White Paper

Disrupting Reality: Taking Virtual & Augmented Reality to the Enterprise

From touchscreen encounters to “real-world, real-life” immersive experiences, virtual and augmented reality signal a new way of working, communicating and collaborating across the enterprise.



Executive Summary

Ready Player One, an upcoming Steven Spielberg movie, is set in a dystopian future where people spend most of their days inside a globally networked virtual universe, Oasis. The game’s “real world” environment and immersive experiences are so absorbing that players prefer them to real life – so much so that the game’s virtual schools have replaced traditional brick-and-mortar structures. While this depiction of the future may seem bleak, advancements in alternative reality technologies – virtual reality (VR); augmented reality (AR), its relatively younger cousin; and their hybrid, mixed reality (MR) – may very well see 2018 audiences watching Ready Player One using VR head-mounted devices (HMDs).

For over 60 years, technologists have sought to create VR experiences that stimulate multiple human senses. In their earliest forms, these efforts depended on bulky, unwieldy devices that offered limited content, such as Sensorama, invented by Morton Heilig in 1962.1 Over the past two decades, rapid advancements in computing technology and the rise of video games helped make VR devices smaller and more immersive. Using biological circuits and silicon sensors, today’s HMDs trick the human brain into visualizing an imaginary world as real. Yet unlike PCs, which were first used to fulfill demand from large enterprises, VR and AR headsets, like smartphones, are expected to appeal equally to consumers and enterprises.

Awareness of VR and AR business and consumer solutions has reached a crescendo — resulting in optimistic projections for the market opportunity and a growing list of applications across industries. As SMAC stack (social, mobile, analytics and cloud) technologies democratize computing power and information access, VR and AR hardware and software will strengthen enterprise-to-employee and enterprise-to-consumer connectivity and interactions, including employee collaboration, training and marketing.

Today, the principal platform for virtual reality is the smartphone, thanks to its small form factor, light weight, reasonable cost, high-resolution displays and powerful computing capabilities.

Looking ahead, the possibilities seem infinite. For example, today’s workstations could give wayto virtual work areas with multiple displays and real-time access to enterprise data, irrespective of where an employee is physically located. Similarly, customers could use HMDs to explore a company’s products and services in depth within a highly personalized, fully immersive environment free of real-world distractions.

Enterprises looking to adopt VR and AR will need to focus on upgrading their technology infrastructure and creating an ecosystem of VR-related applications. They will have to develop a set of best practices for new users and a change management program to help employees become comfortable with the new hardware and software.

HMDs’ ability to track and understand user behavior will fuel the development of strict policies for protecting data and guarding privacy. At a broader level, companies will need to overcome some fundamental challenges, such the current high price tag of HMDs, a fragmented (but growing) market of developers, and a lack of industry standards – all critical for large-scale adoption.

This white paper explores all of these issues and includes a roadmap to help enterprises navigate the process of weaving AR and VR into the fabric of their businesses.


A Groundswell of Expectations


  1. Investments in alternative reality technologies have shown steady growth. As of Q4 2015, VR and AR saw six straight quarters of investment growth.


  1. In a recent report, Goldman Sachs predicted that the VR and AR hardware market will touch $80 bil­lion by 2025.
  2. Citibank expects the market for VR hardware, networks, software and content to reach $200 billion by 2020.
  3. The high expectations of alternative reality are driven by the variety of offerings developed and in development by tech giants and startups alike. One estimate puts the number of companies working on VR hardware and content at 230.


  1. However, this landscape is not limited to virtual and augmented reality alone (see Figure 1, next page).


In terms of devices, industry favorite Oculus Rift offers a conventional headset. Google Cardboard (a successor to Google Glass, which went back to


