What is an extended reality?

extended reality (noun)

A category of immersive technologies that bridges the gap between digital experiences and the physical world.

As the real world and digital spaces continue to converge, organizations are experimenting with the use of extended reality to deliver immersive experiences, introduce new ways of working, and drive higher business value.

XR, as it’s known, is an umbrella term for a constellation of technologies that merge the digital and physical worlds. Among them are: 

1. Augmented reality, which overlays digitally created content onto a user’s real-world environment
2. Virtual reality, which creates a digital environment that represents a user’s real-world environment
3. The metaverse, which offers virtual worlds where users can interact with other users and their surroundings as avatars

Combined, those technologies hold the promise of enhanced productivity, employee engagement, and collaboration, according to MIT Sloan visiting senior lecturer Paul McDonagh-Smith, who teaches an executive education course on the business implications of extended reality.

“The bridge has been built to connect the worlds of physics and silicon with carbon existence,” McDonagh-Smith said. “It’s not going away.”

Market analysts seem to agree. According to a report from MarketsandMarkets Research, the global XR market is expected to grow from $40.1 billion in 2023 to $111.5 billion in 2028, with a compound annual growth rate of 22.7%.

The business impact of extended reality