Shipments of AR and VR headsets expected to grow at 58%

A report from the Israeli website The Verifier says the upcoming “iPhone 8” will include an iPad Pro-like smart connector that may be the link up for augmented reality (AR) and virtual reality headsets. The article adds that the smart connector will also be used for charging, sort of like MagSafe for the iPhone. 

Personally, I’m dubious, but, if the rumor is true, the timing might be good. Augmented Reality (AR) and Virtual Reality (VR) continue to gain momentum in the mainstream tech media. According to recent forecast data from the International Data Corporation, (IDC) Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, dedicated AR and VR headsets collectively are expected to grow at a strong pace from just under 10 million units in 2016 to just shy of 100 million units in 2021, with a five-year compound annual growth rate of 57.7%.

VR headsets have led much of the device volume to date. Within that category, screenless viewers (VR headsets powered by a smartphone), which are the cheapest available form factor, have been leading the charge. The second half of 2016 saw a ramp up in volume from three highly publicized market leading VR device products: the Sony PlayStation VR, the HTC Vive, and Facebook's Oculus Rift.

“The next six to 18 months will further stimulate the VR market as PC vendors, along with Microsoft, introduce tethered headsets and high-end standalone VR headsets also enter the market,” says Jitesh Ubrani senior research analyst for IDC Mobile Device Trackers. “With lower hardware requirements on the PC and lower prices on headsets, VR will be more accessible than ever before. And the introduction of additional motion tracking and hand tracking will help further blur the line between digital and physical reality.”

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

The research group 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. Introduced at the recent Worldwide Developer Conference, it allows developers to tap into the latest computer vision technologies to build detailed virtual content on top of real-world scenes for interactive gaming, immersive shopping experiences, industrial design and more.

IDC believes 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. Supporting this is a wide range of products, some of which are commercially available, but most are from non-household names.

"It is very clear to us that augmented reality is the larger of the two plays here when looking at AR and VR combined," says Ryan Reith, program vice president with IDC's Worldwide Quarterly Mobile Device Trackers. “We believe 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 the consumer market. We expect commercial shipments to account for just over 80% of all AR headsets shipped in the next five years."