The Alternative Reality Landscape


Virtual Reality Augmented Reality Mixed Reality
What it Does Changes reality by placing the user in a 360-degree imaginary world. Visible world is overlaid with digital content. Like AR, but virtual objects are integrated into and respond to visible surroundings.
Where it Stands Has been around for a long time; most famous example is Oculus Rift. Hundreds of companies are working on prototypes. Introduced in the form of Google Glass. Now several companies are developing prototypes. Magic Leap and HoloLens are leading research and development.
Market Opportunities Videogames, theme parks, entertainment apps, video, collaboration, employee training, simulation exercises Games, theme parks, simulation excercises, employee training, commerce Enterprise-focused applications
Biggest Players Oculus RV, Samsung Gear VR, Sony, HTC Vuzix, Skully, Epson Microsoft, Magic Leap

the drawing board) offers a low-cost cardboard VR headset that utilizes smartphone displays. Microsoft’s HoloLens6 – the first fully self-con­tained, holographic computer – superimposes 3-D digital images on top of real-world visuals. Amid moves by tech giants, Magic Leap, a startup focused on mixed reality, has emerged as an indus­try favorite. The company, which is partially backed by Google, is working on what it calls a mixed reality light field, a technology that projects digital images onto the human retina through a transparent lens.7 This cre­ates a 180-degree field of view (much wider than any other current mixed reality headset) that’s closer to how humans see the real world; 3-D merges digital images with real-world surroundings seamlessly. It is hard to predict which player will emerge as the leader (and thereby help create industry standards) but the diversity of efforts bodes well for the alter­native reality market.

It is hard to predict which player will emerge as the leader, but the diversity of efforts bodes well for the alternative reality market.

The Impending Enterprise Reality Shake-Up

Facebook’s acquisition of Oculus VR in 20148 was a strong signal that VR headsets were moving from the realm of science fiction into the mainstream. Most mobile and video-game manufacturers soon followed with their own offerings. Amid these disruptions, the enterprise opportunity was largely missed.

Today, all of that is changing. A major reason is that VR eliminates the need for a person to be physically present in environments that depend heavily on “hands-on” expertise, such as health­care, manufacturing, and utilities. For example, a 3-D rendering of patient images, product designs and factory layouts allows people and facilities to be remotely monitored and attended to as needed, in real time.

Nevertheless, virtual reality has its limitations. Rather than providing a truly immersive experience, it completely blocks a person’s immediate surroundings – requiring them to remain in place. Although headset manufacturers are working to overcome VR-induced sickness.


and nausea, it is still a problem for some people. This is where AR headsets have an advantage; they merge a person’s present surroundings with 3-D images to create a continuous view of both the virtual and real worlds. Furthermore, unlike VR devices, AR headsets do not require users to stand in place; they can move around and remain productive while attending to other tasks. This is one reason why – despite being behind VR on the current development curve, AR is expected to have a bigger impact on the enterprise market.

According to ABI Research, AR headsets will deliver $46 billion in revenue by 2021, whereas VR will generate $15 billion. AR will focus primar­ily on the enterprise, while VR will emerge as a consumer play.9

However, hurdles involving display technology and real-time processing and calibration of phys­ical environments must be overcome first.10

Enterprises are already experimenting with both variants. A 2016 survey by Tech Pro Research11 found that 77% of respondents had first-hand VR/AR experience, while others were consid­ering adopting either of the two technologies (see Figure 2). The flexibility offered by aug­mented reality makes it a frontrunner in the race for enterprise adoption over the long term. However, both VR and AR will drive take up of HMDs as a new computing platform, much like mobile computing drove advancements in the smartphone.

The Age of the Headset

The impact of AR and VR is will likely be pro­found for people and processes across indus­tries. Given the flat-out pace of the digital world, HMD headsets have the potential to ease process bottlenecks and save time and money by reduc­ing the need for physical premises and presence – improving the effectiveness of employee train­ing and engagement programs, and enabling a better understanding of employee and consumer behavior.

Increased Communication & Collaboration

Enterprise communications were last disrupted by the smartphone, which replaced physical buttons with a multipurpose touchscreen that allows users to move beyond phone calls and text messages. The iPhone, as Steve Jobs famously announced at its 2007 launch,12 merged the iPod, the mobile phone and an Internet commu­nications device into one product – making way for today’s hyper-connected world. VR and AR will take this to the next level by making com­munications hyper-real. For example:

  • A video call could take place in a simulated conference room that looks exactly like a phys­ical meeting room. Only in the virtual confer­ence room, attendance would not be dictated by physical space. Teams and individuals in different geographic locations would be able


to talk face-to-face, exchange virtual notes and make presentations in a shared environ­ment without the need to be in the same physi­cal space, and without having to travel to the meeting destination.

