6 min read
19 Oct
19Oct

What is Extended Reality and how does it work? Extended reality, also known as "XR," is a term used to describe the concept of using technology to "extend" or transform our reality. Simply put, it's how we use technology to enhance the world. We already have to create unique environments, experiences, and interactions. XR represents a significant opportunity for both businesses and consumers.


Valued at $26.05 billion in 2020, the XR market is growing at an incredible rate. Experts believe XR will have a value of $463.7 billion by 2026, representing a CAGR of over 62.67%.Though demand for extended reality has been accumulating for some time, the market saw a significant boost during 2020 and 2021. The pandemic (COVID-19) prompted sped up interest in creating virtual experiences for retail, work, and collaboration.Around 80% of business executives now say XR is essential to bridging the “physical distance” between employees. Today, we’re going to demystify the concept of XR once and for all, to help you understand where this amazing market is headed.


XR Technology


What is the meaning of extended reality? Definition of XR

Extended Reality is basically a tool for adding something to our existing reality. Think 3D content seen through your smartphone camera or smart glasses, or virtual worlds you can see via headsets.The concept of XR has actually been around much longer than most people realise–since Charles Wyckoff filed a patent for an XR film in the 1960s. Of course, it’s only recently companies have begun to really unlock the potential of the XR landscape, thanks to the developing technology we have access too. Advanced smartphones capable of tracking everything from eye movement to positioning are paving the way for “AR.” Intelligent sensors and ultra-high-definition lenses are introducing us to new examples of “VR”. Companies are rapidly developing supporting technologies for XR platforms, ranging from high-performance hands-free headsets to AI-enabled tools for capturing information and translating it into extended reality environments.


Extended Reality's Three Types

There are currently three forms of extended reality in the marketplace, each defined by the level of interaction between the virtual and real worlds. Let’s inspect each of these three environments.Augmented Reality (AR)Augmented Reality is perhaps the best-known of the XR environments available today.


Augmented Reality (AR) enhances the real world by incorporating virtual information, objects, and data into it. Everything from animations and images to text and video streams can be included in virtual elements. Because of their accessibility, AR solutions have recently grown at a much faster rate than other forms of extended reality. AR solutions are frequently integrated into smartphones, which the vast majority of consumers already own. As a result, people are more likely to adopt AR technology because they don't need to buy any additional hardware. "Pokémon Go," an app that allows users to hunt specific creatures and see them in the real world through their smartphone, is one of the first examples of AR that most people are familiar with. However, since the release of Pokémon Go, augmented reality has progressed significantly. Apps today can:

  • Deliver real-time guidance and information to professionals for better productivity
  • Offer hands-free help to staff through smart glasses with information streaming
  • Generate stronger communication and collaboration experiences
  • Boost retail interactions with “try before you buy” experiences for customers
  • Improve interactions between companies and consumers through immersive service, support, and even instruction manual experiences.


Virtual Reality (VR) is a type of virtual (VR) Virtual Reality, or "VR," almost entirely replaces the real world by creating unique, interactive virtual spaces for users to enter. Unlike AR, VR requires custom-made hardware, such as headsets (for viewing a virtual space) and sensors / controllers (for interacting with the space). It also required a computer connection for some devices. Virtual Reality first gained popularity in the entertainment industry, where it was used to immerse gamers in unique experiences made possible by their game consoles. Virtual reality has developed into a far more diverse technology with a wide range of applications, especially as the technology has become more affordable. Virtual reality can:

  • Assist with safely training employees in complex situations
  • Create virtual meeting rooms for collaboration between teams
  • Improve efficiency and productivity in product design processes
  • Enable the quick prototyping and discovery of new product ideas
  • Create unique consumer/brand experiences for major companies


Virtual and Augmented Reality (MR) For most people in the XR world, Mixed Reality is where things get a little confusing. Many people initially mistook "MR" for an extension of augmented reality. After all, both technologies combine the real and virtual worlds. Mixed Reality is a little more complicated. Mixed reality merges the two environments to create new visualisations, opportunities, and interactions. While augmented reality embeds digital content into the real world, mixed reality merges the two environments to create new visualisations, opportunities, and interactions. You can have holographic meetings with colleagues or interact with a digital twin of a product for rapid innovation using mixed reality. Although mixed reality is still in its infancy, companies like Microsoft are constantly introducing us to new possibilities. Mixed reality can be used to:

  • Align teams across geographies using holograms
  • Create immersive product building and design experiences
  • Enhance training and development strategies
  • Offer real-time guidance and support to staff in dangerous situations
  • Change the way we interact with machinery in the modern world



What Are the Benefits of Extended Reality?

The full potential of XR is only now being realized. According to research, roughly 60% of people believe virtual reality will become a "mainstream" environment in the next five years. The rise of XR is also paving the way for new concepts to emerge, such as the "metaverse." Extending reality, which combines virtual and real landscapes, has a variety of useful applications, including:

  • Customer experience: With AR, companies can allow customers to try clothing, furniture, and other products, seeing what they look like in-person before making a purchase. Virtual reality can create more engaging demonstrations for customers or provide useful ways for businesses to provide their customers with service and support.
  • Training and development: XR is becoming common in the educational landscape. In universities, teachers are using virtual reality to place their students in landscapes where they can interact with educational content. In the business world, AR, MR, and VR can all help employees to develop skills without putting them at risk.
  • Remote work: Workers can connect easily to other employees, interact on shared content, and even work on projects collaboratively through XR devices. With MR and AR, specialists can even guide team members through complex tasks, like how to fix a problem on a piece of manufacturing machinery.
  • Marketing and sales: Companies are extensively exploring opportunities for engaging with their customers through XR. Virtual reality showrooms are popping up around the world, and AR apps make it easier for brands to make their latest products stand out.
  • Entertainment and events: Virtual reality events are quickly taking over as the new trend for the event industry. Similarly, XR environments can offer a wide range of valuable entertainment experiences by submerging users into immersive experiences.


What Does the Future Hold for XR?

In today's technological landscape, XR is gaining more and more traction, though there are still obstacles to overcome. Companies investing in the future of extended reality must carefully consider how they will handle issues such as:

  • Expensive hardware: While affordable tools for Extended Reality are emerging in the modern market, the most advanced solutions can still be very expensive. Further innovation will be necessary to create products accessible to all budgets.
  • Consumer comfort: Clunky, uncomfortable, and disorienting headsets can make it difficult for people to spend longer amounts of time in XR. Consumer comfort will be a necessity for the future of XR development.
  • Security and safety: A lot of the benefits of XR rely on the ability of tools to safely transfer data and information. Security and privacy concerns will need to be addressed by tomorrow’s XR vendors.

Despite several challenges, demand for XR is definitely on the rise. Sales of virtual and augmented equipment will continue growing strongly over the next five years, reaching around 70 million units sold per year in 2025.Even in a time when economic uncertainty is high, XR is thriving. Indeed, it’s one of the few areas growing not despite the pandemic, but because of it. As a future of physical distancing and virtual interaction settles into place, XR solutions provide a lifeline for companies serving customers and connecting staff. Crucially, it’s not just the consumer market that will thrive in the future of the XR space–but the enterprise landscape too. 


Many businesses are now considering extended reality as part of their digital transformation strategy. The XR environment is ideal for a variety of applications, including remote help and improved collaboration. In 2021, sales of XR headsets more than tripled. Introducing new technology, such as 5G, advanced AI, and improved sensor systems, will only strengthen the XR market's position.


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The article was written by Amit Caesar.


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