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Augmented Reality/Virtual Reality headset demand expected to rebound, says IDC

Worldwide shipments for augmented reality (AR) and virtual reality (VR) headsets will grow to 68.9 million units in 2022 with a five-year compound annual growth rate (CAGR) of 52.5%, according to the latest forecast from IDC’s worldwide quarterly augmented and virtual reality headset tracker.

Despite the weakness the market experienced in 2017, IDC says it anticipates a return to growth in 2018 with total combined AR/VR volumes reaching 12.4 million units, marking a year-over-year increase of 48.5% as new vendors, new use cases, and new business models emerge.

The worldwide AR/VR headset market retreated in 2017 primarily due to a decline in shipments of screenless VR viewers, according to IDC. Previous champions of this form factor stopped bundling these headsets with smartphones and consumers have shown little interest in purchasing such headsets separately.

While the screenless VR category is waning, Lenovo’s successful fourth quarter launch of the Jedi Challenges Mirage headset—a screenless viewer for AR—showed the form factor may still have legs if paired with the right content. Other new product launches during the quarter included the first Windows Mixed Reality VR tethered headsets with entries from Acer, ASUS, Dell, Fujitsu, HP, Lenovo, and Samsung.

Looking ahead, IDC also expects the VR headset market to rebound in 2018 as new devices such as Facebook’s Oculus Go, HTC’s Vive Pro, and Lenovo’s Mirage Solo ship into the market with new capabilities and new price points. Meanwhile, with the exception of screenless viewers, AR headsets are likely to remain largely commercially focused until later in the forecast due to the technology’s high cost and complexity, says IDC.

Category Highlights

Augmented Reality head-mounted displays will see market-beating growth over the next five years as standalone and tethered devices grow to account for more than 97% of the market by 2022. IDC expects AR screenless viewers, the overall market leader in 2017, to peak in 2019 as standalone and tethered products become more widely available at lower price points. The rise of screenless viewers geared toward consumers tilted shipment volumes away from commercial viewers in 2017 and that’s likely to continue in 2018; by 2019 the segment will shift back toward more commercial shipments.

Virtual Reality head-mounted displays will see a shift in product mix. Screenless viewers, once the overall leader, will see share erode quickly over time. Meanwhile, standalone and tethered devices – in the minority in 2017 – will comprise 85.7% of total shipments by 2022. Consumers will account for a majority of headset shipments throughout the forecast, but commercial users will slowly occupy a larger share, growing to nearly equal status in 2022.

[Image courtesy: Dell]

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