Virtual Reality and Augmented Reality — or VR and AR — are set to see explosive growth over the next five years, according to a new report. And while VR has largely been leading the charge to this point, Apple Inc.’s (NASDAQ:AAPL) recently announced ARKit platform is predicted to help augmented reality to have the biggest overall impact on the industry, and to experience much higher growth rates than virtual reality — both in consumer and commercial applications.
Apple Introduces ARKit, IKEA Is Already Onboard
Virtual reality has had several years to establish itself, led by high-profile products like Facebook Inc.’s (NASDAQ:FB) Oculus Rift headset. There are dozens (if not hundreds) of inexpensive VR headsets on the market now, many of them made of cheap material like cardboard and using a smartphone as the display.
Augmented reality has had a slower start because overlaying virtual objects over top of a live background is more technically challenging. The biggest success in this area to date has been Niantic’s Pokemon Go. However, when AAPL announced ARKit — its new augmented reality platform — at WWDC 2017, it changed the game.
Already, Swedish furniture giant IKEA has signed on to develop an app using ARKit to let customers overlay photo-realistic 3D renders of IKEA products within rooms of their home. By using Apple AR technology, IKEA can use the models it’s already produced for use in its catalogs within the app, saving development time and money while offering customers a futuristic new shopping tool on their iPhone or iPad.
These experiences help to fuel demand for more complex AR requiring use of a headset. Think Microsoft Corporation’s (NASDAQ:MSFT) HoloLens or those rumored Apple AR glasses.
IDC Report Predicts Big VR Growth, Even Larger AR Growth
IDC just released a report predicting that over the next five years, virtual reality and augmented reality will experience massive growth. And while VR will continue to hold a lead over AR, it’s AR that will experience the much larger rate of growth during that time: a 172.9% CAGR in AR headsets to 2021 compared to 48.7% for VR headsets.
According to IDC analysts, “It is very clear to us that augmented reality is the larger of the two plays here when looking at AR and VR combined.” The company points out the importance the new Apple AR technology is expected to play in this equation, pointing out “Consumers are very likely to have their first AR experience via a mobile phone or tablet rather than a dedicated headset, and Apple’s recent introduction of ARKit further supports this.”
Commercial Applications for Augmented Reality
Interestingly, while games like Pokemon Go have been the catalyst for AR’s growing popularity to this point, and consumer apps like IKEA’s will push it further into the mainstream, IDC sees commercial use as really driving augmented reality.
Because the technology overlays information over top of a live view, it’s proving useful in a range of fields including healthcare, design and even manufacturing. IDC thinks commercial products will account for over 80% of all AR headset shipments over the next five years.
AAPL stock is on track to find itself in a good position as a result of augmented reality’s expected growth. With ARKit encouraging developers to release AR-enabled apps for the iPhone and iPad, the company is setting itself up to be the consumer-facing leader in the industry. As the technology grows more popular with consumers, Apple will be able to use its support and leadership to help drive iPhone and iPad sales. And if it follows through with the Apple AR glasses it’s supposedly working on, AAPL will be poised to take advantage of the explosive growth of AR headset sales as well.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
