Market Overview

Strategy Analytics: Augmented Reality is Taking Off, but Dedicated AR Headsets Remain Grounded


Consumer AR Remains Smartphone-based, Enterprise Use Drives Dedicated AR

Consumers are becoming accustomed to Augmented Reality technology on
their smartphones through apps such as Snapchat and Pokémon GO. Yet AR
headsets such as Google Glass and Microsoft HoloLens remain a niche
product with sales barely into the hundreds of thousands of units.
Strategy Analytics' latest reports on AR,
AR Devices - Market and Outlook
and Dedicated
AR Device Forecast by Device Type 2013-2023
, examine the
factors which will drive growth and consumer uptake in the AR headset

Report author David MacQueen said, "2013 and the launch of Google Glass
really kickstarted the dedicated AR device market. Although the device
was not a commercial success, the potential of AR became clear and the
hype around it saw Google, Apple, Microsoft and other major players make
serious investments in the AR field. 5 years on, and much of that
technology has found its way onto smartphones, while dedicated AR
headsets have remained a niche product.

"The major factor holding back the market for dedicated AR devices today
is simply the cost of the hardware. In a typical enterprise deployment,
this is not a major issue as the hardware itself is a relatively small
part of the cost. The consumer market is much more price sensitive, and
this is amply demonstrated by the relative success of the low cost $200
Lenovo slot-in Mirage AR headset, which drove the market to new heights
in 2017. Despite the product instantly becoming the top selling AR
headset of all time, it only moved the needle slightly, increasing total
shipments from the tens of thousands of units to the hundreds of

The report found that slot-in AR devices account for the majority of
shipments and users today, but binocular AR units (such as HoloLens)
will become increasingly important as the market evolves toward devices
which offer higher quality experiences. Strategy Analytics expects total
shipments to reach just under 10 million units globally by 2023, but
with further growth projected beyond that as ASPs continue to decline to
more consumer-friendly levels.

David Kerr, Executive Vice President, added, "AR is suited to a wide
variety of use cases, and could conceivably be used to augment almost
any category of application or service. As well as adding richness to
existing services, it also opens up possibilities for entirely new apps
and services. So despite a slow start, the potential upside is huge. But
for the market to grow significantly, it is consumer (rather than
enterprise) which must drive volumes.

"Key consumer use cases including gaming, marketing, and search require
a device capable of delivering rich 3D graphics. The successful devices
in the consumer market should be lower cost than, yet similar in
functionality to, current cutting edge technology. To drive the price
down to a consumer-friendly price point for an AR device with a
stereoscopic 3D view, it is likely that some of the functionality (and
therefore component cost) will be shifted to a smartphone. Strategy
Analytics believes that smartphone OEMs are the most likely contenders
to succeed in the longer term."

About Strategy Analytics

Strategy Analytics, Inc. provides the competitive edge with advisory
services, consulting and actionable market intelligence for emerging
technology, mobile and wireless, digital consumer and automotive
electronics companies. With offices in North America, Europe and Asia,
Strategy Analytics delivers insights for enterprise success.

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