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Augmented Reality and Virtual Reality Headset Upside

Augmented Reality (AR) and Virtual Reality (VR) continue to gain momentum in the emerging technology marketplace. Dedicated AR and VR headsets are now expected to grow from just under 10 million units in 2016 to about 100 million units in 2021 -- that's a 5-year CAGR of 57.7 percent.

VR headsets have led the device shipment volume to date, according to the latest worldwide market study by International Data Corporation, (IDC). Within that category, screen-less viewers (VR headsets powered by a smartphone), which are the least expensive available form factor, have been leading the charge.

AR and VR Market Development

The second half of 2016 saw an increase in volume from three market leading VR device products - the Sony PlayStation VR, the HTC Vive, and Facebook's Oculus Rift.

The next few months will further advance the VR market as PC vendors introduce tethered headsets and high-end standalone VR headsets also enter the market. With lower hardware requirements on the PC and lower prices on headsets, VR will be more accessible than ever before.

In terms of dedicated devices, AR continues to sit slightly in the background of VR. The reason for this is not that AR is less important, but rather it is harder to achieve.


IDC believes VR headsets will continue to lead in terms of volume throughout the forecast, but maintains that AR in general will have a much bigger impact overall on the industry.

Consumers are very likely to have their first AR experience via a mobile phone or tablet rather than a dedicated headset, and Apple's recent introduction of ARKit further supports this.

IDC belives the large opportunity for dedicated AR headsets exists in the commercial segment. A huge level of interest and investment is happening as we speak around vertical markets such as healthcare, manufacturing, field service workers, and design.

"It is very clear to us that augmented reality is the larger of the two plays here when looking at AR and VR combined,” said Ryan Reith, vice president at IDC. "Companies like Microsoft, Epson, Intel, Meta, ODG, and DAQRI are already providing devices that are being deployed in real-time commercial projects with significant ROI."

Outlook for Industrial Applications

The list goes well beyond that of other companies which have either deployed or are readying for deployment of similar devices. IDC believes that many industrial jobs will fundamentally change because of AR in the next five years, and these are much more opportunistic markets for dedicated AR headsets than within the consumer market.

According to the IDC assessment, commercial shipments will likely account for just over 80 percent of all AR headsets shipped during the next five years.

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