Listen: Next in Tech | Episode 56: The Metaverse

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Eric Hanselman

Welcome to Next in Tech, an S&P Global Market Intelligence podcast where the world of emerging tech lives. I'm your host, Eric Hanselman, Principal Research Analyst for the 451 Research arm of S&P Global Market Intelligence. And today, we will be discussing the metaverse with returning guest, Ian Hughes, Senior Analyst with our team. Ian, welcome back to the podcast.

Ian Hughes

Thank you very much. It's great to be here and to talk about one of my favorite subjects as well, the metaverse.

Eric Hanselman

Well, we've been talking about a whole set of different aspects and touched on little pieces of it, but I think it was clear that we needed to get an episode that was dedicated specifically to the metaverse. We've talked about a lot of the different tangential aspects, some of the data out of IoT.

We touched about some of the IoT stuff that we're talking about, certainly, other aspects that are sort of tied into Web3 and stuff. But before we get too far down the road, why don't we go into, what is a metaverse? And how is it different from the various other virtual realities that we've known?

Ian Hughes

That's a very good question obviously. And the metaverse is ill-defined, as we all might have noticed.

Eric Hanselman

As with many new technologies.

Ian Hughes

Absolutely. And for those people playing metaverse buzzword bingo, this -- the word goes back to a science fiction novel by Neal Stephenson called Snow Crash. And he describes a virtual world of avatars and places and things and calls it the metaverse.

And so as an industry, we've kind of hijacked that word to try and describe some of the things and the features about how we might interact with one another online in the future. And so when you mentioned the kind of existing virtual realities and the existing virtual worlds, they are actually part of the metaverse.

So metaverse isn't going to be one giant great virtual world and only one giant great virtual world. It's actually the collection of those virtual worlds, the collection of the Web content that we currently have, the collection of any data from IoT and other environments and having different ways to pull that together that fits better with the way that we as humans need to experience data and experience one another when we're at distance and when we're remote.

And so it's easier to think of and to talk about a metaverse as a virtual world and avatars because that's already quite a leap for people. But the actual conceptual thing that the community is talking about, about the metaverse is much wider than that. It is the next level of what the Internet is and which has had the Web layered on. And even -- you mentioned Web3. Even the Web3 concepts, it's part of that movement of, where do we go from where we are now?

Eric Hanselman

Well, and I think it's interesting from an overarching idea. We -- to your point, we like to think about specific instantiations of a topic that's as big as this. But if we think about the origin of the word itself, I mean it's the meta universe, I think, really in terms of what's been put together.

And it really is that universal overarching definition for, what is that collection of the capabilities that exist across all of these pieces? You talked about data and some of the aspects of the unifying nature of having an all-encompassing way of referring to all of these different environments.

And I think that's particularly useful when you start thinking about some of the way in which people are talking about individual elements, individual instantiations, talking about what Meta, Facebook is doing with the metaverse and thinking about the fact that there will be one, one will rule them all, that sort of thing. But really, it's this much larger encompassing of all of the things that we can potentially bring together as the representation of these interactions.

Ian Hughes

Correct. But the thing is it's quite easy to expect or to talk about -- if you're a particular company, to say, I'm doing the metaverse, and it's us and me in trying to attract clients, customers, whatever, and to be the only place that people go because that's a natural approach for a business, to want to own as many eyeballs and as much time as possible.

But the overarching metaverse movement, if you like, is about it being open and interoperable and available to everyone and on any platform and every platform. So it's, when you need to interact with people or with data, how do you do it? Does it -- it doesn't all need to be with a VR headset on. It doesn't all need to be with an AI headset. It doesn't all need to be with a giant screen or a CAVE or any of the -- or fancy goggles or any of those things.

It can be through a regular screen. It can be through audio. It can be through text. But it's the interoperability of those things that is the next driving force for what the metaverse becomes. But it will be driven often by the use of avatar-based virtual environments and virtual worlds because they express a lot of the things that we need to deal with when we're saying what's the next level of how we communicate online.

Because they involve space. They involve movement. They involve knowing something is next to something, above something, behind something, which is all the way that we deal with the physical world, and it's spatial. And so whether you're talking about pure virtual environments or whether you're talking about bringing those virtual environments into the physical world in augmented reality terms, they're all part of fusing the digital with what we need to engage with and what we're trying to do and the conversations we're trying to have.

