcare, Industrial, and Broadcasting Events. The relative opportunity size of AR/VR across various verticals and respective dominating use cases are summarized below.

  • 1/3rd of the VR/AR market opportunity comes from the Gaming industry. Leveraging VR to enrich the video gaming experience offering players with illusory environments by porting games onto playing fields offers a significant business opportunity. The recent success of “Pokemon Go” is a use case to showcase.
  • Next 1/3rd market opportunity prevails in Industrial, Healthcare, and Event Broadcasting verticals. For example, in the industrial sector, AR/VR can help engineers to test scenarios and designs allowing rapid prototyping and yield cost reductions fixing known errors before mass production.
  • Remaining 1/3rd market opportunity comes from other verticals including Retail, Real Estate, Entertainment, Education, and Military. For examples, Retailers can revolutionize the way consumers shop by elevating the shopping experience and promoting emotional connection to a brand or product

In summary, i) AR/VR Business Opportunity Framework, ii) AR/VR Business Models and Market Size, and iii) AR/VR High Impact Sectors presented above can be used as a starting point in carving out specific target business initiatives in much promising AR/VR space.

You can reach me @ kishor.akshinthala@gmail.com for a deeper mindshare on this topic.

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Living in an Artificially Intelligent World

imagesI was reading an article on new research led by the University of Adelaide on the subject of an AI’s ability to predict a patient’s lifespan simply by looking at images of their organs. After taking a deep breath picked up my coffee and started walking thinking about the deeper engagement of AI in human life. While paying for coffee a few minutes ago, I realized that my credit card got misplaced and called the Bank customer service to inform. A bot attended my call and navigated through the issue and without getting a human agent involved, bot blocked my lost card and placed a new one. I am sure it would have simultaneously updated records in the backend with lost and new card information in multiple systems beyond handling customer communications. This is a classic example of automating a standard business process and corresponding workflows. Then I realized ANI (Artificial Narrow Intelligence) has already made inroads into human daily life.

While contemplating further on AI reach on our lives, reached my home. My ten-year-old daughter approached me handing over the home phone and said, I am holding a call for you and it seems that “bot thingy” is on the line. She was right, it’s an automated calling service from credit fraud services. The bot enquired about the recent loss of my card, security, and privacy related queries. Then transferred the call to a human agent, who confirmed card replacement and started offering adjacent services like fraud protection, started analyzing the credit situation identifying potential needs offering a new credit card that in a way precisely address my requirements. My surprise went to the next level, as AI started traversing deeper in my life routines. Of course, post my last call to the bank, cognitive AI might have picked up from ANI and started advanced analytics on data deriving next level insights and triggering a bot to make a follow-up call. As bot done its preliminary job handing over to the human agent, this cognitive AI started helping him in offering adjacent products the make perfect sense in my scenario. The bot may sooner completely replace human interface. Isn’t it nothing but AGI (Artificial General Intelligence)? A machine that could successfully perform any intellectual task that a human being can or aid human being in doing so.

Perfect! I walked into the kitchen and got into a dialogue with my wife. We decide to go shopping. She was on her iPhone as we walk through the aisles, and I noticed that an NLP chatbot advising her on retail product recommendations with a greater personalization with rich images and connecting to VR interface enabling product tryout. What an intrusion of AI in every walk of life. This I call it ASI (Artificial Super Intelligence).

Albeit, in a day of life, I traversed with all three phases of AI with increasing degrees of influences on daily routines, needs, and decisions. Going back to the article I read in the morning, I felt humans natural dependency on AI is on a rising path. 

Digital Revolutions

DR

Markets have been constantly evolving from pre-internet era of viscous state through fluid state over last decade with internet democratized access to information, reducing buyer-seller information asymmetry. Digital Revolutions with the advent of AI, Blockchain, Robotics, AR/VR, and hyper connected driven IoT technologies are forcing companies to functioning in a state of super fluidity in recent times.

