I'm a big proponent of handheld augmented reality; I think that AR is going to be a key technology and conceptual framework for mobile applications. After all, many of the things we imagine doing on mobile devices relate to the world we are moving through, so AR seems a natural fit. When practical headmounts finally arrive, things will only become more compelling.
However, the main thing holding AR back, in my opinion, is a clear portfolio of compelling applications, games and uses; sure, everyone imagines all kinds of things; applications like Wikitude are evocative of more powerful, practical and useful systems.
But, frankly, most of what's been actually deployed has only been noticed because of the GeeWiz factor. A static model of a car sitting on a paper ad? Yawn! Books with 3D graphics that pop out of the page, but don't really add much to the experience? Ho hum.
So why do I think things are about to change? The FLARtoolkit, that's why. Over the years, I've worked with designers and other non-technologists because I believe that it will be these sorts of folks, folks who aren't necessarily in love with the technology but you have something they are trying to do, some vision that the technology enables. We built our DART tools to let folks work on AR in Macromedia Director. But, a big limit is that we couldn't deploy experiences easily; they still needed to be "installed" to work. And our camera access and other things were "finicky".
But, now, people can build Flash applications that use the camera on your computer to do AR. Sure, it's limited; Flash doesn't really support 3D, so the amount and kind of content you can create isn't "professional game quality"; you can access local devices (like a compass or gps, or more powerful sensors).
But, you can do simple things. For example, consider "Eye of Judgement," the relatively disappointing AR game on the PS3. All it uses is a stationary camera and markers. What would the Flash-Games equivalent of that be? What clever new interactions or game concepts could make such a setup compelling? Now, we can find out, because now virtually any Flash programmer/author can try it. Without help from a programmer. Without installing more software. With the ability to distribute it!
Consider these demos, here and here. They aren't that novel or exciting. But I could get design and art students to build these. On their own, without a bunch of technical support. And that means, very soon, we should start seeing new, exciting things coming out. And the full source to that first one is available, for anyone who wants to look at it.
Which is cool. Very cool.