Eric Hanselman

And doing that in a way that works for humans because as you're saying, this -- we've got to be able to represent whatever these spheres look like in ways in which people can really understand them, interact with them, how do you deal with all of the things and the pieces and putting all those pieces together and whether or not that happens to be something that's game-oriented like a Pokémon GO or something that's more direct in business context, like training, being able to interact with equipment, being able to simulate interacting with equipment.

And we talked about how -- in the Industrial IoT episode a while back, about the ability to transform the way that people understand and interact with things but, more importantly, to be able to take that to a level of abstraction that lets you simulate those interactions to be able to not even fully require the actual physical things themselves, to have an understanding about how they would work, how they might work and to be able to really step away from the physical in ways that are useful for a whole set of ways of understanding and exploring the future.

Ian Hughes

Yes. And I'd say that simulation is one of those things that is an incredibly useful arm of the metaverse. So when we're talking there -- and this is when we're talking about, as you said, industrial or kind of the things that are about interacting with the world as it is for us, you need accurate simulations in order to do training and you need accurate simulations in order to train AI in order to be able to interact with those environments.

But that's the ability to accurately represent the physical world as it is as a digital twin of a factory or the planet or whatever. An actual copy instrumented accurately as is now is, a, quite complicated but something that people are going to carry on doing because that's what simulation has always been, but b, it's only one part of the spectrum of how we might want to interact with data and with one another.

So yes, if I'm doing fire training for an oil rig, I need to know what the -- it's a proper oil rig. I don't need to know where the fire exits are. I don't need to experience that. And that's beneficial. If I'm in a flight simulator, I need to know that it's going to behave in a way that the plane would behave and I can land at the airport that's the airport that I'm going to practice landing at. But as we go across that spectrum, we get to things that don't exist and things that are more ethereal and things that may be more creative and things that are more inspirational that can only exist in these digitally created environments.

And it's there that I think we get a lot of confusion for -- from the -- maybe the business world or from the art world that they have to coexist in the metaverse conceptually, but you're not going to expect a theater production of Midsummer Night's Dream to actually have to need to cross over into a car factory.

Eric Hanselman

It's not going to need an anchor in the real world because its value is that, in fact, it can become unmoored.

Ian Hughes

Yes. And that's the only real relationship between those, is us because it's what do we want to do and what do we want to communicate with as people. And all the technology that we use at the moment filters out a lot of who we are and what we know and how we explain things in order to meet the needs of the technology.

And that goes back to cave paintings, and it goes back to how we write words, and it goes back to how we paint or we make films. They're all encapsulations in certain forms of technology to try and get an idea across, try and share something.

And yet we have an evolution of technology where we can communicate in richer ways. And as I said, a virtual world with avatars, you're talking just like I'm talking here, but you can -- you're then engaging in -- standing next to somebody, actually being next to somebody and say, "I was next to you," just as you would if you met somebody in a physical environment. And all that sits on that spectrum of high-end simulation of proper engineering function and completely nonexistent experience -- or nonexistent physical experience but are there to stimulate the mind.

Eric Hanselman

Well, and make those interactions that much richer that expand the ways in which you can interact. I mean we've been through 2 years of Zoom calls and the idea that we could step beyond those interactions. And realistically, moving to Zoom was a richer environment than certainly just telephone conference calls. But we've got the ability to take that to additional levels of richness.

Ian Hughes

That is true. And the thing is that we've had video conversation, video chat available for a long while, but not -- people didn't need to use it other than those of us that already worked remotely and engaged remotely. And some -- many of us have been doing this for a long while.

But we go back to 2006 and the stuff that was going on with Second Life and that -- I was in an enterprise role, and my business card said Metaverse of Angeles. So I was trying to help enterprises understand how to communicate and engage either with customers, one another, with employees in a richer way than just using video chat.

But we kind of we needed the world to all -- everyone to experience the fatigue that we get from calls and video calls. And they work in some circumstances, don't they? So there are times when things -- certain media work. Like this podcast, this works because it's audio and somebody can listen to it as and when they're on a treadmill, when they're walking around the park or when they sat at their desk. That's all good. It doesn't mean...

Eric Hanselman

It's got a consumption model that's reasonably flexible as far as it goes, though.

Ian Hughes

Yes. And it's interchangeable and can be delivered in multiple ways, and it meets that need. Video conversations meet a certain need, but those of us that have experienced virtual environment meetings, virtual world in meetings, whether it's on a flat screen, whether it's in VR or even AR, we all have felt that that's different.

