As it does almost every year, TED has gotten people excited about the next big thing – and this year that next big thing is augmented reality. Well, actually it’s more likely to be the big thing in 2011 or maybe even 2012 (we would humbly suggest that check-ins are the big thing now). Nevertheless, when augmented reality finally comes to fruition in scale, more than any kind of apps, social location services will be propelled to new heights.

There are many reasons why this will be the case. First of all, as we have mentioned before, checking in will be a much more compelling experience once those check-ins are verified (and there will be less cheating going on for sure), preferably by interacting with the surrounding environment. Although this can be accomplished through other ways than high bandwidth augmented reality, other means will be much less compelling than this new medium, which means they won’t win out over augmented reality.

In Person over Remote

Secondly, while it will be possible to sit at a laptop to view locations anywhere (indoors and outdoors) with augmented layers, this medium really comes into its own when it enhances the user’s interactions within their immediate vicinity. So while playing with augmented layers over Street View in Beijing from a coffee shop in Berlin will be fun, walking around Beijing with a augmented reality capable phone will be more beneficial, immediate and most importantly social for the user. Walking in to the Forbidden City with your phone, checking in, and then searching the palace for Foursquare badges (or maybe even seeing other users “wearing” their badges), is going to be much more fun than sitting thousands or even a couple of miles away and trying to do something similar from a laptop. Other kinds of augmented reality could also be activated when a user is physically present – wouldn’t you like to shake the hand of the emperor?

Fun over Utility

Which leads us into another reason augmented reality and location services are a perfect fit. Many of the currently popular social location apps are popular because they are fun – utility is at best right now a side effect. And while there will be many utilitarian uses of augmented reality, first and foremost people will want to have fun with it, therefore gravitating to those apps that offer gaming elements over more serious uses. As we mentioned above, a clear example would be Easter egg hunting for badges and other virtual goods (which is basically what Gowalla is in an un-augmented app world). Gaming and virtual goods have proven to be tremendous business models and it will come as no surprise to us if the first wave of augmented apps are mainly games. Of course, in this case, Foursquare and Gowalla may have to compete with Zynga and Tencent and others, but even though those giants have the edge in online gaming and virtual goods, location-savvy startups should be able to level the playing field with better location-aware apps.

Check-in activated advertising

On the topic of revenue (such a pesky topic, isn’t it?), the inevitable revival of display advertising in augmented reality another major source of income for location apps. Step into a baseball park, check-in, and watch signs pop up to give you discounts on hot dogs, beer and peanuts. It won’t really matter if those signs are already there in real life – the augmented ones will have high conversion rates so they will be there (possibly even overlaying the actual physical sign). Virtual signage that only appears when a user checks in will continue to drive the desire to check-in (whether manually or through auto verification), although we fully expect that there will be plenty of augmented signage just hanging in the air whether users check-in or not. That said, current location apps that continue to build relationships with venues should have a step up over newer entrants on securing augmented advertising deals.

Are they ready?

Finally, we wonder whether or not current location apps are ready or willing to tackle augmented reality functionality. Of course, augmented reality will need an ecosystem to truly thrive, but some of the examples we gave above, such as hunting for prizes or viewing other users’ badges can be completely within the control of the apps themselves. Perhaps this functionality will not come from the startups themselves, but through developers using APIs. Regardless of where it comes from, however, apps that combine what’s great about location apps with the seemingly unlimited potential of augmented reality, should do very well indeed.