VR headsets for now, but AR headsets look the long term bet

International Data Corporation (IDC) is forecasting the combined AR and VR headset market to reach 13.7 million units in 2017, growing to 81.2 million units by 2021 with a compound annual growth rate (CAGR) of 56.1%. According to new forecast data from the IDC Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, VR headsets will account for more than 90% of the market until 2019 while AR will account for the rest.

In the final two years of forecast (2020 2021) IDC expects AR headsets to experience

exponential growth as they capture a quarter of the market by the end of the forecast.

AR headset shipments today are a fraction of where we expect them to be in the next five years, both in terms of volume and functionality, said Jitesh Ubrani senior research analyst for IDC Mobile Device Trackers. AR headsets are also on track to account for over $30 billion in revenue by 2021, almost twice that of VR, as most of the AR headsets will carry much higher average selling prices with earlier adopters being the commercial segment. Meanwhile, most consumers will experience AR on mobile devices, although its only a matter of time before Apples ARKit- and Googles ARCore-enabled apps make their way into consumer grade headsets.

While AR headsets are poised for long-term growth along with a profound impact on the way businesses and consumers compute, VR headsets will drive a near-term shift in computing. Recent price reductions across all the major platforms, plus new entrants appearing in the next month, should drive growth in the second half of 2017 and will help to offset a slow start to the year. Screenless viewers such as the Gear VR will continue to maintain a majority share throughout the forecast, although the categorys share will continue to decline as lower-priced tethered head-mounted displays (HMDs) gain share over the course of the next two years. Meanwhile, IDC is predicting that standalone HMDs will gain share in the outer years of the forecast.

Virtual reality has suffered from some unrealistic growth expectations in 2017, but overall the market is still growing at a reasonable rate and new products from Microsoft and its partners should help drive additional interest in the final quarter of this year, said Tom Mainelli, vice president, Devices and AR/VR at IDC, As we head into 2018 well see additional new products appearing, including standalone headsets from major players, and we expect to see a growing number of companies embracing the technology to enable new business processes and training opportunities.

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