There is a psychological difference that is less jarring, less annoying in many ways and more memorable. I remember meetings and conversations I had because of the places I've had them both in the physical world and in the virtual world. My meetings that I have playing Celebrity Squares in video chat across all platforms all happen at my desk with random images of people bouncing around the screen, and I do not remember them in the same way because I'm -- everything else around me stays the same.

Whereas when you are in another environment, you are in the -- you are to the right-hand side of the room or you are on the stage or you are by the tree or you are flying around in space. It's any of those -- there are the various kind of mental bookmarks that you get from these environments.

And that's just about human-to-human communication, let alone all the other use cases that we've talked about of a full digital twin of a factory and creative experiences. Just the way that we talk to one another and engage with one another, virtual worlds as they are at the moment with avatars isn't the end point. But it's on the way to it. It's on the way to it being indistinguishable from what we would do if we met physically. That's the goal.

Eric Hanselman

And it gets to the point of being able to build richer interactions in ways that work for humans. And if you think the way our minds work, the way our memories work, the ideas about temporal memory, a lot of that gets keyed off of the interactions that we have and the context in which we have those interactions.

And as you're saying, you're looking at a small square of somebody on a screen that isn't going to have the same kind of longer-term impact. You're not going to be able to communicate in the same way if you've got the ability to represent being -- sitting in a room with them, being able to look at the environments, being able to experience what is that whole environment in which you're existing when that's actually taking place, when the interaction is taking place.

Ian Hughes

Absolutely. And it's that human need and that mapping to the millions of years of evolution that have got us to understand the world around us. It's not been that many years that we've had digitally mediated conversations. And before that, we'd experienced other people's ideas through writing, through paper and words and the shapes that were on that paper. And people don't tend to worry about what writing and words and paper are because -- but it is a technology.

But that technology can express a kid's nursery rhyme or your latest business report for the stock market or it can be complete fiction. And it's all encapsulated in words and paper. And the metaverse is that, if you like, but related to much more of what we can do with the technology. So it's -- and it's not even getting rid of writing. We're not getting rid of -- it's not about getting rid of images, and it's not getting rid of text.

It's the suitable things come to you when you need them, and you distribute them as you need them. But I know from many years of talking about metaverse stuff that people kind of lock on to the fact that it looks a bit like a game when you're in a virtual world and what will people think of you.

And that, I hope, is going to start to pass because people have now -- because they used to say, "Well, I never do a video call. Why do I need to do that? I've got e-mail. I've got telephone." Things move on. And I definitely know that where we are right at the moment is not the pinnacle of human communication, and we -- it can't be.

Eric Hanselman

I think we can characterize that pretty clearly. But yes, to your point, there's just so much more that we can do. And in the same level that we've made advancements to be able to get to where we are today, there's still more to do and, I think to your point, the ability to take those next steps in making this feel like a much more natural interaction.

You talked about augmented reality and the way that it can be a user interface for the Internet of Things. How do you see that evolving? And is this -- and we talked a little bit about it on the Industrial IoT episode. I'm curious about what that next stage is in that context as part of that larger metaverse.

Ian Hughes

Yes. It's a bit of a catchphrase that I use all the time. The AR is the UI for IoT, which is primarily to help people understand that we get -- everything gets put in those little categories and buckets, doesn't it? But in reality, everything flows across those categories and buckets.

And so the instrumentation on a machine, for instance, is a piece of information about how that machine is working, but it has a location. It is spatial. If you're talking about what a motor is doing, where is the motor? And so the placement of that and where that fits in the world is relevant.

And so if you're an engineer trying to engage with that, even knowing where it is, how do you find out where it is? Is it on a little 2D map? Or is it just -- or do you advance that into, well, it's up a bit and left a bit and in a bit, and see that through assistance by that digital information being imposed on your -- or superimposed on your view of the world where they are.

So that AR therefore becomes part of the entire metaverse discussion because where does the virtual data live? And where are those models? And where is that structure captured? And what else is being done with it? And you can augment the physical world with digital information or virtual information. But in a virtual environment, you can augment that with physical information in a fully virtual -- and also in a fully virtual environment, you can augment it with information from another completely virtual environment.

So all those interplays of where the information and the data is makes kind of -- the metaverse is -- becomes a user interface for everything about digital twins, and the metaverse becomes an interface for everything about human experience as well as we just talked about.

So it's a -- ideally, you would end up being able to not necessarily -- it's not about telling the difference between the real and the physical, but you just have all the things you need to do whatever it is you need to do with you in front of you to experience, to navigate through, to point out, to pick up just so that you're prepared to do the task. And by the task, the task might be enjoying the entertainment experience of a game, but it might be servicing that jet engine.

