VR Hardware Market to Reach $2.3 Billion in 2016

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The year 2016 is shaping up to become the year virtual reality enters the mainstream.

This year, International Data Corporation (IDC) predicts that the market for virtual- and augmented-reality (VR and AR) hardware will reach $2.3 billion. It’s a category that includes both full-featured headsets and so-called “screenless viewers” like Samsung’s Gear VR that require a smartphone to provide 3D visuals.

“In 2016, the first major VR Tethered HMDs [head-mounted displays] from Oculus, HTC, and Sony should drive combined shipments of over 2 million units,” said Tom Mainelli, vice president of IDC Devices and Displays, in a statement. “When you combine this with robust shipments of screenless viewers from Samsung and other vendors launching later this year, you start to see the beginning of a reasonable installed base for content creators to target.”

In total, vendors will ship 10 million VR and AR devices this year, the vast majority of which fall into the VR column, according to IDC’s forecast. The analyst group expects shipments of AR hardware, like Microsoft’s HoloLens, to reach 400,000 units versus 9.6 million VR devices in 2016.

As it turns out, AR is tougher to bring to market than VR. “While development kits from players such as Microsoft, Meta, and others point to a strong future in AR hardware, these devices are dramatically harder to produce than VR products,” said Mainelli.

virtual reality, augmented reality

Arguing that getting it “right is more important than doing it fast,” he said his firm advises taking a cautious and disciplined approach to developing AR hardware that may profoundly change how users interact with technology and perform their jobs.

Eventually, AR will narrow the gap, IDC predicts. By 2020, VR and AR shipments will total 64.8 million and 45.6 million units respectively, each growing at a compound annual growth rate (CAGR) of more than 180 percent during the intervening years.

In the short term, gamers are the ones that will get the VR ball rolling, said Lewis Ward, research director at IDC Gaming.

“Video games will clearly be the lead rationale for people to pick up an Oculus Rift, HTC Vive, or PlayStation VR this year. While there have been some launch window hardware shipment hiccups that must be addressed near-term, I’m confident that they will be ironed out before the holiday season,” said Ward in a statement.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.