Augmented Reality will soon become a major feature of new smartphones. Who’s positioned to benefit the most from this dramatic new technology: Snapchat.

On any given day, Snapchat (NASDQ: SNAP) reaches 41% of all 18 to 34 year-olds in the United States. Reggie Brown’s sexting-app idea metamorphosed and it’s captured zeitgeist of a generation.

Having grown from non-existence to 150 million daily active users in just about half a decade, Snapchat is where Facebook was 10 years ago. Its popularity has been meteoric and it’s not just because it’s is such an amazing picture-taking social media app.

Granted, 35% of its users say they use it because of the disappearing photos feature. However, ephemerality was only the beginning for Snapchat. It has facilitated the growth of a generation of creators and sharers and by introducing filters, animated filters and now, Snap Spectacles, which is succeeding where Google Glass failed. In short, there is no telling the limits to what Snapchat has to offer. Its IPO valued Snapchat at almost $24 billion. This marked the biggest tech IPO in the US since Alibaba.

Snapchat co-founders Bobby Murphy, left, and CEO Evan Spiegel, ring the opening bell at the New York Stock Exchange. (AP Photo/Richard Drew)

Universal took a $500 million piece of the Snap IPO. It will likely be worth much more to the future.

From Baby Boomers to Generation X, Y and Z, everyone is jumping on the bandwagon. Snapchat has covered a gap we didn’t realize or even cared existed — not just emulating real life, but enhancing, or augmenting, it. Snapchat allows us to share our experiences in 10-second blurbs of sight and sound, almost as fast as the speed of life, often with our own digital commentary combined with the shared image.

Late last year Snap acquired an Israeli company Cimagine, which now has over 100 engineers working on Augmented Reality. Snapchat is going to ride a wave of innovation that will amplify what it’s already doing.

Snap’s animated filters are enormously popular, and can be defined as AR, if the company cared to do so. Credit: Charlie Fink/Snapchat

What is Augmented Reality (AR)?

Augmented Reality (AR) is simply data and graphics overlaying and reacting to the real world. Virtual reality, on the other hand, completely replaces the real world with a digital one.

While AR technology has been available for years in military and video gaming, only the most recent consumer devices can handle it. But costs have come down, and technology has improved, and will soon enable smartphones to provide more compelling AR apps (see my article on Phantogeist, which was developed with financial support from Google). With Apple mobile AR rumored to be on the way, AR is poised to explode. Who’s positioned to benefit the most from this dramatic development: Snapchat.

AR phones’ depth sensing camera allow new applications like facial recognition, room mapping, and depth effects, to revolutionize every app on your phone, unleashing a wave of innovation. In particular, AR is going to revolutionize mobile’s games that are already generating billions without it. Games may have the money, but Snapchat which is already AR by another name, has the audience.

You Tube personality Mario Easton demonstrates the whole range of Snapchat filters, which are anyone’s definition of AR: digital content overlaid on the real world.

You Tube personality Mario Easton demonstrates the whole range of Snapchat filters, which are anyone’s definition of AR: digital content overlaid on the real world.

Is Pokėmon GO the Tip of the AR Spear?

At its peak, Pokėmon GO was achieving impressive numbers. It still is. Right from its launch, the AR Nintendo game developed by Google became an instant sensation. With roughly 500 million downloads, existing on over 10% of mobile devices in the US, it’s still widely appreciated and still recording impressive stats.

But these stats point to a deeper truth: AR really does matter (and not just for the high-profile projects like the Hololens).

According to Business Insider, the daily active users of Snapchat (upwards of 100 million) spend an average of 25–30 minutes daily on the app. And it’s not just people watching videos, 60% of those active users create content, daily.

So, if Pokėmon Go might is the tip of the spear, Snapchat is the AR missile — more advanced and farther-reaching.

It’s All about What the Top of the Pyramid Does

Advanced, head mounted displays for AR, like the Hololens, ODG R-8, or Meta’s headsets, won’t be on the consumer market for some time, so as far as AR goes, existing smartphones are going to be the only consumer platform for a year, probably two. Snapchat Filers are the perfect AR application for existing the platform, and it could be even more amazing with better technology.

Google and Samsung are both expected to release advanced smartphones later this year optimized for AR with Qualcomm’s powerful Snapdragon processor and depth sensing cameras. This will bring 3D holographic AR to smartphones without requiring a headset. Apple is working on its on solution for the highly anticipated iPhone 10. Despite notable advances by new players, the future of AR undoubtedly hinges on what the big guys do.

What Next?

Snapchat is well positioned to leverage all these innovations, both short and long term. If it lives up to its full potential within five years, it will be at the top of the pyramid with the five market-making tech titans, Google, Microsoft, Apple, Amazon and Facebook.

Snapchat did not respond to multiple email requests for comments.