Eric Hanselman

Well, and we're starting to now get to some of those pieces. I mean you've mentioned Neal Stephenson. We're not yet to the full sort of mirror shades his idea of replacing what -- the way in which we see and being able to do that sort of augmentation.

But I was seeing that there's a whole new crop of exercise glasses that are now out that will give you all of the things that you'd have to sort of pick up your phone and look at, give you all of your exercise statistics, give you the ability to actually see a lot of that on -- projected on the glasses.

One more way in which you can get a lot of the data that's important to you to interact with your world, in this case, how you're actually performing as you're biking, working out, whatever your activity happens to be, and bring that into ways that give you more context, make it easier to use, be able to bring that into more direct control as part of that overall human experience.

Ian Hughes

And any gamer will be used to a heads-up display, just as any fighter pilot will be used to a heads-up display and anyone that drives a high-end car will be used to a heads-up display because they exist there as well, the ability to put the information where you need it and is incredibly important and not to be distracted and not have to look away.

And if you're busy swimming, you haven't got time to pick your phone up, you want it in your goggles. And that doesn't mean that the augmentation has to be a fully 3D mapped version of the world in front of you and superimposing things over the top of it, just the basics of a heads-up display to tell you that the information you need is part of the metaverse experience.

And so it's the relevant stuff at the relevant time that works and suits what the person is doing. We often get caught up in the idea of high-end headsets and glasses and mapping and lidar and real-world mapping and stuff, which is happening, but it doesn't all have to be that way. There are times when you only need a little piece of information, and you don't need it superimposed because it's just relevant to where you are and who you are.

Eric Hanselman

And that it's sufficient to do just those on pieces.

Ian Hughes

Yes. But equally, when you're servicing a jet engine, it needs to be on the jet engine. You need to know it's the right blade that you're talking to, and you need to know the value of -- the torque wrench needs or the torque wrench needs to know the value of the bolt that you're going to tighten. And so that then becomes more precise.

And we're then back to that spectrum of things that there's high-end precision needed for some things and there's human experience in the middle of them. And then there's more creative pursuits. And you could put sport into that as well and training pursuit with some science, but just telling me the speed I'm going in with heart rate and stuff is enough for that particular way of expressing that data.

Eric Hanselman

So we're talking about data and a lot of what builds the metaverse. We were talking on the previous episode about Web3. And it seems like there's a lot of times that the metaverse and Web3 all get mentioned in the same breath. What's your thought about where this fits and some of the aspects of -- or I guess, maybe more of the realities of where Web3 is as a component of the metaverse?

Ian Hughes

Okay. Right. Well, again, Web3, an ill-defined term. But the way I look at that, Web3 is an overarching evolution of all the technologies and the thought processes that go in and the organization that people give to things is all part of the Web3 arc.

And the metaverse is a kind of prime element of a bundling of technologies and a bundling of people interacting with things and said -- that whole spectrum from precise digital twins and simulations to the weirdest and the most wonderful experience you can have. But Web3 encompasses things like NFTs and blockchain and cryptocurrencies to help pay for things.

It doesn't mean you have to have cryptocurrencies in the metaverse, but you can have crypto because you might be buying virtual goods. And so then it becomes -- it wounds -- where -- that, it fits in. But then you've got kind of DAO, distributed...

Eric Hanselman

Autonomous organizations.

Ian Hughes

That's it. Yes. It's hard to keep up with these sometimes. That's an evolution of...

Eric Hanselman

A flood of neologisms, sort of.

Ian Hughes

Absolutely.

Eric Hanselman

Never ending.

Ian Hughes

That's the evolution of open-source thinking really, but that's being applied in a decentralization approach to things. And it's sociopolitical attitudes to how the technology gets used to push things forward from -- pretty much from a generation that's grown up with this technology rather than those of us that kind of watched it evolve and helped it evolve. So it's -- Web3 is a much more overarching bucket of things and could go any number of ways. And so I think the metaverse is a key big thing under that umbrella.

Eric Hanselman

So bringing this back to a more central focus, what should organizations be considering about the metaverse? And we've talked about some of the practical aspects. But I think as we've discussed, there's a lot of confusion about, what's the extent to which organizations should engage? How do they engage? Where do they start? Should they start? What are your thoughts?

Ian Hughes

Well, I think for enterprises that are dealing with remote working, not everybody does obviously, but enterprise, the remote working and how people engage with one another and have a sense of community or feel they're part of something when they may be not going to an office and are not used to quick ways of communicating online and engaging with things because it's not -- the culture hasn't formed yet. I think providing the opportunity to explore some of the more basic virtual world tools, such as here's an office -- that's not the most interesting use of virtual. But here's an office. You can gather while you're doing your work.

