Google’s augmented reality glasses have captivated people, but there are other aspects of blending of potentially live material with gaming and other experiences that may be realized faster. There are other changes in the consumer space that appear to have some potential to create broad impact, and that’s what I propose to talk about today.
Microsoft has released its SmartGlass Windows 8 app to link mobile devices to Xbox and to TVs, and it looks like Microsoft plans to go beyond simply facilitating streaming video. It’s possible that SmartGlass might augment the experience of gaming, for example, and that would be smart given that Xbox and Kinetic are probably Microsoft’s strongest and smartest innovations of late.
SmartGlass is really about creating an orchestrable relationship among media elements, which Microsoft calls “activities”. The seemingly normal model might be to be watching something (a movie) and using tablet or phone (via SmartGlass) to access incremental information like cast data, related movies, etc. The system has the capability to index by metadata so you can jump to a specific scene. Since you can blend the stuff freely, you can create a blend of realtime and game, or video, and thus create augmented reality.
Sony’s Wonderbook E3 technology also includes some augmented reality features. The Sony mechanism lets you “insert” yourself into a book via a camera and kick off sequences based on gestures, something that’s also possible with SmartGlass but wasn’t really demonstrated. Unlike SmartGlass, which is clearly a platform on which Microsoft hopes a whole ecosystem will build, Wonderbook seems more a storybook-for-kids kind of technology. Clearly Sony hopes to develop it into more than this, but the profit pressure on the company may have led them to focus more on releasing something for immediate sale.
The thing about augmented reality in these forms is that it involves orchestration and convergence of multiple media types. I think that what’s really being built here is a cloud application where the game console is the user’s agent and the media resource set is essentially cloud content. That model suggests that eventually elements of alternate reality, including video feeds, might originate remotely. You could create an image where you appeared beside the Queen reviewing the Jubilee flotilla on the Thames, for example. All that could promote the cloud and also drive up network traffic.
The big question that these mechanisms for orchestrable experiences generates is whether operators could play a role. At one level that’s easy to answer; you can play any role you can compete for in a competitive market. At another level the question is whether the guys who are driving the change (Microsoft, Sony, Apple, Google) have such an advantage in being able to pre-position their technology assets that anyone else is playing second fiddle. If that’s true, the operators would always end up shooting behind the duck.
Another interesting development in the consumer space is AT&T’s recognition that in a couple years we’d likely have data-only plans for smartphones. The driver here is that operators really want two things; ARPU growth and cost management. If users can be made to pay for data usage (which they can be) and if data overages run up their bill more than voice service elimination would cut it, it could be a major win for operators. Operator-provided VoIP, particularly in P2P form, or even simply ceding voice to Google or Skype, would make more sense than capitalizing expensive voice infrastructure that inevitably would make the offerings uncompetitive in a VoIP-dominated future.
Finally we have social networking. Anyone who’s been reading this blog knows that I’ve never been a fan of the Facebook IPO or business model. While the after-offering loss Facebook has suffered and the collateral hit taken by other social network companies (like Groupon) seem to validate my view, it’s really still too early to know whether the space is just suffering from the general economic malaise or has a fundamental problem. I think it’s the latter, of course, and the fact that Facebook is trying to figure out how to get kids onto the site illustrates that they believe there’s a problem too.
There is, and the problem is in no small part the fact that the ever-expanding drive for profits, when applied through the filter of social networking and media, is going to lead us to some very bad places or lead to inevitable under-performance of the companies. How many times do we need to be reminded that advertising is a zero-sum game? Yes, you can argue that avid Facebook users might look for product guidance on the service (I’ve offered some, though I’ve not asked for any). However, what percentage of the social babble is linked to purchasing? Precious little. Search, in contrast, is pretty widely linked to purchase research and even execution. Thus, search should outperform social, and we already have a mature search engine space. Moral: VCs need to be thinking about some other hype wave to ride because the social wave may be over.