We have all been obsessed by the development of VR (virtual-reality). Ever since the first launch of the Oculus Rift, people have been dreaming about walking on the moon, stealing a car in GTA or fighting side by side with Pikachu. Since then, Virtual Reality has been evolving and the competition is fierce. Oculus, HTC, Samsung, Microsoft etc. are all trying to bring the first fully functioning VR-device to market.
Although satisfying the hunger of the hyped up consumers seems the main goal of these companies, the real money is in creating business value with VR. With the most recent versions of the Oculus Rift and HTC Vive shipping for $599 and $799 respectively, the consumer market is not yet able to fully adopt VR. However, companies are and if used right, VR can drastically improve business processes. Some examples are provided below.
1. Shorter time to market
Designing products can be a complex and time-consuming process. Sketching by hand, modeled as CAD and then printed only to find out the measurements were off. By means of Virtual Reality the CAD can immediately brought to life, providing to opportunity to check, improve and restructure the design at the same time.
2. Increase business agility and flexibility
In line with the previous benefit, VR offers the opportunity to evaluate multiple scenarios in the production process, making the process more agile. By designing in a VR-environment, a company can wait until later in the process before committing to a final design, giving management more time to evaluate market opportunities and consumer behavior.
3. Training and Development
By simulating real-life environments, employees can be trained more efficiently and more important, risk free. This is extremely relevant for hazardous or risky occupations as pilots or surgeons. Flight simulators are already used in training for pilots, so why not build a virtual OR to simulate surgery?
4. Enhance sales processes and customer experiences
Using VR within the sales-environment to provide customers with a more in-depth insight into products they are buying. An example of this is the Kitchen Configurator of IKEA, which let you design your kitchen and immediately walk through it. First, this attracts more customers and second, the customers will leave more satisfied.
What do you think? Should the companies focus more on business or the final consumers? And what role will the software of these devices add to the discussion?
Sources:
Click to access pwc-virtual-reality-business-value.pdf
http://www.ikea.com/us/en/about_ikea/newsitem/040516_Virtual-Reality
http://www.zdnet.com/article/five-ways-your-company-can-get-business-value-out-of-virtual-reality/
Hey Maarten, thank you very much for your post, I really enjoyed reading it! For me, virtual reality and augmented reality are one of the most interesting and promising topics of the near future (besides IoT which is by far my personal favourite). Coming to your questions:
I think there are two main reasons why VR and AR providers heavily focused and still focus on the consumer market rather than business applications. First, money and market size are way more attractive on the consumer side of action. Looking at a recent article written by Tim Merel of TechCrunch (2016, https://techcrunch.com/2016/04/05/the-reality-of-arvr-business-models/), it is predicted that by 2020 the majority of revenues in the AR/VR will come from consumer directed business models such as eCommerce sales and Ad spending. Just the sheer size of the consumer market and the range of possible applications is very much appealing to the providers. Moreover, most benefits for business applications come from cost savings, improved processes or other more intangible benefits (e.g. like you mention, business agility and flexibility or training purposes). I have the feeling that companies are more likely to undervalue such benefits and rather like to think in terms of increasing revenues. If this is indeed the case, this could further explain why the provider of AR/VR technology concentrate on consumer-focused applications. Second, the entry barrier to the consumer market is way lower than adoption barriers are in the business market. Consumers are very quickly convinced by the new technology and the initial “Wow” effect might result in quite a lot of quick wins for the AR/VR companies. However, I agree with the point you make that the current prices are still too high for the consumer market to fully embrace the new technology. So for now, the entry barrier to the consumer market is still higher compared to what it could be due to high hardware costs. Adoption barriers to the business market are a whole different story. Similar to any other new disruptive technology, companies (understandably) treat such big investment with a lot of care. Implementing a new technology like AR or VR often means complex changes in old processes and I feel that firms are generally more reluctant to change than most consumers. Industrial applications of AR and VR technology also comes with extensive regulations and requirements that have to be met. For instance, consider companies in the chemical industry that want to implement a new AR/VR solution. All the devices used in and around their plants have to comply with detailed safety regulations.
All in all, I think that both directions, consumer and business, are equally important and companies thinking about adopting AR/VR should definitely consider both scenarios instead of only focusing on one. I also believe that recent advancement in both application areas show good signs that we will eventually reach a market where all potential benefits are fully exhausted. Do you agree with me?
Hi Maarten, thanks for this interesting topic! I agree that the current entry barriers for consumers are much higher than companies, which determines that the companies will be the first adopter of VR technology. If you see the places where VR is getting real, they are all about businesses and not the individual consumers. According to what I got from Fortune Magazine, NASA has combined VR with real-world training equipment to teach their technicians how to repair satellites or their pilots to fly fighter jets; surgeons at UCLA are using VR and Oculus Rift headsets to test sensitive and highly technical surgeries before operations; the Line, a luxury retailer, who is using VR to create a pop-up shop where consumers can tour its store in NYC.
Adding to the improvements in business process, VR enables business to decrease the cost. For example, Ford are using VR to design and test elements of new cars, which makes a $8 million saving happen in one year (http://fortune.com/virtual-reality-business/). Moreover, recent development of VR technology makes lower barrier to entry, which makes it a good time for new businesses to enter the market. For instance, &Samhoud Media has opened the first VR cinema in Amsterdam, with a combination of Samsung Gear VR, Galaxy S6, 360°chairs and headphones.
Different VR products have been launched since last year, and this is just the beginning. Although the prices of VR devices are pretty high right now, customers still show their strong interests. Currently companies apply to the bundling pricing strategy to improve the sales, such as Sony PS4 and VR headset and Samsung phone and Gear VR. It makes easier for consumer’s adoption. With the development of VR technology, it will get better and more inspired imitators/rivals will enter the market. These competitions will make VR a business reality. The more widespread use the lower entry barriers. I do believe VR is the future for both businesses and consumers.
References:
http://fortune.com/virtual-reality-business/
http://www.cnet.com/special-reports/oculus-rift-review/
Hi Maarten,
Great post on VR!
I think companies are already focusing a lot on VR. We can see the example of IKEA, they already have a virtual kitchen configurator, so I don’t think that companies are lagging behind on this subject. However, there is still a lot to gain in the field of virtual reality for consumers. Currently, all the money from developers is invested in B2B VR activities, while the opportunities for personal use are limited. Samsung is one of the few companies that are already taking steps toward this development.