And you can kind of hear what's going on or get some ambient intimacy or feel like you're part of a group or attend an event so that you can sit next to somebody and say, "You know when we sat next to you, and they said that," even if it's just a boring old PowerPoint presentation about the organization or something, it -- helping people explore that -- to say, "You know we had that video meeting. Let's try one of these instead."

And it might just be a little team meeting. There's plenty of kind of free ways to get into just trying -- just to see if people go, "Oh, that feels good. That feels interesting, and that feels interesting. Shall we try this?" So just even as almost an extra hobby, if you like, or an extra thread to what it means to be part of a group, those are things to explore.

Obviously, for the bigger kind of consumer-facing brands, then there are bigger virtual worlds and platforms that they probably should start exploring having a presence in. And our -- I mean the big sports brands and stuff have places in some of the platform.

Because eventually -- and eventually can be 3, 5, 20, 100 years, but it's going to be eventually, just the same conversation that we had when people didn't have websites and the same conversations that when they eventually had websites, we said, "Well, you should probably sell online and do e-commerce," and then we were all, "No, nobody does that."

And then the next conversation was, "Well, you should really have a presence on social media to be able to engage more quickly with your customers, your clients and solve problems." The same thing applies to you will exist in the metaverse. Your project -- you will have virtual products that may map the physical products, but somebody might want to wear your branded T-shirt in a particular virtual environment.

And it may be beneficial for you to make sure they have that branded T-shirt. And they may buy that virtual T-shirt and get sent the physical one so they can wear the proper T-shirt or they may be buying the physical T-shirt and the receipt is a virtual one. And it doesn't have to be virtual T-shirts. Not everybody needs -- but that's an example of a brand that has a certain identity that needs to be in a certain place where people are, and people are in these places.

Eric Hanselman

Being able to extend to enrich those interactions so that you've got the ability to connect in new and really better ways.

Ian Hughes

And then those are the kind of nonsocial side of things and not those brands that are about experiences but the engineering companies, the manufacturers of this world that are -- need to provide better digital-enabled tools to their workforce to help them keep the machines running and improve their OEE, their overall equipment effectiveness.

Because we have this industrial IoT kind of way of instrumenting machines and applying predictive maintenance to all that data, lots of clever AI and ML stuff going on. But if you then write down on a piece of paper what -- somebody needs to go and fix a machine, you kind of lose -- you're losing the benefit of that leap, whereas if you...

Eric Hanselman

Drop the value and...

Ian Hughes

Yes. If you provide them with everything they need in a better way so that they can hands free go and fix that and give them some extra information about which bit to do in which order, it is a no-brainer because it's not ridiculously expensive tech we're talking about anymore.

And so the idea of an industrial digital twin in an industrial metaverse, if you like, then that works, too. And that's the kind of the hard-nosed end of engineering. And we're talking about the softer side of human interaction and then the engagement with brands. All these things sit back on that spectrum talked about right at the start.

Eric Hanselman

Well, I mean a decade or more ago, we talked about generating video signals for -- video symbols for IT equipment so that you could assemble them virtually. Now we need to start thinking about digital twins in the same way.

Ian Hughes

Absolutely. And I mean even the pandemic had models of ventilators that were from a particular manufacturer where -- as digital models and digital work instructions were being distributed to other companies that had the engineering ability to make them.

But it was the best way to distribute the instructions to help them adjust their production and say, "This is what you need to do. This is how you assemble it. It's how it fits." It wasn't a handwritten note on what to do or just a basic blueprint to sort out that then took months to figure out. It was -- this is it, is the virtual version of this thing. This is how it gets put together. Can you do it until you then get the massive ventilators that were made to try and help people that were in dire need very quickly?

Eric Hanselman

Evolution in terms of where our thinking is. Well, thank you, Ian. This has been great. All sorts of perspectives and I think a lot more that we could potentially cover. But thank you very much.

Ian Hughes

You're welcome.

Eric Hanselman

And that is it for this episode of Next in Tech. Thanks to our audience for staying with us. We hope that you will join us for our next episode where we'll be talking about some of the U.S. federal government executive orders coming in the White House and how they're affecting expectations about security and some implementation priorities that may be shifting because of this.

Scott Crawford and Garrett Becker will be back on the podcast. So hope you will join us then because there is always something Next in Tech.