  • Much like the iPhone removed the need for physical buttons, HMDs could create virtual buttons for any application incorporated into it. People traveling to a foreign country could translate sign boards and food menus in real time, hands-free.
  • Similarly, English-speaking employees would be able to talk effortlessly with their Chinese counterparts, with the headset providing real-time translation. (This capability applies to various languages).

A Smarter, More Engaged Workforce

According to recent Gallup research, engaged employees are involved in, enthusiastic about and committed to their work. The research also showed that employee engagement is strongly connected to factors that are essential to a com­pany’s financial success, such as productivity, profitability and customer engagement.13 How­ever, Gallup found that 87% of the global work­force is either not engaged, indifferent to or actively disengaged with their employer organi­zations – costing billions of dollars annually in the U.S. alone.14, 15

Gamification (adding game elements to train­ing and other processes) is one approach enter­prises are using to address this issue. (For more on this topic, read our whitepaper “Gamification 3.0: Meaningful Insights for Businesses Across Industries.”) These initiatives could benefit from VR/AR. Researchers at Iowa State University found that users across demographics, when instructed through AR, experienced a 90% reduction in errors when assembling a mock air­plane wing.16

Employee engagement also requires enterprises to make the most of employee interactions across the organization — collecting their feed­back on a regular basis and understanding the talents and needs of each person. A VR/AR solu­tion can fit nicely into these efforts. For example, VR and AR headsets could provide employees with a host of tools, such as training videos, visu­alized data and multiple desktops for performing various activities. For example, AR can be used to teach complex maintenance procedures for factory equipment – overlaying animation-based instructions and reference materials directly onto the physical gear. (For more on this sub­ject, read our whitepaper “Augmented Reality: A New Workforce Mobilization Paradigm”). The engrossing nature of these headsets could also serve as a medium for sharing leaders’ visions for the enterprise.

Learning from Behavior

VR and AR headsets are designed to track user behavior to generate rich behavioral data. For employers, this provides an opportunity to more fully understand employee and customer pat­terns and tailor the user experience to match expectations. Additionally, since the headset acts as the center of the user’s connected world experience, it can be linked to other wearables, such as smart watches and health trackers, to improve the quality of user data.

Branding & Marketing

A marketing message delivered through a VR or AR headset is likely to be highly effective for the simple reason that the experience is richer, highly personalized and devoid of any distractions. Not surprisingly, major brands such as Volvo, Coca- Cola and McDonald’s have rolled out VR-centered marketing campaigns.17 In November 2015, The New York Times gave away 1.3 million Google Cardboard VR boxes to its subscribers,18 allow­ing them to experience news with 360-degree video. Given that it is still early days for the tech­nology, this is an impressive list that is likely to keep growing. As more brands realize the power of immersive VR experiences, more people will probably have their first VR experience delivered for free through similar marketing plays.


Thanks to the Internet of Things (IoT), manufac­turing is already transforming. Sensors installed on the factory floor and on machines are cre­ating opportunities for manufacturers to mon­etize software and data, improve operational efficiencies to save costs, and revamp their supply chains.19 VR and AR are expected to save time and money in areas such as collaboration, digital prototyping, design reviews and client presentations.20 Using virtual reality demos, The Ford Motor Company has streamlined its manufacturing process and made it safer – resulting in a 70% drop in worker injury rates and a 90% reduction in ergonomic issues


As AR and VR technologies advance, data-driven collaboration among designers and engineers could open up new areas for heightening effi­ciencies.


From 3-D operating room simulations to decen­tralized mental health treatments, VR and AR are expected to have wide-ranging applications. These advancements are predicted to generate $2.54 billion globally by 2020, according to one estimate.22 For example, in April 2016, the Royal London Hospital broadcast a surgery for colon cancer, streamed live to VR headsets and smart­phones using 360-degree cameras).23 The idea is a simple yet powerful way to transfer knowl­edge and skills. Similarly, virtual organ models could allow surgeons to better prepare for deli­cate surgeries. For amputees, the headsets hold promise for dealing with phantom limb pain.24 As connected care becomes the norm, VR and AR solutions – combined with big data analytics, sensors and artificial intelligence – could upend evidence-based medicine and the way care is delivered.


