VR/AR development forecast: Mobile AR market value reached $83 billion in 2021.

"VR will become a trend, AR will be more prosperous, but it takes longer." When we said this two years ago, we may feel too bold, but today, we can only sigh, The person who said this was too wise. With the gradual formation of AR and VR markets, our views on them have also changed.

By 2021, mobile AR will be the main driving force of the VR/AR market worth US$108 billion (when the performance is strong, it is expected to reach US$122 billion, and the performance is expected to be US$94 billion), and it will be madly priced at 83 billion US dollars. VR is 25 billion US dollars.

2016 Review

We begin with unpleasant. Facebook and HTC have experienced pain during the release of their products, either expecting shipments to be overly optimistic or order cancellations; Oculus was not equipped with a Touch control handle; users need to spend an additional $199 on purchases; Samsung Galaxy Note 7 in the "full blast", watched his mobile VR ambition was bombed (Gear VR is designed to be compatible with this flagship phone at the beginning of the design); the worst is Magic Leap, This venture company, which had previously raised $1.4 billion, has been repeatedly questioned by both inside and outside the industry, claiming that it has no such advanced technology as legend.

Delivered a turnaround in the 2016 VR/AR market when Nintendo’s Pokémon GO was launched.

Even Nintendo itself has never expected Pokémon GO to become a popular explosion. In the first three months after its launch, the game injected $600 million in revenue for the AR market, which surpassed that of other VR products for the entire year. Although Pokémon GO's success has its time and location factors, it will undoubtedly provide reference for other companies' mobile AR development strategies.

In the second half of the year, Sony released PlayStation VR; Google launched Daydream View mobile VR heads and controls, and the first mobile AR Tango for mobile phones. Surprisingly, Snapchat is not far behind and launched Spectacles. Although it is not a true AR product, it does make fashion smart glasses.

However, a little success has not allowed the market to go on the desired track. In early 2016, industry insiders estimated that VR/AR products will receive revenues of US$4.4 billion (VR$3.8 billion, AR$600 million), but the final VR market is only US$2.7 billion. AR market, thanks to the contribution of Pokémon GO, AR was surprised to receive $ 1.2 billion in revenue, and the final two markets accumulated revenue of $ 3.9 billion.

Although the revenue and expectations are somewhat different, the 2016 VR/AR market can be reshaped and the future development momentum will be even more rapid.

Mobile VR will continue to be the primary direction explored by major companies. However, after Samsung broke the world, mobile VR could have broken its springboard. Mobile VR is still the mainstream, but its brewing time is longer.

Sony's PlayStation VR and Microsoft's upcoming Windows 10 VR are expected to become the main force for VR demand. Both products are affordable (below 400 US dollars), and performance can meet the requirements of the average enthusiast. Microsoft's product advantages are relatively obvious. Under the price of 299 US dollars, Windoors 10 VR may change the face of the industry. More importantly, it does not require a brand new computer to support it. It is a real consumer product.

Facebook and HTC's product prices and platform requirements are high (about $ 1,500, including the platform), under the oppression of Sony and Microsoft, its market may be limited to a small number of professionals. Although the VR/AR industry is crowded with giants, there are no effective products and no one can guarantee that they will not be eliminated.

Development dilemma

In the evaluation of Pokémon GO, Apple CEO Tim Cook said, "Apple is very optimistic about the long-term development of AR, we will continue to invest in it. AR is an industry with unlimited potential." Google CEO Sundar Pichai, Facebook CEO Mark Zuckerberg and Microsoft's Satya Nadella also praised Pokémon GO as the first shot of success for AR.

In the process of popularization with mass consumers, AR needs to overcome the following five difficulties:

1. Revolutionary equipment (such as Apple's quality products)

2. Strong endurance

3. Mobile internet

4. Applied ecosystem

5. Cross-subsidization of telecommunications

At present, people in the industry have taken the revolutionary equipment as the highlight, but in fact, the other two problems are more worthy of attention.

First of all, without strong endurance, users must carry battery packs or prepare spare batteries. Therefore, excellent AR glasses can not satisfy users (enterprise users may be able to adapt, but ordinary consumers must not). This is a very important issue. Second, the shabby ecosystem is not enough to support developers to build high-quality AR applications. However, before the market is further upgraded, companies are not motivated to build a sound ecosystem. This is like the technology industry's “chicken and eggs. problem". So how do these giants deal with this problem with Apple, Google, Facebook and Microsoft?

If AR can be popularized among mass consumers in the short term, Mobile VR may be able to overcome the five major problems mentioned above. In this regard, Mark Zuckerberg thinks this way: "As AR function becomes mainstream, the mobile phone will replace the glasses worn on the head to become the mainstream platform."

At present, only mobile phones have solved the four major problems of AR mass consumption: strong endurance, mobile connectivity, application ecosystem, and cross-subsidization of telecommunications. At the time of reading this article, you are likely to use an iPhone or Samsung mobile phone. These phones are undoubtedly great technical inventions, but they are not yet equipped with sensors and software that support AR content.

