One company - String, in partnership with tech firm Digicave - has developed and demonstrated a system that creates the impression of a 3D figure mapped onto, for example, a book shelf. Such technology opens up the possibility of having a pop star appear in your bedroom, performing as if they were on-stage.
"I think what we're delivering here is a unique experience that no-one has ever seen before," says String's CEO Alan Maxwell.
"For example, we can capture a live performance from an artist on stage and deliver that performance to people's devices wherever they are in the world and they simply have to hold their device at a marker. I think there is a certain amount of value in that."
The idea of augmented reality was first mooted as far back as in 1965, with
Ivan Sutherland's now famous essay
Augmented Reality: The Ultimate Display. In it, he said that "with appropriate programming a display could literally be the Wonderland into which Alice walked," stating that digital handcuffs would be able to actually restrain users, and those shot by digital characters would be killed in real life.
His vision bears uncanny resemblance to the Matrix, although it is far from the world of AR that we currently inhabit.
Nearly 50 years after that prophetic work, computers have advanced beyond comprehension. However, commercial developments in AR have been slow and the buzz that surrounded the technology a couple of years ago seems to be waning.
That is perhaps because, up until now, the products and software available to most people have been gimmicky, fun applications rather than - as much of the industry thought - lifestyle must-haves.
Augmented reality is a vision of a future where images, not words, become the building blocks by which we search the world and understand our surroundings
But while AR failed to captured the popular imagination, the technology was being extensively used in commercial environments.
"Fighter pilots are a classic example," says Dan Sung, editor of features at tech site Pocket Lint.
"The technology [of using a heads-up display] has been there since Top Gun. It's really useful and the reason we don't talk about it is because it's so good no one even notices it's augmented reality."
The heads-up display can now be used by cyclists and snowboarders alike, and in sports where looking unconventional is seen as often appealing, bulky goggles may not be a problem.
Sports programming is also a large user and developer of graphics that interact and rely on real-world reference points. A game of cricket or American football - for example - would now look strange without the use of some form of AR technology.
A number of marketing companies have used AR to promote products
Yet it all seems rather limited compared to the vision of AR painted by future-gazing technology evangelists.
What makes AR's slow progress all the more apparent is the way that sci-fi series and Hollywood have taken to the idea like a 3D duck to pixelated water. From the holo-deck in Star Trek to - perhaps more realistically - the virtual reality simulations in a recent James Bond film, examples are all around.
recently announced its
"SmartAR" project, which seems to have solved many of the problems which critics have previously used to discredit the technology - that it is too slow and does not react well to the unsteady devices it is used on.
But it is the start-ups and smaller enterprises that many see as making the big breakthroughs.
One thing that developers are looking to get rid of as quickly as possible is the need to use tablet or mobile devices to see the extra images.
"Ultimately, what we really want is glasses for this kind of thing because there is the problem of swinging a phone around in front of your face," says Sung.
"But a good working pair which doesn't look as though you're trying to assimilate people that people will actually wear is still at least five years away."
The barrier of a screen between the user and the action is seen by many as a problem and, until that changes, critics say that this technology will struggle to engage people.
Photo-realism is seen by many as the next big thing in augmented reality
But when solved, the effects could be magical.
"Imagine shooting zombies coming out of the ground while wearing glasses, it's pretty incredible," says Maxwell.
And away from gaming, rather than just videos and extra information, imagine walking round Trafalgar Square with a 3D depiction of Admiral Nelson you could ask questions to, or watching dramas that take place in specific locations with characters interacting with their surroundings in real-time.
"We need the whole world as a 3D reference," says Jan Schlink from AR firm Metaio.
"In 10 to 15 years, I really think you will be able to walk around the city and have it all augmented. There are already 3D map providers and you could use these and create a model so that entire cities could be referenced."
But perhaps the real challenge will be making the digital and real worlds combine and work together as if it had always been that way. As is often the way with technology, it has only been truly integrated with mass society if no-one notices it.
"What happens in 20 years, that's the ultimate test," says Sung.
"When augmented reality has made it, no-one will talk about it anymore. It will just be there."
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