IDC: VR has suffered from ‘unrealistic expectations’

Virtual reality has suffered from “unrealistic growth expectations” but the market is still expanding at a “reasonable rate”, according to research firm IDC.

The company’s latest ‘Worldwide Quarterly Augmented and Virtual Reality Headset Tracker’ estimates that the the combined virtual reality (VR) and augmented reality (AR) headset market will reach 13.7 million units in 2017.

The market is then expected to increase at a compound annual growth rate of 56.1% to reach 81.2 million units by 2021 – with VR to account for the bulk of unit sales over the forecast period.

VR headsets will account for more than 90% of the combined AR and VR market until 2019, according to IDC. However, between 2020 and 2021 it expects AR headsets to experience “exponential growth” and to capture a quarter of the market by the end of the forecast.

VR headsets will drive a “near-term shift” in computing while AR headsets are poised for long-term growth and will have a “profound impact” on the way that businesses and consumers compute, according to the report.

“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.”

Jitesh Ubrani, senior research analyst for IDC mobile device trackers, said: “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.”

“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.”