For retailers, VR and AR headsets can be a tool for squeezing the most value out of the data gathered from social media and mobile apps. Consumer shopping patterns can be used to cre­ate virtual tours tailored to the expectations of different customer segments. Shoppers can use the headsets to experience a new product or ser­vice without being physically present in a store. They could watch a fashion show in real time, use their HMD to see how they would look in a partic­ular outfit, or how a room renovation would look before they decide to move forward. (For more on the digital retail theater concept, please read “The Digital Retail Theater: Shopping’s Future.”) The operational benefits could be equally attrac­tive for retailers. For example, using HMDs, store personnel could track hands-free sales across multiple stores to make inventory adjustments in real time, or assist customers by visualizing the exact location of individual products.25


Goldman Sachs expects video games, live events and video entertainment to form the biggest chunk of software revenue from VR and AR by 2025 (see Figure 3). This should not come as a surprise. For creators and players of video games, VR headsets are a boon, since they cre­ate new possibilities for immersive content. Thunderbird: The Legend Begins, a puzzle game designed exclusively for VR, is one of the many examples of this trend.26 AR-based video games could merge the user’s immediate surround­ings into the game. Audiences watching live events could experience the thrill of the venue without leaving their homes. Movie makers are also on board the VR bandwagon – creating



VR experiences for movies such as The Aveng­ers: Age of Ultron.27 In the near future, stories will be told in a 360-degree format that allows viewers to watch the plot unfold all around them, and view a scene from any angle they choose.28


If tablet devices made learning interesting for school-goers, VR and AR could revolutionize the education market through immersive learning in both primary and higher education.29 Google’s Expeditions, for example, is a VR platform that allows students to take guided tours of cities around the world, as well as stars and planets. Subjects such as astronomy and medicine could be taught much more effectively through 3-D graphics and 360-degree videos.

Hurdles to a Virtual Future

If the disruptive power of VR and AR HMDs matches that of the PC and the smartphone, so do the challenges. Given the flurry of activity in this space, it is important that these issues be tackled effectively to ease the path to widespread adoption:

  • Price and apps: Top-end consumer HMDs such as Oculus Rift and HTC Vive Price are cur­rently priced at $599 and $799, respectively.30 These headsets must be tethered to comput­ers capable of running high-end VR software, which adds to the cost. Cheaper HMDs that use smartphone displays are currently limited by the poor battery life of most smartphones and the low quality of displays (although display manufacturers should close the quality gap over time). Importantly, VR headset manufacturers are still await­ing the launch of an Angry Birds-style blockbuster app that appeals to users across demographics, thereby pushing uptake. Mean­while, Microsoft’s HoloLens developer kit is currently priced at $3000.31 Magic Leap is yet to announce prices, but in all likelihood its HMD will be expensive.
  • User experience: Although VR headsets have become more user-friendly, headset manufacturers are still competing to make people feel more comfortable with these devices. Users of Oculus Rift and HTC Vive, for example, must tether their headsets to a computer. This requires them to remain stationary while bearing the weight of a device that weighs close to 500 grams32 – a little over one pound – making it difficult to use the headset for long periods of time. In this case, AR headsets have a distinct advantage, but are likely to be similar in design to the now-shelved Google Glass. Nevertheless, both VR and AR headsets will have to deal with the fact that one size does not fit all.
  • Standards: Although invis­ible to end users, common standards have been at the heart of the computer and smartphone revolu­tions. To enable wide­spread enterprise and consumer uptake, VR and AR will need similar universal standards that allow developers to make applications that are open and interoperable across differ­ent headsets. For VR alone, the current HMD market is filled with companies working on software and content;33 however, there is a mix of proprietary and open approaches. VR has a long way to go before it can support a simple plug-and-play capability. Efforts such as OpenVR by Valve are steps in the right direction.34

Transforming Enterprise Reality

For enterprises looking to incorporate AR and VR into their processes, those that have taken concrete steps to digitize, such as rewiring the enterprise around the SMAC stack, are primed to make quick and long-lasting gains, since these technologies are foundational to both AR and VR. Although these technologies are at a nascent stage and need to mature before becoming a heavy-duty computing platform, they will be a key component of the future digi­tal enterprise. With this in mind, companies will need to ensure a reasonably smooth transition by thinking through how and where to integrate their existing technologies with AR and VR, and properly train and reskill employees to benefit from them.

