Executive test: visitors to January’s World Economic Forum in Davos try out the Oculus headsets © Bloomberg

Virtual reality is helping developers to build homes at West End Gardens in the smart market town of Stockton-on-Tees in England’s north-east. They can see how finished buildings will look without having to go on site. And those who do go can use augmented reality on a smartphone or tablet to see how the properties will appear when they are completed.

The software has revealed some minor flaws in design plans, enabling errors to be rectified more quickly and cheaply than at the construction stage.

The building consortium that commissioned the virtual application was “blown away” by it, says Dan Riley, managing director of Spearhead Interactive, which developed the software.

Martin Hawthorne, group director at Thirteen, which is building West End Gardens, says: “The software has huge potential in helping builders work with planners . . . if we are to build the hundreds of thousands of new homes we need in the UK.”

The global market for virtual reality will reach $6.7bn this year, and is estimated to hit $70bn in 2020, according to Taiwan-based TrendForce, a market research company. Large companies are seizing on the technology, which has led to a spate of takeovers such as Facebook’s $2bn acquisition of Oculus VR, which makes the Rift headset, in 2014.

Rob Gear, an IT expert at PA Consulting, says that after several false dawns for virtual reality: “Near photorealistic simulations, unthinkable eight years ago, have become the norm.” So far, virtual reality has been used mainly for computer games, advertising and marketing, often blurring the boundaries between commerce and entertainment.

Another UK company, Bristol-based Opposable VR, developed an application for a client that shows how it protects internet data.

Dan Page, a consultant at Opposable, says: “It’s different from conventional advertising because it is so immersive. We create vast landscapes for single brands that would be impossible in real life without colossal budgets.”

Augmented reality, often seen as a rival to its virtual cousin, has also been used in advertising. This technology allows information to be superimposed on the real world while users remain fully aware of their surroundings. It is beginning to play a role in industrial training and assisting engineers in hazardous environments, such as the nuclear and oil and gas industries.

Mr Riley says: “Virtual reality and augmented reality let us bring products and components to life, adding voice-overs and graphics that look like the real thing. It’s easier to understand and more engaging [than conventional video].”

But such technology is power hungry. California-based graphics chipmaker Nvidia says only about 1 per cent of current PCs can handle virtual applications using headsets such as the Oculus Rift and HTC Vive, both of which are due to go on sale this spring. Most PCs would require a sevenfold increase in performance to work properly, Nvidia says.

Another problem is that virtual reality headsets can cause nausea. This can be solved by improving the frequency at which images are displayed and the stereoscopic view.

But Mr Gear also warns there could be psychological repercussions, such as reckless behaviour from those who no longer know the difference between the real and virtual worlds. In a 2009 study by Stanford University, a group of children was immersed in a virtual simulation of playing with whales. When asked about this a week later almost half recalled it as if it actually happened.

Mr Gear adds: “How technology like virtual reality will play out over time in a mass population is still to be determined. Some people will use it responsibly and others will use it irresponsibly, to the detriment of their health.”

A further potential downside was highlighted in research by Siemens, an engineering company, which showed that people performing a manual task using a head-mounted display did worse than those using conventional methods.

Mr Gear says there is scope for more research to understand how companies may gain real business benefits rather than digitising to no advantage.

Cost may also be a barrier to people taking up the technologies. The Oculus and HTC sets are expected to be priced at $600 or more and need a PC costing about $1,500 to operate. However, Google Cardboard headsets cheaply turn any smartphone with the right apps into virtual reality viewers.

In future, virtual reality will be less about wearing headsets and more about social interaction and collaboration, Mr Gear says. People will be able to create 3D video on social media, capturing and sharing their real-world experiences.

The biggest threat to the technologies may be that the industry itself is raising unrealistic expectations of what it can deliver, Mr Gear says.

And Mr Riley adds that an additional risk is the lack of awareness on the part of company bosses. “You don’t have a budget for something you don’t know exists,” he says.


Virtual reality

© FT graphic by Graham Parrish

A wholly immersive 3D, computer-generated experience that, with the use of devices such as headsets, waistbands, jackets, treadmills and special gloves — or PCs and video walls — enables us to see and take part in a simulated real-world environment.

Augmented reality

© Dreamstime

This ‘overlays’ additional information on whatever you are looking at on your device. So if you are looking for a railway station, hotel or restaurant, an app on your device could bring up the distance and direction to the nearest one or show you a menu or tariff. If you are looking at famous building, you could be shown points of interest while you look at it.

So what’s the difference?

With augmented reality you are aware you are still in the real world, but virtual reality allows you to be completely ‘absorbed’ in whatever fantasy or training environment you have entered.

Which is best? Comparisons are inevitable but they are also unfair

Last year, I spent some time under the sea, playing with a giant whale but without getting wet, writes Daniel Thomas. Later, I led an army storming castle walls, then took a break to wash some dishes and was unexpectedly killed in a robot uprising. A busy and emotional half-hour, all told.

I was, of course, testing out the latest advances in virtual reality — in this case, the nascent platform being developed by Taiwan’s HTC. It felt like a corner was being turned in taking it from a much-hyped novelty act to something that could genuinely become part of the next generation of home entertainment.

But while the technology behind virtual reality feels like it is taking leaps forward every year — as groups such as Facebook and Sony are drawn to the huge potential in consumer applications — there is a lack of similar innovation in the market for augmented reality.

The biggest news for the latter in recent years was the decision by Google to slow its Google Glass project, a pair of bulky spectacles that contain a small internet-connected screen that can be navigated by a side mounted touchpad.

I never found Google Glass wholly pleasant, and it was not overly useful for everyday life. The privacy difficulties of a head-mounted camera were obvious and the fact I looked a bit weird did not help. However, augmented reality should not be dismissed. Indeed, as a productivity tool, its applications will eventually have a profound effect on the way we work and play.

In fact, it is unfair to compare augmented and virtual reality. Augmented reality adds to whatever is already around you, with helpful information, directions and labels, while virtual reality takes the user away to somewhere else entirely.

Last year, I tested out a pair of glasses that would help a worker find the right pallets in a large warehouse, speeding up the time taken to fulfil orders. Elsewhere, people in museums used an augmented reality application to learn more about the exhibits.

Shopping centre owners are considering how to use augmented reality to help people move around the stores and choose clothes. Google has promised to come back with the next generation of Google Glass, which will doubtless improve the design and applications.

Of course, people with augmented reality glasses can play games, watch videos and communicate, but I would have little hesitation when given the choice between a tiny screen in the corner of my eye or the virtual reality experience of sitting on the Moon in a 1950s-style drive-in to watch a blockbuster film. In this case, virtual beats augmented every time.

Copyright The Financial Times Limited 2018. All rights reserved.