It’s a cool trick: Aim your smartphone camera at a building or an object, and--onscreen, anyway--other things seem to suddenly materialize out of thin air.

The idea of augmented reality, the layering of computer-generated information over real-world scenes, has been around for a while, but recently, some new companies--Daqri, Blippar, and Layar, to name a few--have been transforming the technology from a novelty into a serious business tool. And with the creation of wearable devices such as Google Glass and the ubiquity of camera-enabled smartphones and tablets, the AR industry is poised to take off.

Juniper Research estimates that by 2017, more than 2.5 billion AR apps will be downloaded to devices annually. Another study forecasts that annual sales in the space will nearly double every year to hit $5.2 billion by 2016.

Some retailers have been using AR technology to bring the showroom into consumers’ homes. Swedish furniture maker Ikea introduced an app last year that lets customers see what a couch or chair would look like in their living rooms. Developed by Munich-based Metaio, whose projects can run from about $10,000 to $500,000, the app has been downloaded some eight million times.

Product manuals and maintenance instructions are getting an AR makeover to make repairs more intuitive. Metaio recently developed an AR-enabled car manual for Audi. In addition to offering basic information about the car, the app can give instant troubleshooting feedback when a service light comes on.

Some companies are starting to build physical products with AR technology baked in. For instance, Daqri, a Los Angeles-based start-up, is developing a set of AR-enhanced educational wooden blocks that display the periodic table elements. When viewed through a tablet app, the blocks appear to chemically react with one another. Push the sodium block next to the chlorine block, and both blocks become NaCl, or salt.

Product packaging has become similarly interactive. Blippar, based in London and New York City, makes an app that recognizes the height-and-width ratios of brand logos. Scan the product with a smartphone camera, and up pops digital content such as location-based games, coupons--even a way to buy more products.

And soon, AR may be coming to the industrial setting. AR technology could eventually be deployed for things such as warehouse management and employee training, says Brian Mullins, CEO of Daqri. He imagines a facility where, rather than spending several minutes finding and counting inventory, an employee wearing a head-mounted device simply looks at a bin, scans it, and then is directed to the next bin. “Multiply that out over the course of a year,” he says, “and you’re talking significant savings.” 

What’s Next for Augmented Reality

Pick and pack
Augmented-reality glasses could help direct warehouse workers to the right items for packing.

If a product breaks down, customers could aim a smartphone camera at the object to get information about how to fix it themselves.

Window shopping
Passersby could use their smartphones to scan items in a store’s window display and purchase them using their phones.