To enable this, consider the following:

  • Create the necessary infrastructure. The content-heavy nature of VR and AR means that enterprises will need to add more computing power, network bandwidth and data storage capacity to their existing IT infrastructure to accommodate new hardware and software.
  • Create a supportive ecosystem. Just as the rise of the smart­phone drove the need for on-demand access to mobile apps, VR and AR will require a backbone of resources that ensures users have access to rel­evant content, and can connect and collaborate securely around the clock.
  • AR, VR or both. The future of VR and AR in the enterprise is unlikely to be binary in nature. Enterprises should prepare to incor­porate the best approach for a particular pro­cess. For example, VR will be a great medium for videos and meetings, while AR is better suited for processes that require users to move around, on a factory floor or in a retail store.
  • Manage change. For enterprise users, mov­ing to a headset-oriented workplace from a PC-oriented environment that has existed for decades will need some getting used to. More important, since users will include both mil­lennials and older generations, companies will need to undertake training and change man­agement that accommodate the needs of all as they become accustomed to the new technol­ogy and a new way of working.
  • Address data privacy and security. The use of HMDs only intensifies the need for data pri­vacy, since VR and AR headsets are capable of tracking user behavior down to the minut­est detail. While this is necessary in order to “hyper-personalize” the user experience, it can also raise privacy issues, especially in consumer-facing applications. Users should be made aware of and have a say in what informa­tion is stored, with appropriate steps taken to ensure the safety of enterprise data.


VR will be a great medium for videos and meetings, while AR is better suited for processes that require users to move around, on a factory floor or in a retail store.


1 Sensorama Machine, http://www.mortonheilig.com/InventorVR.html.

2 “AR/VR investment in 2015 breaks out near $700 million,”http://www.digi-capital.com/news/2016/01/ arvr-investment-in-2015-breaks-out-near-700-million/#.V4_LqTVWvUV.

3 Goldman Sachs, “The Real Deal with Virtual and Augmented Reality,” http://www.goldmansachs.com/ our-thinking/pages/virtual-and-augmented-reality.html.

4 “2016 set to be year virtual reality takes off,” http://raconteur.net/technology/2016-set-to-be-year-virtual-reality-takes-off.

5 “How virtual reality in 2016 prepares us for the Internet of experiences,” http://venturebeat. com/2016/05/17/vr-and-2016-the-year-virtual-reality-prepares-us-for-the-internet-of-experiences/.

6 Microsoft HoloLens, https://www.microsoft.com/microsoft-hololens/en-us.

7 “Google’s Magic Leap may have one big advantage over Microsoft’s HoloLens,” http://www.techin­sider.io/magic-leaps-field-of-view-may-be-much-better-than-hololens-2015-10.

8 “Facebook’s $2 Billion Acquisition of Oculus Closes, Now Official,” https://techcrunch.com/2014/07/21/ facebooks-acquisition-of-oculus-closes-now-official/.

9 “While Gaming VR Grabs Headlines, Enterprise AR Dominates with Three Times the Device Revenues in 2021,” ABI Research, https://www.abiresearch.com/press/while-gaming-vr-grabs-headlines-enter­prise-ar-domi/. cognizant

“Virtual & Augmented Reality: Understanding the Race for the Next Computing Platform,” Goldman Sachs, http://www.goldmansachs.com/our-thinking/pages/technology-driving-innovation-folder/virtual-and-augmented-reality/report.pdf.

11 Infographic: VR and AR are gaining traction for use in the enterprise, http://www.techrepublic.com/ article/infographic-vr-and-ar-are-gaining-traction-for-use-in-the-enterprise/.

12 Steve Jobs, iPhone Introduction in 2007, https://www.youtube.com/watch?v=9hUIxyE2Ns8.

13 “Employee Engagement in U.S. Stagnant in 2015,” http://www.gallup.com/poll/188144/employee-engagement-stagnant-2015.aspx.

