Virtual Reality vs. Augmented Reality: similarities, differences & future opportunities

Have you seen The Matrix, a movie released in 1999? It features characters that are living in a fully simulated world, with most of the population completely unaware of it. Although some previous movies have tried to depict VR, The Matrix had a major cultural impact and brought the topic of simulated reality into the mainstream.

Not so long ago it seemed that a concept such as this could only come to life in a movie. However, in recent years an alternative reality has become increasingly popular. Major companies such as Facebook, Microsoft, Google, IBM, Intel, HP, Amazon and others became involved in the Augmented Reality and Virtual Reality revolution. Some of these companies are involved more than others but they all are exploring the technology or creating products.

As the tech world becomes increasingly obsessed with AR and VR, it’s important to understand the similarities and differences between the two. Both are earning a lot of media attention and are promising tremendous growth. Knowing the difference between the two will help develop a better understanding of their strengths. It will also help to realize how they can apply to both businesses and the end consumer.

What is Virtual Reality?

Virtual reality (VR) is an artificial, computer-generated simulation or recreation of a real life environment or situation. It stimulates vision and hearing, thus making the user feel like they are experiencing the simulated reality firsthand. In other words, VR is replacing your real world.

VR is typically achieved by wearing a headset, e.g. Oculus Rift, PlayStation VR, Samsung Gear VR or HTC Vive. VR headsets track head movements of the user. This is necessary in order to give him an immersive experience in a 3D digital world, making it ideally suited to games and movies.

This technology is used prominently in two different ways:

  • To create and enhance an imaginary reality for gaming and entertainment (e.g. video and computer games, or 3D movies).
  • To enhance training for real life environments by creating a simulation of reality where people can practice beforehand (e.g. flight simulators for pilots).
Use cases of Virtual Reality

VR in the entertainment and gaming industry has grown exponentially. There are also some exceptional examples of VR for business use that are emerging. VR for business is still in its infancy but is already showing great potential in helping companies inform and impress their customers. Below there are some examples of how VR could be used in business context.

IKEA VR Experience allows interior decorators and designers to create custom kitchens and explore different three different kitchen designs and customize them at will. The user can change the colour of cabinets and drawers with a click and move around the kitchen from the perspectives of small children or tall adults.

Excedrin’s VR Migraine Experience makes a non-sufferer go through at least the visual element of a migraine, even if it can’t simulate the pain, so they see that what the migraine sufferer endures is not a minor experience. Novartis, maker of Excedrin, says that “Migraines are still widely misunderstood — largely because those who do not experience the condition cannot fully understand it.” It shows what it’s like to have the visual symptoms: sensitivity to light and sound, disorientation, as well as visual disturbances, such as spots or jagged edges or flashes of light that are blinding. Actually, VR technology in general has been called the ‘ultimate empathy machine’, because it enables user to see himself through the eyes of a child, a woman, a stranger, a close friend, and a disabled man.

Lowe’s Holoroom allows customers to redesign rooms and spaces in digital space and see it in 3D before doing it in real life. The customer uses an Oculus headset in the store, and can then export their design to YouTube 360 and view it at home with a Google Cardboard headset, since it is much cheaper.

What is Augmented Reality?

Augmented Reality (AR) adds a digital layer on top of the real environment in real-time. It enriches the real world with digital information and media, e.g. 3D models, videos, audio & GPS over laying in the camera view of your smartphone, tablet, PC or smart glasses (the list of the best 2017 smart glasses here). Audio can also be used in a similar way to visual objects, where the audio is propagated and spatialized digitally in the real environment. AR layers detailed information over what we see around us while still allowing us to navigate through the real environment.

The most recent phenomenon use case of AR would probably be Pokemon GO. This game has made millions of people run around outside looking for cute little creatures that they can see through their smartphone or tablet. It has been able to gain a record-setting number of users since its release and it will definitely go down in history as the game that truly brought AR to the mainstream masses.

Use cases of Augmented Reality

It’s important to stress that Pokemon GO is only one of the potential use cases of the AR technology. Imagine using an app on a tablet to visualize the furniture you want to buy in life-like 3D projection that’s placed in your living room.

Or a children’s drawing book, in which the completed drawings would come to life through AR when scanned through the app. These drawings would become a part of interactive story series and mini-games which could be played by the children.

What about a virtual dressing room that displays the image of the person with the selected clothes on their bodies? 

These examples go to show how AR technology could be used in various business contexts. It can be applied in many different markets – entertainment, gaming, navigation, design, marketing, sales, omni-commerce retail, etc.

Similarities between VR and AR

VR and AR both leverage some of the same types of technology, and they each exist to serve the user with an enhanced or enriched experience.

Both technologies enable experiences that are becoming more commonly expected and sought after for entertainment, business and training purposes. Leading tech companies are investing and developing new adaptations, improvements, and releasing more and more products that support these technologies.

In addition to that, both VR and AR have great potential in changing the landscape of the medical field by making things such as remote surgeries a real possibility. These technologies been already been used to treat and heal psychological conditions, e.g. Post Traumatic Stress Disorder (PTSD).

Key differences between VR and AR

AR works by merging the real world with the virtual world. Developers create images or sounds in apps so that it mixes with the real world content. Contrastingly, VR creates its own reality that is computer generated and driven.

Virtual Reality is usually delivered to the user through a head-mounted, or hand-held controller (e.g. Oculus Touch). This equipment connects people to the Virtual Reality, and allows them to control and navigate their actions in an environment meant to simulate the real world.

Augmented Reality is being used more and more in mobile devices such as laptops, smart phones, and tablets to enhance the real world experience with digital images, graphics and videos.

Future opportunities

VR and AR have the potential to become the next big computing platforms. Goldman Sachs’ market report on AR/VR estimates that in a worst case scenario, Augmented Reality will become an $80B market. They estimate that if AR hits an “accelerated uptake”, the market might grow to $182B.

In the AR/VR report released by Goldman Sacks last year 9 key use cases for these technologies were mentioned: video games, live events, video entertainment, healthcare, real estate, education, and military. They will be the most important in the near future.

Main constraints of adopting these technologies will be user experience, development of content and applications and price. One of the most important factors will be to improve user experience: reduce sickness and dizziness. As for the content and applications, it’s a chicken and egg situation. Content and app developers are cautious to make investments in AR/VR without a user base, while customers and enterprises to buy VR/AR hardware without a strong supply of content and apps. Finally, the price of Oculus Rift, one of the most popular VR headsets, is $599.00 (the user also needs powerful computer to run it) . The price points need to be lowered for wider adoption.


Augmented Reality and Virtual Reality are not new concepts. They were depicted in movies, such as Matrix in the 90’s, and recently started to bring to life by major tech companies. Both of the technologies are earning a lot of media attention and are promising tremendous growth. It’s important to understand their similarities and differences, in order to apply them to both businesses and end consumers.

VR and AR can reshape and disrupt existing markets and business models. However, there are some constraints of adopting VR/AR: UX, development of content and applications, and high price points. They have to be dealt with in order to bring the technology to wider audience.

Do you know of any exciting ways you have seen either VR or AR being used? Lets us know in the comment section below!