Extended Reality Gets into Gear
Minor decline in 2020 just a bump in the road to solid growth
Minor decline in 2020 just a bump in the road to solid growth
Disrupted supplies in the first half of 2020 and economic weakness in the second hurt the market for extended reality devices, but consumer excitement about new products and strong interest from enterprises are paving the way for solid adoption of these devices in the future. These are the main messages from our latest forecast for virtual and augmented reality (VR and AR) devices.
The forecast projects shipments to fall 1% in 2020 to 7.2 million units, but to grow strongly over the next four years to reach 55 million units in 2024, as shown in the chart below.
It’s worth pointing out that an almost flat market is a good result in this extraordinary year. To put things in perspective, the largest consumer electronics category in the world, mobile phones, will fall by 15% in 2020.
Sales of VR and AR devices, to both consumers and enterprises, would have been higher if some of the main players had been able to ramp up production faster. For example, Facebook suffered shortages of the original Oculus Quest earlier in the year, and in the autumn we saw huge numbers of pre-orders for the attractively priced Oculus Quest 2. This demand shows the potential of standalone VR headsets, which will form half of all sales of extended reality devices in 2024.
The market has also faced other obstacles in 2020. The launch of the new Xbox Series X and Series S and the new PlayStation 5 meant that many gaming enthusiasts directed their Christmas spending toward a new console rather than a VR headset. We expect VR devices that attach to a PC or games console will become a niche part of the market.
However, recent announcements by Qualcomm at its Snapdragon Tech Summit confirm our view that affordable VR and AR devices that connect to a smartphone are a growth segment (see Instant Insight: Qualcomm Snapdragon Tech Summit 2020). We expect that telecom operators will become an important part of the distribution network for extended reality devices, especially as they seek to position VR and AR headsets as accessories to pair with 5G-capable smartphones.
Meanwhile, the enterprise market saw a significant rise in demand for extended reality devices and services in 2020. In fact, this year the technology got a golden opportunity to finally make the step from promise to reality in enterprises and educational institutions. Sales of extended reality headsets to the enterprise are expected to swell almost 2.5 times in 2020 to reach 650,000 devices. These products are most often used to provide business continuity in scenarios related to remote field service, manufacturing, product demonstration, training and other areas.
It’s fair to say that in 2020, extended reality companies grew in the enterprise space as much as their production and distribution reach allowed them. Epson, Google, RealWear and Vuzix are among the companies that have benefited from a focus on the enterprise market, thanks to their established distribution and relationships with different industry sectors. Demand for extended reality in enterprises and education is expected to remain strong and more than double again in 2021, despite difficult economic conditions, reaching 8.2 million devices by 2024.
In addition to these positive indicators for the extended reality industry, we’ve spotted signals that support our prediction that consumer AR glasses will emerge as an important category by 2023, including products from major consumer brands like Samsung, Facebook and Apple. This nascent market, comprising just 50,000 devices in 2020, has the potential to reach 9 million units by 2024, should new lightweight stylish devices grab the attention of technology enthusiasts in the next few years.
More details of CCS Insight’s extensive VR and AR research service can be found at www.ccsinsight.com/research-areas/virtual-and-augmented-reality
Make sure you don’t miss out on our fresh insights on topical news in the connected world.
This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.
OKLearn moreWe may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.
Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.
These cookies are strictly necessary to provide you with services available through our website and to use some of its features.
Because these cookies are strictly necessary to deliver the website, refuseing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.
We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.
We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.
We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.
Google Webfont Settings:
Google Map Settings:
Google reCaptcha Settings:
Vimeo and Youtube video embeds:
Leave a Reply
Want to join the discussion?Feel free to contribute!