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Augmented reality (AR) integrates the real world and cyberspace. You can read an fantastic blog about AR developments here.
Most usually today the technology uses GPS and compass data from a smartphone, tablet or similar computing device to work out where you are and what you are looking at. The video display from the device's camera is then overlaid with additional digital information in real time. An example of this in practice provided by this video from IKEA showing how AR can be used to help place furniture in your home:
Augmented reality can allow us to learn more about the buildings, people or other things we are looking at, or to see alternative views of the world. So, for example, any property for sale can be augmented with its price and other specifications, whilst direction arrows can float over roads. With integrated vision recognition information will also be able to be overlaid on people or products. This could allow links to a person's Twitter Feed or Facebook account to float above their head, or nutrition or allergy information to hover over products on a supermarket shelf. Such "augmented identity" AR systems are in already in development, and are illustrated in the following video:
You can also gain some idea of the future potential of AR by looking at this great concept video from Layar:
The first augmented reality browsers were launched in 2009, and many companies are now trying to capitalize on this new frontier. For example, AugmentedReality.co.uk is creating some fascinating AR applications in the Layar AR brower available for Android smartphones and certain iPhones. These include an application to overlay virtual 3D representations of the Beetles on the zebra crossing in Abbey Road, and with whom you can be photographed! The company has even built an application to allow visitors to Rotterdam to see a final version of its incomplete Provast market hall by simply pointing their phone at the construction site. For more on this you may want to read this great inteview with AR pioneer Howard Ogden.
Other augmented reality systems overlay data on our vision using glasses or even contact lenses. This may allow near constant, almost subconscious access to AR. An idea of what this may be like is illustrated in the following video from Google:
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Augmented reality overlays digital data on a real-time view of the world.