Augmented Reality (AR) and Virtual Reality (VR) are markets seeing a strong resurgence. Despite the overwhelming media focus on VR, the real revolution lies in AR. AR overlays information on a user’s natural vision, primarily manifesting as Smart Glasses with pass-through displays and smaller, familiar form factors. The report uncovers deep, granular data on the AR market, with device shipments, installed base, average sale prices (ASPs), and revenues broken down by specific industry verticals. While verticals such as industry, healthcare, and government are driving the most AR growth early on, further opportunities lie in entertainment, gaming, education, transportation, and others. Improvements in technology and reduction in ASPs, though, are required before major growth will be recognized in these areas.
The smart glasses form factor is currently ever-changing, with some notable differences between devices and technology. Many devices are standalone, offering battery, display, processing, sensors, I/O, etc., in one package; some devices favor an external processing and/or battery component to preserve form factor and lower costs. For displays, monocular versus binocular display setup is the most noticeable difference, with binocular setups favoring high-end devices and interactive, three-dimensional content; monocular display devices are cheaper to both manufacture and purchase but offer a more passive experience. Wave guide displays, which allow for thinner optics and device footprints, are growing and will be a major component of consumer-targeted AR thanks to the more appealing and familiar form factor. Some companies to watch for in the smartglasses space include (but are not limited to) Microsoft, Epson, Daqri, Osterhout Design Group (ODG), and Vuzix. Microsoft’s HoloLens is perhaps most well-known, but Daqri (high-end smart helmet), Epson (high manufacturing capabilities), ODG (years of experience in the market), and Vuzix (varied device lineup), all bring their own strengths. Outside of hardware, there are players in input (Atheer has a licensed gesture control platform), IoT (PTC with Vuforia), and mobile AR application development.
For Virtual Reality, Head-mounted displays (HMDs) are driving the market. Tethered devices, like the Oculus Rift, HTC Vive, and Sony’s PSVR, are creating a compelling, high-end space, while mobile-reliant devices, like the Samsung Gear VR and Google Cardboard, are creating more affordable VR opportunities. Standalone devices, which house all necessary components within the device, are more limited due to high processing and battery requirements limited by form factor; these devices will become more prevalent over the next five years and see usage in dedicated, installation-based VR experiences. High-end gaming and content consumption are prime targets for tethered and standalone VR, while low-cost VR experiences open up a wealth of possibilities for gaming and video, education, marketing, retail, and more. These factors make VR a consumer-focused market for now; though, greater exposure and capability will pique interest in enterprise application as well, primarily in simulation and training use cases.
While not at the center of attention, the gaming markets tie in naturally to both AR and VR. Gaming continues to grow at a quickening pace overall, and with it comes shifts in trends, devices, and market share. Consoles will play an important role in the upcoming VR markets, with Sony PSVR leading the charge. Nintendo’s next-generation console is slated for a possible 2016 release and with it, the potential for VR or AR components. Microsoft’s recent interest in a more unified Xbox and PC platform could have interesting ramifications when it comes to VR, with a rich, high-end VR ecosystem growing on PC. Tangential to high-end gaming, the high performance computing and gaming platforms required for premium VR are also seeing use in enterprise VR applications revolving around simulation and training. The potential is there not only for high-end experiences, but also for more accessible VR gaming through Google Cardboard and mobile-focused games. As mobile devices continue to grow in power, OEMs recognize VR as a growth path for their mobile business, and mobile gaming’s impressive footprint continues to grow, the gaming markets and ARVR will have an increasingly synergistic relationship going forward.