Fortune 1000 organizations and VC backed startups are applying AI, ML, AR/VR, Blockchain and IoT to empower enterprises to make intelligent decisions, prioritizing and driving next-gen innovations improving the success rates. As an enthusiast envisioning the success of superfluid markets and with know-how of recent technology developments, I would like to summarize below the driving forces of Digital Revolutions

  • Key characteristics of Digital Revolutions: As businesses are trying to become intelligent enterprises with real times responses, there is an increasing demand for dematerializing their physical assets with digital touchpoints. In these times, business operations, supply chain, supporting infrastructure and technology, and enormous volumes of data becomes software driven making enterprises become hyper connected seamlessly and derive proactive insights. This is leading to Digital Revolutions offering a rich user/consumer experiences.
  • Blockchain and IoT are expediting the pace of Digital Revolutions: We have now entered the age of superfluid markets, which represents the convergence of multiple forces. While many transaction costs were reduced during the fluid market period, costs around contracting, trust and the policing and enforcing of contracts remained high. The maturation of blockchain technology as a transaction engine in which trust is “built in” will reduce even these costs. With the Internet of Things, physical goods are being sensed, tagged and linked to the Internet, with the promise to better match supply and demand. Intelligent agents will soon anticipate buyer preferences before buyers themselves. The intersection of blockchain and IoT will create autonomous markets that run themselves cheaply and efficiently. The gig economy implies increasingly superfluid labor markets. And these developments may just represent the tip of the iceberg. Examples include,
    • Blockchain potentiality to offer intrinsic business value in integrated utilities management with a reliable, low-cost way for recording validating financial or operational transactions across a distributed network with no central point of authority. Peer-to-peer energy trading, Billing of AV charging stations, Power Ledger and Smart grid management systems are few use cases.
    • Visa’s IoT platform designed to bring the point-of-sale everywhere by allowing businesses to introduce secure payment experiences quickly to any device connected to the IoT. Visa’s vision and belief is to securely embed payments and commerce into any device—from a watch to a ring to an appliance or a car.
  • Robotics and Bots are first steps of organization in taking advantages of Digital Revolutions: Robotics are emerging to pick up precision heavy activities and “bots” leveraging AI is taking customer service and experience to the next level. Take a look at inVia that is introducing “robotics-as-a-service” to the new economy with first “goods-to-box” warehouse packing system. This new robotics system that put goods directly into shipping boxes. Instead of investing in a fleet of robots, customers pay a monthly service fee.
  • Artificial Intelligence and Machine Learning are big boost to Digital Revolutions: AI combine with machine learning is paving ways to new business models. AI technologies already pervade human lives progressing beyond simply building systems that are intelligent to building intelligent systems that are human-aware and trustworthy.
  • AR/VR is becoming a driving force of Digital Revolutions. Let us take examples of retail industry transformation. Virtual reality (VR), along with its sister technology augmented reality (AR), offers retailers the opportunity to transform how people shop. One customer might try on shirts without having to travel to the store. Another might order furniture on the spot, confident that it’s right for the house. Applications using either technology stand to eliminate customer pain points, elevate customer service, and create a differentiated, personalized customer experience. The successful incorporation of VR and AR into retail models also has the potential to vastly change the way retailers are thinking about stores of the future

Digital Revolutions are leading to superfluid markets which will continue to evolve differently across different industries and companies. These transformations are what we continue to explore into future. There is a pressing need for companies to collaborate exchanging ideas, trend spotting, and tap innovations to succeed in  future frictionless markets.

New IT enabling Superfluid Markets

Super Fluid

 

 

Digital forces like AI, Machine Learning, IoT, Robotics, VR/AR, Blockchain etc. are reimagining business models transforming goods, services and labor markets at unprecedented pace enabling the superfluidity of the markets. Two fundamental characteristics of superfluid markets are shrinking lead times making the interactions seamless and near realtime, and second is extreme focus on cost-to-value ratio. I will discuss the evolving nature of markets with few use cases below.

