Speaking on the sidelines at the CEATEC technology conference in Chiba on Friday, Takahito Iguchi made a bold statement: "We will make a new environment."

Iguchi is the CEO of TonchiDot, the company behind Sekai Camera, a much-hyped program that lets users digitally tag and annotate places in the real world. The mixing of computer-generated images and the physical environment is known as augmented reality (AR), and Iguchi is at the forefront of a barrage of mobile AR applications.

But can it live up to the hype? Virtual reality created similar excitement in the 1990s but later fizzled, mostly because it was too expensive to bring to the average user. In stark contrast, AR applications have a decent shot at riding the smart- phone boom to become truly ubiquitous.