14 “Organizations Going Above and Beyond to Engage Employees,” http://www.gallup.com/opinion/ gallup/191765/organizations-going-above-beyond-engage-employees.aspx?g_source=EMPLOYEE_ ENGAGEMENT&g_medium=topic&g_campaign=tiles.

15 “How to Tackle U.S. Employees’ Stagnating Engagement,” http://www.gallup.com/businessjour­nal/162953/tackle-employees-stagnating-engagement.aspx.

16 Augmented Reality Training: Worth the investment? https://www.smartindustry.com/blog/smart-industry-connect/augmented-reality-training/.

17 “Why virtual reality is potentially brands’ next lucrative storytelling medium,” http://www.mobilemar­keter.com/cms/news/software-technology/22446.html.

18 “Google Cardboard’s New York Times Experiment Just Hooked a Generation on VR,” http://www.wired. com/2015/11/google-cardboards-new-york-times-experiment-just-hooked-a-generation-on-vr/.

19 “Monetizing the Internet of Things for Manufacturing, Cognizant,” http://visual.ly/monetizing-inter­net-things-manufacturing.

20 “VR and AR in factories and manufacturing,” http://eandt.theiet.org/magazine/2016/03/vr-manufac­turing.cfm.

21 “Virtual technology Streamlines Ford’s Manufacturing,” http://www.detroitnews.com/story/business/ autos/ford/2015/07/16/virtual-manufacturing/30243959/.

22 “Augmented Reality and Virtual Reality in Healthcare Industry Market to Reach $2.54 Billion by 2020,” http://www.medgadget.com/2015/09/augmented-reality-virtual-reality-healthcare-industry-market-reach-2-54-billion-2020.html.

23 “Cutting-edge theatre: world’s first virtual reality operation goes live,” https://www.theguardian.com/ technology/2016/apr/14/cutting-edge-theatre-worlds-first-virtual-reality-operation-goes-live.

24 “How Virtual Reality Will Change the Face of Healthcare,” http://bigthink.com/philip-perry/how-vir­tual-reality-will-change-the-face-of-healthcare.

25 “How VR and real-time data are changing shopping,” http://www.marketingweek.com/2016/03/04/ what-does-shopping-in-a-real-time-future-look-like/.

26 “Here are the Winners of the Vision VR/AR Summit 2016 Awards,” http://www.roadtovr.com/winners-vision-vrar-summit-2016-awards/.

27 “It’s Not Easy Being Iron Man—Except in This VR Experience,” http://www.wired.com/2015/05/aveng­ers-vr-experience/.

28 “Virtual-Reality Movies: Get Ready for the VR Revolution,” http://www.wsj.com/articles/virtual-reality-movies-get-ready-for-the-vr-revolution-1457030357.

29 “These Two School Districts Are Teaching Through Virtual Reality,” http://fortune.com/2016/02/25/ school-districts-teaching-through-virtual-reality/.

About Cognizant

Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 100 development and delivery centers worldwide and approximately 244,300 employees as of June 30, 2016, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world.

Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.

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30 “HTC Vive vs. Oculus Rift: The Virtual Reality Comparison We Had to Make,” http://kotaku.com/htc-vive-vs-oculus-rift-the-comparison-we-had-to-make-1771122831.

31 “Microsoft’s HoloLens is now available for preorder,” http://www.cnet.com/news/microsofts-hololens-is-now-available-for-pre-order/.

32 The Ars VR headset showdown—Oculus Rift vs. HTC Vive,” http://arstechnica.com/gaming/2016/04/ the-ars-vr-headset-showdown-oculus-rift-vs-htc-vive/.

33 Virtual Reality, https://en.wikipedia.org/wiki/Virtual_reality#Commercial_industries.

34 “Just how “open” is the future of PC virtual reality?” http://arstechnica.com/gaming/2015/07/just-how-open-is-the-future-of-pc-virtual-reality/.


Author and Analyst

Akhil Tandulwadikar, Senior Researcher, Cognizant Research Center


Harleen Bhatia, CRC Design Studio Manager

Promit Pattnaik, CRC Design Studio Team Lead

Mohammed Salman, CRC Design Studio Designer

Codex 2124

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