A version of this essay was originally published at Tech.pinions, a website dedicated to informed opinions, insight and perspective on the tech industry.

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Over the last three weeks, I’ve spent an enormous amount of time talking face to face with technology investors in San Francisco, Silicon Valley, New York and London. These conversations tend to be wide-ranging, covering numerous topics in a typical hour-long session. But there was one subject that came up in every single one of my 20+ meetings: Augmented reality (AR).

Interest in this topic is off the charts, and tech investors are eager to learn everything they can about this burgeoning market. I came away from these meetings more convinced than ever of my two fundamental theories around augmented reality. First: It won’t happen fast, and it won’t be easy, but AR is going to have a profound impact on how we all interact with technology. Second: The enormous challenges of bringing AR to market — first to IT buyers and later to consumers — will drive a new wave of technical innovation that will generate massive amounts of new value within the tech industry.

New Challenges, New Opportunities

Part of the reason I’m so bullish on AR is that I’ve had the privilege of testing some of the early devices, and each demonstration has an undeniable wow factor. More important however, is that, once the rush of trying this new technology subsides, you can’t shake the undeniable feeling that it isn’t just for show. AR will drive massive real-world opportunities right out of the gate. I’ve talked about the key verticals where AR will hit first in a previous column, but it feels increasingly inevitable that it will eventually impact just about everything and everyone.

But these massive opportunities won’t come easy. Nearly every aspect of a future AR experience is going to require big leaps in new hardware components, new types of interaction models, next-level applications, and connected services we’ve yet to even conceive.

Interest in this topic is off the charts, and tech investors are eager to learn everything they can about this burgeoning market.

Let’s start with the hardware. Microsoft’s groundbreaking HoloLens product, now shipping in developer kit form for $3,000, has a multitude of sensors, cameras, speakers and three primary processors: A CPU, a GPU and an HPU. That’s right, Microsoft designed its very own 32-bit, X86-based Holographic Processing Unit because the company decided that the traditional CPU/GPU arrangement didn’t provide enough of the right type of processing to handle the massive amounts of data input and visual output inside the HoloLens.

And Microsoft isn’t the only company investing in new silicon designs to drive AR. Dozens of companies — some old and many new — are looking at this space, trying to figure out how to build new types of chips to drive innovative experiences.

Another area of interest is the cameras, sensors, and microphones inside an AR device that will help capture where a person is, the people and objects that surround them and, most importantly, what they are doing with their hands, their eyes and their voice.

An essential element of AR will be the successful capture of human input on a device without a keyboard, a mouse or even a touchable screen. A wide swath of companies, from Microsoft to Meta, Leap Motion to Ultrahaptics, are working hard to tackle the complexities of using cameras and software to capture minute movements of the hands and fingers. Imagine manipulating data or digital objects with your empty hands (I’ve tested it, and it’s brilliant). Still others are trying to move beyond the somewhat rudimentary skills of today’s digital personal assistants to create voice-based interactions that work during mission-critical, hands-free tasks.

Let’s not forget the screens. One of the fundamental differences between virtual reality and augmented reality is that VR can utilize the high-resolution screens the industry has already created for smartphones. That’s because, with VR, you look at the screen, but with AR, you need to look through the screen, so you can still see your real-world surroundings.

The challenges of manufacturing high-resolution screens will be a key limiting factor to a fast ramp for AR.

The challenges of manufacturing these screens will be a key limiting factor to a fast ramp for AR. It’s one of the only areas where Microsoft’s universally lauded HoloLens often gets dinged, as the company chose a relatively small viewing area as it wrestled with cost, complexity and the battery power needed to drive the screens. Meta’s new Meta 2 product offers a notably larger viewing area, but must be tethered to a PC. And AR’s secretive darling Magic Leap, with $1.4 billion in funding, suggests that its technology will be different from these types of screens altogether.

Of course, none of this amazing hardware is of much use without software to run it. One of the key elements of good AR software will be an application’s ability to collect and process potentially dozens of different inputs at a time, and changing the experience based on new information. That software will need to be tied to back-end services, through high-speed connections, effectively turning future AR devices into the world’s most capable Internet of Things endpoints.

Early Days, Big Bets

All of the above excites me because, in the various challenges that lay before AR, I see huge opportunities for the tech industry to do what it has always done best: Solve difficult problems. Cranking the wheel on the next iteration of a smartphone, tablet, or notebooks is necessary, but doesn’t exactly light the fires of our imagination. I believe the high level of excitement building around AR comes from the fact that, once you experience it, you realize this technology feels truly important.

As a result, we’ll see big, well-known companies begin to make increasingly large bets here. And we will see a long and growing list of small companies that look to make their mark in one or two specific areas, hoping to be a part of the larger AR story down the road.

It is early days, and picking company or even technology winners now is a fools’ game. But I will predict this: It’s going be an interesting, world-changing ride, and more than a few companies will rise (and fall) as the tech industry works to make this new reality happen.

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Tom Mainelli has covered the technology industry since 1995. He manages IDC’s Devices and Displays group, which covers a broad range of hardware categories including PCs, tablets, smartphones, thin clients, displays and wearables. Mainelli is also driving new research at IDC around the technologies of augmented and virtual reality. Reach him @TomMainelli.