1) Goods and Services in Superfluid Markets:

i) Artificial Intelligence and Machine Learning: AI combine with machine learning is paving ways to new business models for example, changing the landscape of online ads by connecting shoppers to goods using images. Take a look at an AI platform called The Discover Machine, created by the startup Z Advanced Computing (ZAC). This new machine learning backed platform is changing the landscape of online ads. ZAC claims to offer something unique by producing online ads generated through images, not text. The machine-learning platform can be applied to searches from shoppers that will lead to the product on a merchant’s website, or to serve merchants by generating targeted visual ads based on a customer’s browsing history. The intended users of the platform include shoppers, merchants, and bloggers or other publishers.

ii) Internet of Things (IoT): As the Internet of Things (IoT) continues to grow and drive a more connected world, it is changing the way we live, shop and pay by moving data and the point-of-sale to wherever the consumer wants it to be. Take a peek at Visa’s IoT platform designed to bring the point-of-sale everywhere by allowing businesses to introduce secure payment experiences quickly to any device connected to the IoT. Visa’s vision and belief is to securely embed payments and commerce into any device—from a watch to a ring to an appliance or a car. Experts estimate there will be 380 million connected cars by 2021. Visa is working with a number of car manufacturers (and other companies from across the car ecosystem) to build and test prototypes for car-based payments. By connecting the car ecosystem to the Watson IoT Platform and enabling the car with secure payment functionality, imagining the many possibilities becomes easy. Drivers could be alerted when their smog certification is about to expire or if a specific car part needs replacing, responding by either scheduling a service appointment or ordering the part that has the combined lowest cost and fastest shipping time. The range of other options is virtually limitless, extending to insurance offerings, paying for gas without a physical card or zipping through the drive-thru that much faster because the payment part of the transaction no longer exists.

iii) Robotics are emerging to pick up precision heavy activities and “bots” leveraging AI is taking customer service and experience to the next level. Take a look at inVia that is introducing “robotics-as-a-service” to the new economy with first “goods-to-box” warehouse packing system. This new robotics system that put goods directly into shipping boxes. Instead of investing in a fleet of robots, customers pay a monthly service fee.

iv) AR/VR in a classic example driving superfluidity is transforming the retail industry. Virtual reality (VR), along with its sister technology augmented reality (AR), offers retailers the opportunity to transform how people shop. One customer might try on shirts without having to travel to the store. Another might order furniture on the spot, confident that it’s right for the house. Applications using either technology stand to eliminate customer pain points, elevate customer service, and create a differentiated, personalized customer experience. The successful incorporation of VR and AR into retail models also has the potential to vastly change the way retailers are thinking about stores of the future

2) Labor Markets:
“On-demand and online talent platform” is a new labor model in the connected digital age. As per multiple surveys 1B+ people are unemployed in Developed & BRIC nations. According to McKinsey, online talent platforms serve as clearinghouses that can inject new momentum into job markets. By 2025, they could add $2.7 trillion, or 2.0 percent, to global GDP and increase employment by 72 million full-time-equivalent positions. Global companies are rethinking their talent strategies to tap Connected Transparent Talent Pool.

Augmented Reality Use Cases – Next Multi-Billion Business Opportunity

ar1Augmented Reality is going play a center stage in connected world. AR technology is enabling apps see and connect with the physical world. Imagine, for example, aiming your mobile phone camera at your car engine. The phone then overlays an image of the scene with labels and videos, showing you how to change your air filter. A report from Juniper Research shows that the use of AR apps in the enterprise will grow to $2.4 billion in 2019, up from $247 million in 2014. The enterprise AR market is primed by the growing use of AR in the consumer segment, creating a push-pull revolution that will affect both markets. Collated below few use cases of AR technology that help businesses to chase new revenue opportunities.