Analyst: VR headsets to drive near-term growth

International Data Corporation (IDC) is forecasting the combined augmented reality (AR) and virtual reality (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 per cent. According to new forecast data from the IDC Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, VR headsets will account for more than 90 per cent 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 it’s only a matter of time before Apple’s ARKit- and Google’s 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 category’s 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 we’ll 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.”

Worldwide AR/VR Headsets, Segment Share of Shipments, 2017—2021
Product Category Segment Group 2017 2021
Augmented Reality Commercial 71.1 per cent 82.5 per cent
Consumer 28.9 per cent 17.5 per cent
AR Total 100 per cent 100 per cent
Virtual Reality Commercial 21.8 per cent 27.8 per cent
Consumer 78.2 per cent 72.2 per cent
VR Total 100 per cent 100 per cent

 

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