IDC: AR/VR headset shipments to surge 88% a year until 2022

Brief:

Augmented and virtual reality (AR/VR) headset sales are forecast to surge at an 88% yearly growth rate until 2022, when they will reach 53.1 million units, per a study by the International Data Corporation (IDC) that looked at standalone and tethered devices. The researcher predicted that sales will jump 31% to 4.2 million units in 2018 from a year earlier.
IDC pushed back its estimates for AR headset growth as smartphone and tablets continue to be the most popular way for people to experience the technology, which overlays digital images on a real background seen through a smartphone or headset. Commercial applications for AR will be the primary driver of headset sales for the next couple of years, while consumer-centric AR apps will focus on smartphones and tablets.
Consumer adoption of AR/VR headsets will start to accelerate as more device makers enter the market and the resulting competition helps to drive down prices, per IDC. Low-cost screenless headsets that need to be physically attached to a smartphone to work will gradually lose market share as sales decline at a 1% annualized rate from 2018 to 2022.

Insight:

IDC's revised forecast for AR/VR headset growth acknowledges that smartphones and tablets are the primary driver of AR technology, and likely will be for the foreseeable future. Since the popularity of Pokémon Go two years ago, mobile apps with AR have increasingly become a way for marketers to engage with mobile-first consumers, with big tech companies like Apple and Google creating software platforms to help developers create them more readily.

While AR headsets are forecast to have a growth rate of 214% a year, with projected sales of 21.6 million in 2022, the sale of AR headsets won’t match the total volume of VR headsets, which are projected to jump from just 4 million this year to more than 31.5 million by 2022. VR adoption, however, will depend on declining prices for headsets that contain their own screens and processors, such as Facebook's Oculus Go, HTC's Vive Pro or Lenovo's Mirage Solo.

AR headset development has been sporadic in the past decade. Search giant Google in 2012 introduced a test version of Google Glass that was criticized for numerous bugs, $1,500 price tag, limited battery life and creepy ability to record people surreptitiously. Google in 2015 ended its Glass Explorer program and last year relaunched the product as Glass Enterprise Edition for workplace uses. Meanwhile, Apple — which this year purchased AR lens startup Akonia Holographics — is said to be developing an AR headset that will come to market as early as 2020 and have its own display and operating system. IDC expects AR headset sales to exceed 1 million a year by 2020, and then dramatically increase as more vendors enter the market.