It's an idea that movie directors spent millions to simulate in the sci-fi films of the 80s and 90s, as audiences watched the Terminator receive live information feeds by scanning the people and objects in his immediate environment. Now, that real-life technology, called augmented reality (AR), is taking shape as a boon for mobile-application developers.
Take the new Google Maps Navigation app for Android phones, for example. While a typical GPS system would only indicate locations on a crude map on the screen, the new app allows users to see virtual arrows and street names through their phone's viewfinder, providing more accurate, real-time directions. Layar, for the iPhone, allows users to choose what points of interest they'd like to see – choosing the "ATM" option, and holding the camera over a particular intersection, would direct them to the nearest spot to pick up some cash.
Professionals such as surgeons and engineers were among the first to use AR, via projectors and head-mounted displays, using virtual reality to help make more precise movements. But since the technology has been introduced to the mainstream through smartphones, the floodgates have been opened for developers hoping to cash in. Ogmento, a company that creates and publishes AR games, hopes to be one of the leaders of the pack.

"We have very grandiose plans about what we're doing," says Brian Selzer, co-founder of the company, which has offices in New York and Los Angeles. "A lot of people are seeing AR as somewhat of a gimmick. We're here to educate and say, 'No, there's a much bigger picture here."
For Ogmento, the big picture includes endless advertising opportunities, such as virtual characters from new movies that play out scenes in the actual world, Selzer says. The company, in partnership with developers Arballoon, is currently readying the release of Put A Spell, an iPhone app that features a 3-D panda that teaches kids spelling and phonetics.
Chris Fralic, a partner at First Round Capital, a West Conshohocken, Pennsylvania-based technology investment firm, which has clients in the mobile, entertainment, and online industries, says he definitely has his "radar out" for the coming AR possibilities.
"We pay attention to it and think it will be a big deal," says Fralic, whose attention was first captured while watching a demonstration by Tokyo-based AR developers Tonchidot at last year's TechCrunch conference. "A number of our companies may end up using augmented reality as a way to display data to their users," he says. "When you first see it, it just blows you away."