Pokémon GO allows us to see the future potential of mobile AR (though the industry may not say so). The real first step toward mobile AR is Google's Tango AR mobile phone, which is jointly launched with Lenovo. Although this device is far from the level of "revolutionary product," it has given Apple, Samsung, and other companies a clear direction, allowing innovation and development to regenerate in the increasingly declining smartphone market.

Next, the AR's secret weapon appeared: equipment updates.

Buying a new phone is all right

The mobile phone market in most developed countries has approached saturation, and mobile phone sales can only come from the upgrading of consumers. However, consumers usually change their mobile phones every 2-3 years, which makes Apple, Samsung and other companies a headache.

In the last 10 years of lasting glory, Apple finally ushered in the iPhone sales and revenue decline. Samsung executives also said: "Even if the market stagnates, we can guarantee basic profits, but the premise is that we can not make mistakes." Shortly after the words, Galaxy Note 7 was blown. Smart phones are a mature market and urgently need innovation to support development.

At this point, it is not difficult for us to understand why Apple will buy Metaio, and there are speculations that this team will secretly study a project inside Apple. At the same time, Samsung's Sung-Hoon Hong also publicly talked about the company's "light field engine" can produce "very, very real" holographic images, as if "can touch the same"; Sung added that AR's business development potential More than VR. Qushu's Seshu Madhavapeddy said that their flagship processors can support mobile ARs, which are not only compact but also power-efficient.

Neither Apple nor Samsung have specifically disclosed their mobile AR plans, but we estimate that the two companies will likely launch AR-enabled handsets in 2018, and other mainstream handset makers will follow suit or follow suit. However, we cannot rule out the possibility that the two companies will release products in 2017. If the iPhone 7s and the Galaxy S8 are the same standard phones as before, then the iPhone 8 and the Galaxy S9 in the next year will be able to usher in an upsurge of popular AR consumption.

The advantage of this method is that consumers do not use extra efforts, and they can change their phones. If all goes well, AR mobile phones will become a new bright spot to promote the growth of the mobile market. Imagine having a mobile phone leading to the magic world. Who wants a smart phone?

Where did my smart glasses go?

However, what is the real AR child smart glasses?

In 2017, you can buy new smart glasses from ODG and Meta, but AR glasses will not solve the above five big problems until 2019. Leading companies in the smart glasses industry are still concerned with enterprise-level products and a few professionals. Before they can find alternative products for battery packs and build a sound ecosystem, smart eyewear companies will not be able to devote much effort to mass consumer products. In the next few years, independent glasses manufacturers may create a high-end market, separated from AR mobile phones.

As an inevitable branch of mobile AR development, Apple and Samsung may also enter the smart glasses industry in the future. At the same time, Google, Facebook, Snapchat and China's Internet giants (Baidu, Alibaba, Tencent) will also make a difference in this area.

What's next?

The development of the VR/AR market is colorful and diverse. Next, let's take a look at what the giant companies are doing. First of all, their actions are different. Facebook may have really invested in this industry. They first bought Oculus at a price of 2 billion U.S. dollars, and then continued to inject at least 500 million U.S. dollars. In the future, Facebook is likely to create two VR social platforms. Oculus's computer-side VR department is expensive and therefore only for professionals. It may not be able to match Facebook's final size. Facebook can keep the department as a testbed for high-end products to promote the development of mobile VR/AR; it can also be independent or sold directly like Google treats Niantic.

Apple may be the most advantageous of all companies to develop mobile AR. Whether it is an end-to-end ecosystem of software, an application store, developers, or retail, Apple is daring to be the first in the industry. This company has always been full of vitality, not to mention Tim Cook had previously publicly expressed his interest in AR technology. With just a few sensors and the integration of Metaio's software, Apple can make a big move. Based on the above, we predict that Apple will launch AR/VR-related products this year. For Apple users, the marginal cost and the like need not be calculated. Anyway, the new iPhone comes out and they always have to buy it. Cultivating an application ecosystem and developer ecosystem is Apple's own advantage, so in the long run, edge products such as smart glasses are likely to be the company's next step.

Samsung has maintained a leading position in the mobile VR industry so far, although the Galaxy Note 7 has been blasted again and again. However, Samsung does not have a complete mobile VR application store, and its Gear VR is running on Facebook's system. Like Apple, edge products such as AR smart glasses are also likely to become Samsung's next step in mobile AR.

Microsoft's VR products are highly configurable and expensive, and its Satya Nadella division is focused on Hololens AR and mixed reality technology in the corporate market. In the next few years, the mass market will not be the main direction of Microsoft.

In the aftermath of Glass's tragic failure, Google changed its style of past and began to try everything in the AR/VR field. For example, Carboard is a relatively low-end, but practical VR product; the company's Tango is currently at the forefront of mobile AR technology development.

On the other hand, the competition between Apple and Google on VR/AR is essentially the struggle between iOS and Android. Apple's end-to-end mobile AR ecosystem is huge and profitable; Google uses its open VR/AR ecosystem to drive advertising, and the two companies have their own rewards.

However, what will happen to AR/VR startups (now including Snapchat) this year? Please wait and see.

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