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There's nowhere to go but up in the market for augmented reality and virtual reality (AP/VR) solutions, according to the latest forecast from International Data Corporation (IDC).
The technology analyst group expects the market to expand at a dizzying compound annual growth rate (CAGR) of 181.3 percent between 2015 and 2020. In effect, after generating an expected $5.2 billion in revenues this year, AR and VR companies will sell more than $162 billion in hardware, software and services by the end of the forecast period.
What's fueling this growth? Essentially, technology is finally catching up to science fiction, said Chris Chute, vice president of IDC Customer Insights and Analysis.
"Now with powerful smartphones powering inexpensive VR headsets, the consumer market is primed for new paid and user generated content-driven experiences," Chute said in a statement. "Recent developments in healthcare demonstrated the powerful impact augmented reality headsets can have at the industry level, and over the next five years we expect to see that promise become realized in other fields like education, logistics, and manufacturing."
AR/VR hardware will account for more than half of all sales. Software will also start off strong, but IDC expect services to pull ahead in 2017 and 2018 as enterprise demand picks up.
This year and next, VR systems, software and accompanying services will outsell their AR counterparts. By 2017, AR revenues will jump as businesses, particularly healthcare companies and product design firms flock to the technology, said IDC.
Unlike VR systems, which deposit users into all-encompassing 3D virtual environments, AR systems "augment" physical reality by overlaying computer-generated images onto the physical world. Typically, this is accomplished by projecting digital content onto a transparent visor or eyewear. Smartphone AR apps, like this Google Translate and summer's smash hit, Pokémon Go, use a device's cameras to layer computer graphics atop real-time footage of a user's surroundings.
Regardless of the tech involved, prices for both VR and AR solutions are falling fast.
"The rise of new, less expensive hardware will put virtual and augmented reality technology within the grasp of a growing numbers of companies and individuals. But, as always, what people can do with that hardware will depend upon the applications and services that power it," remarked Tom Mainelli, vice president of IDC Devices and AR/VR, in a statement.
In the workplace, CIOs can expect AR/VR to influence their technology buying decisions. "In the coming years, we expect developers to create a wide range of new experiences for these devices that will fundamentally change the way many of us do work," Mainelli added.
Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.