The technology has been around for quite some time, but like so many other fringe smartphone features, augmented reality has yet to present itself as a must-have for consumers.
Subsequently, businesses have placed it on the back burner, alongside RFID, near-field communications, QR codes, and all the other mobile technologies that they've read about but have yet to see take off in the real world.
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Then came Google's most recent publicity campaign for Project Glass, the futuristic eyewear that projects digital content directly before the user's view of the real world, and augmented reality (AR) suddenly became a significant topic of discussion.
The bottom line is that several recent developments, and the potential of a few future prospects, make AR an important technology for businesses to watch.
[ IN PICTURES: 10 augmented reality technologies you should know about ]
A couple of companies have already reaped the benefits. Trak Lord, public relations and marketing manager at augmented reality development company Metaio, points to a couple of already successful use cases, including Lego. The toymaker worked with Metaio to implement augmented reality technology in its retail stores to give shoppers a 3D view of what a Lego product will look like once it's assembled.
Considering that the value in Lego's products lies in the building process, customers appreciated the ability to see a better image of what they were constructing than was shown on the two-dimensional image on the box. Lord says Lego saw a 15% increase in sales after implementing the AR tool.
"Whether that's directly connected to the augmented reality box, of course, I can't say for certain, but you can't deny the fact that their investment in the better way to visualize in the point-of-sale experience certainly helped them as far as converting those visitors to their store into paying customers," he says.
The "big breakout year" for AR will be 2014, Lord says, pointing to a combination of smartphone penetration, competition among manufacturers, and continued development of AR apps customized for specific businesses.
Metaio hopes an increasingly competitive smartphone market, coupled with the rapid growth in the smartphone customer base, will drive many manufacturers to incorporate AR capabilities into their products. Indeed, the company announced at the recent Mobile World Congress in Barcelona the release of the first-ever hardware for augmented reality, targeted at OEMs and handset manufacturers looking to add new features to their products.
"It's certainly competitive," Lord says. "From an objective point, I think a lot of the interest we have from OEMs is if you look at the market leader, Qualcomm, they also have an augmented reality middleware and they're marketing it pretty aggressively. So I think a lot of these people we've been working with, they see the work that Qualcomm is doing, and they also want to be in this space, they also want to have this competitive advantage. They don't want to be left out if this technology takes off."
If Metaio's bet on native AR in smartphones pays off, it could mean a new medium through which businesses can reach mass amounts of customers.
Lord points to last year's Ikea catalog as a good example. The furniture company released an augmented reality app that, when held over the pages of its print catalog, projected 3D images of its products that could be moved around. That meant customers could view Ikea furniture in their living rooms before making a purchasing decision, and could even see products from other angles to see how they were structured. Customers flocked to it. Despite being released in July, it was the most-downloaded branded promotional app in 2012, according to Distimo.
But Ikea customers are famously loyal, and it's easy to say they may have gotten caught up in the sensation of a new gimmick. Besides, QR codes have long offered the ability to scan print materials for a link to additional information. Individual success stories of QR codes have emerged in the past, and the technology has still failed to make a significant impact.
To this, Lord says augmented reality has greater potential because, while it serves a similar need among mobile users, it does so in a more engaging way. Computer users have grown accustomed to the perks of Web content, going beyond the first page and clicking through links and images to access more information. Lord says this impulse will occur with those reading print content, such as a product catalog, and will prompt them to use an AR app to go beyond the information available immediately in front of them. The businesses that provide the additional information will reap the benefits.
"A majority of people are going to look at that catalog, see something they like, and then they're going to go to the physical store to buy it," Lord says. "What if we can somehow skip that second step? Not to say that people are never going to go to Ikea stores or department stores or anything like that, but what if something was so compelling that you can see it directly in your home and you can purchase it right there?"
While QR codes offer a similar capability, AR enables marketers to create more compelling campaigns, which will be more likely to engage customers, Lord says.
"What's amazing about QR codes is it's actually remarkable technology. But it's used very poorly and not creatively at all," he says. "Mobile users are still really intimidated by this kind of faceless information that is often without context, this collection of black and white squares. Yeah, it can take them to a website, but from the experiential side there really isn't much there."
Beyond marketing, augmented reality is also a proven tool for businesses looking to improve internal processes and customer service. Mitsubishi Electric offers augmented reality for visualizing its heating and cooling products, which was particularly useful for walking customers through installation and maintenance processes. Similarly, NGRAIN 3D built an AR app for training on industrial parts and equipment, so students wouldn't need to look at manuals while assembling or repairing an object.
A few considerations need to be made before diving into an AR project, for both external and internal purposes. Legal and regulatory compatibility will need to be addressed if the technology is to reach its full potential, Lord says.
"Of course, there's a lot of liability that has to be discussed or dealt with at some point in time. But I think a lot of it has to do with it being a new technology," he says. "As people get more used to the technology and understand it, I think we're going to see that liability disappear. Or we're just going to see disclaimers like 'caution: coffee is hot,' on every smartphone that says 'caution: this is not reality that you're seeing.'"
But once consumers are comfortable with the concept of augmented reality, businesses will be able to communicate with their customers and employees in a way that was never before possible, Lord says.
"I think there's an undeniable psychological effect when you see something in 3D, in real life, versus when you're just looking at a picture of it," he says.
Colin Neagle covers emerging technologies and the startup scene for Network World. Follow him on Twitter @ntwrkwrldneagle and keep up with the Microsoft, Cisco and Open Source community blogs. Colin's email address is email@example.com.
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This story, "Augmented reality: What businesses need to know" was originally published by Network World.