2024 will be a big year for AR/VR, but mainstream adoption will lag

The augmented/virtual reality (AR/VR) market is already buzzing with announcement of several products during last week’s Consumer Electronics Show (CES).

While adoption of so-called XR technologies (a term used to cover augmented, mixed and virtual reality) remains at an early stage, hardware vendors continue to push toward mainstream acceptance by businesses and consumers. At CES, that meant the unveiling of new mixed-reality headsets, smartglasses, and a Qualcomm processor that promises to power a new generation of hardware later this year.

“Announcements at CES and in general in this space will help spur the market and innovation required to create a comprehensive ecosystem, which will help the industry evolve (and increase adoption),” said Tuong Nguyen, director analyst at Gartner.

After a backlash against the metaverse and related technologies in recent years, the mood appears to have shifted, starting with the first unveiling last summer of Apple’s Vision Pro. (The headset will be available for pre-order on Friday and hits stores on Feb. 2.) In addition, Meta’s Quest 3 headset and Ray-Ban smartglasses have garnered largely positive reviews, reigniting public interest in virtual- and mixed- reality devices.

That follows a tough 2023 for the market: device shipments declined 8.3% to 8.1 million devices — a small number relative to the money invested in product development, according to a recent report from IDC. However a sales rebound is predicted during 2024, IDC analysts say, up 46% compared to last year.

“We’re still very far from mainstream adoption,” said Nguyen, with low single-digit percentage adoption for VR and AR headsets currently. Addressing hardware limitations is just one part of the puzzle here. The challenge for progress towards early majority (let alone mainstream) is the underlying ecosystem of content, services and applications.”

The good news for the industry, he said, is that the devices now coming to market can “spur interest and innovation” in the wider ecosystem. “In turn, this helps the industry evolve,” Nguyen said.

Apple sets a date for Vision Pro

The biggest AR/VR announcements during CES were not at the event itself. Though Apple announced the release date for its long-awaited Vision Pro in the US, no such date has been set for other countries. The device is expected to come to a handful of other markets, including the UK and Canada, later in the year.

“By far, the most significant announcement in recent months is Apple’s Vision Pro announcement,” said Nguyen. “Apple’s validation of the market has and will continue to usher in competitors as well as other critical providers to the ecosystem that needs to establish and grow to make AR and VR HMDs [head-mounted displays] successful.”

With a $3,499 price tag, the Vision Pro isn’t aimed at mass audience; IDC analysts are predicting around 200,000 unit sales this year, with business customers likely to be the primary audience at first. Another analyst expects Apple will quickly sell out of a first run of around 60,000 to 80,000 devices, according to a CNBC report last week.

The hype generated by Apple’s arrival in the market will have a spillover effect on consumer interest in spatial computing — Apple’s term for mixed reality technology — more broadly.

“Apple’s entry into spatial computing has catalyzed the market, giving the competition a target to hit — or avoid,” said Avi Greengart, president and lead analyst at Techsponential. 

“No one has announced a directly comparable product coming to market this year, but some are clearly in development. Other companies are deliberately choosing different development paths or market niches to avoid taking on Apple directly.”

Sony unveils unnamed device for 3D content creation

Until now, Sony’s VR ambitions have centered on gaming, but that’s going to change in 2024. At CES, the company announced plans to target business users with a still-unnamed mixed–reality device aimed at the creation of 3D content and collaboration between professionals in fields such as entertainment and engineering. It also announced a partnership with Siemens to develop industrial AR/VR services.

Sony

The standalone headset features a 4K OLED display and video passthrough similar to what’s offered by Meta’s Quest 3 and the Vision Pro. The Sony device also relies on two controllers to interact with 3D objects in virtual environments: a pointer and ring controller for manipulation of 3D objects while retaining access to a physical keyboard. 

The device will launch later in 2024, Sony said. 

According to ZDnet — which offered initial impressions of the headset comparing it to the Vision Pro and Varjo’s XR-4 — Sony’s device won’t come as a standalone device; it will be sold instead as a package with Siemens NX Immersive Designer software (also announced at CES).

Latest Qualcomm XR chip points to upcoming Samsung headset launch

Also noteworthy: the Sony headset will use the latest Qualcomm chipset aimed at virtual-and mixed-reality hardware; the Snapdragon XR2+ Gen 2. Qualcomm officially unveiled the processor, which it says will enable the next generation of headsets, the week before CES.

Key improvements include support for high-resolution displays of up to 4.3k pixels per eye (up from 3k with the XR2 Gen 2 chip); support for 12 concurrent cameras (two more than its predecessor); and 12 millisecond latency in full-color passthrough, a key feature for mixed-reality devices. Those improvements put Qualcomm’s specs roughly in line with the Vision Pro, CCS Insight analyst Leo Gebbie said in a recent blog post, and offers a glimpse of what to expect from the Snapdragon XR2+ Gen 2 later this year. 

Qualcomm’s chip is also likely to power a new headset in the works from Samsung, part of a joint effort withGoogle to create a mixed -eality platform. Those plans, announced in early 2023, were apparently put on hold after Apple’s Vision Pro announcement. 

“[T]he announcement that Samsung is building with Snapdragon XR2+ Gen 2 implies that we’re going to see a powerful standalone headset from the company when the time for launch comes. That timing remains a mystery, although late 2024 seems like the most likely window,” said Gebbie. 

Unknown at this stage is pricing for devices running the new Qualcomm chipset, but there’s a strong possibility they could arrive in a lower price bracket, he said.

Smartglasses get vendor push at CES

Several augmented-reality smartglasses were on display at CES, including Xreal’s Air 2 Ultra and TCL’s RayNeo X2 Lite, he said.

Priced at $699, the Air 2 Ultra glasses are aimed primarily at developers, but will be available to consumers when they launch in March.

Xreal

The Wayfarer-style titanium glasses weigh 80g, offering a lightweight alternative to heavier headsets. The Air 2 Ultra lets users view digital objects (including a large virtual monitor, for example) overlaid on the real world, as well as spatial videos created on iPhones. There are drawbacks to the small form-factor, however, as, unlike the Vision Pro and Quest 3, the Xreal Air 2 Ultra must be tethered to a smartphone, laptop, or PC via a USB-C cable.

The Air 2 Ultra launch creates a “good, better, best” set of products for the biggest supplier of AR headsets in the market, said Anshel Sag, principal analyst at Moor Insights and Strategy. Even though most of its products are 3-DoF (degrees of freedom – an indication of the number of rotational axes), he said, the Air 2 Ultrasignals the company’s return to 6-DoF – having ditched the feature since the the Nreal Light, launched in 2019.

“[Xreal] sees a market there and can entice customers to upgrade to 6-DoF from its more affordable product,” Sag said. (Xreal was known earlier as Nreal.)

“Xreal started with simple wearable displays, and is now building out the computing capabilities,” said Greengart. “The field of view is somewhat limited and the software ecosystem needs to be built out, but the hand tracking worked and the image quality in my demo was excellent.”

IDC

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