VR and AR device market to reach $1.8bn in 2018

Sales of virtual reality (VR) and augmented reality (AR) devices will reach $1.8 billion (£1.3bn) in 2018, according to a new report from CCS Insight, which predicts 22 million headsets will be sold this year.

Smartphone VR headsets such as the Samsung Galaxy Gear will account for most of the units shifted but the true value lies in dedicated headsets such as the HTC Vive Focus and Microsoft HoloLens, which will contribute two thirds of a $9.9 billion (£7bn) market in 2022.

Indeed, within four years it is anticipated there will be fivefold growth over the next four years with total units sold reaching 121 million.

VR and AR market

“Virtual reality headsets have been the main source of growth in unit sales to date, and we expect this will continue, particularly headsets that use a smartphone,” explained George Jijiashvili, wearables analyst at CCS Insight. “However, we expect stand-alone headsets like the Oculus Go and HTC Vive Focus to ignite a new wave of growth that will help broaden the appeal of virtual reality, particularly with businesses and in education.”

Gaming continues to be the main driver behind sales and this is unlikely to change. It is estimated that 70 percent of those with a dedicated VR headset have purchased games, while more than half with a smartphone VR device have bought games too.

There are attempts within the industry to diversify however, with HTC CEO Cher Wang telling Mobile World Congress (MWC) was to expand use cases into other areas of life, work and entertainment.

"There's a growing array of exciting new content being developed,” said Jijiashvili. “We were encouraged to see in our latest consumer survey that virtual tourism, remote participation in events such as music concerts, and virtual social interactions are all emerging as further uses for virtual reality. Watching video is also proving popular, particularly on smartphone-based headsets".

CCS notes that although AR is generating a lot of interest, there hasn’t been a lot of adoption to date, especially in businesses. It predicts that consumer and enterprise AR devices will develop independently and believes that as businesses move to wider deployments, there could be 1 million enterprise units sold in 2022, alongside 4.5 million consumer devices.

"Given augmented reality is one of the hottest new technology areas in smartphones, it's not surprising that interest is mounting in augmented reality glasses,” concluded Jijiashvili. “Billions of dollars are being invested in this technology and we've seen significant improvements in the size, weight and design of smart glasses over the past 12 months.

“The potential of this technology is clear, but so far most companies are evaluating a few units to see how the technology fits into their operations.

“We're encouraged by the technology developments in smart glasses for consumers. Products such as Intel's Vaunt glasses are a clear signal of the direction these devices are moving in, with a design little different from a pair of standard prescription glasses. It only takes a big company like Apple to jump into the market and we could be looking at market of millions of smart glasses in no time at all.”

Steve McCaskill is TechRadar Pro's resident mobile industry expert, covering all aspects of the UK and global news, from operators to service providers and everything in between. He is a former editor of Silicon UK and journalist with over a decade's experience in the technology industry, writing about technology, in particular, telecoms, mobile and sports tech, sports, video games and media.