By Dermot Casey Catalyst. Synthesist. Curious, Venture Investment Leader, NDRC

Big Data is the next big thing.

Analytics is the next big thing.

IOT is the next big thing

Artificial Intelligence is the next big thing

Augmented Reality / Virtual Reality (AR/VR) is the next big thing

I’m a bit weary of the next big thing.

The next big thing may fill lots of column inches but it doesn’t always solve lots of problems or generate lots of value or profit. How’re those 3D TV’s that everyone has? When it comes to new platforms we need to figure out how the technology solves real customer problems.

Every new successful platform has its “VisiCalc moment”. It’s that point that it transitions from toy to a tool, from interesting to true innovation. VisiCalc was the first spreadsheet. It was the defining product for the Apple II. VisiCalc was a killer application. People spent $10,000 on an Apple II so they could spend $100 on VisiCalc. Lotus123 later did the same for the PC. Platforms succeed and transform through killer applications that unlock huge value for their customers.

This is the sense I get with AR/VR right now. I’ve used VR headsets many times over the past few years. Initially they were interesting in a cute kind of way. My first idea with AR dates back 20 years when walking out of a cinema after seeing Michael Collins and looking at the GPO in Dublin that I’d just seen on the big screen and wondering – how do we make that come alive? How can I see the history around that building? In 2010 that was the first application I thought about when seeing some early versions of AR.

I got a real sense of the power of VR at the Congregation conference in Mayo a year ago. I was fascinated by the addictive power of Oculus for gaming. My first thought was wow. My second was “my kids are NEVER getting VR for gaming” (sorry kids that’s still the case). Right now that’s still the challenge of VR and AR. There’s a lack of defining applications. VR has games. And, well… games. Gaming is a massive industry but I think VR gaming is a staggered refinement inside a product category rather than a platform breakthrough. It’s a sustaining innovation rather than a disruptive one.

Another issue is fragmentation (which headset do I buy – outside of experimentation you may be buying into the future Betamax or CPM ). Right now AR/VR feels that they’re at this point. Useful for gaming and for some eLearning and training applications but creation of a new interface hasn’t solidified into the creation of a defining new platform with one or more killer applications.

There are any number of paths that AR/VR could take from here.

It could follow the IOT path. Unsurprisingly people haven’t found much use for IOT lightbulbs in their houses and the biggest impact of IOT connected fridges have been Denial of Service attacks. Consumer grade IOT has created new vulnerabilities without creating new value and consumers are showing limited appetite for it.

On the industrial side IOT is moving from proof of concept into proof of production and proof of value. There is significant value being created here. Eventually consumer grade IOT may become more common – try buying a non-smart TV for example – but it will happen gradually. It’ll likely be an example of what Bill Gates means when he says “we overestimate the change that will happen in two years, but underestimate the change in 10”

Now AR/VR may be having its next big thing moment. The purchase of Oculus by Facebook woke many people to the opportunity. But the question is where will the opportunity and where will the value lie? Will the money flow to the hardware manufacturers like Apple in mobile with software (apps) commoditised? Will it flow to the service providers like Google and Facebook who have leveraged mobile in very different ways?

AR/VR is potentially a transition point. We hit these points repeatedly with technology. Green screen to DOS, DOS to Windows, Windows to Web, Web to Mobile, Mobile to AR/VR. At each stage different companies capitalise and generally it requires innovative thinking about how the technology can be applied – so solve real problems or unmet needs. No one knew they needed VisiCalc before they saw it.

In time AR/VR will have its VisiCalc Moment, and many more of those moments will follow when they create real value for real customers.

Dermot Casey is a Venture Investment Leader at NDRC and also lectures in the Michael Smurfit Graduate Business School. He was previously COO and CTO of Storyful.
NDRC sources and builds digital startups to invest in and work with – check out to find out more about their Summer 2017 investment programmes.

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