AR and VR headsets nosedive in Q1

Shipments of augmented and virtual reality headsets have plummeted year-on-year across the first quarter, according to statistics from IDC, as telcos unbundle the kit from premium contracts and handsets.

Despite the poor performance in the first quarter, down 30.5% year-on-year, totalling 1.2 million units, IDC does forecast the segment to return to growth for the remainder of 2018 as more vendors target the commercial AR and VR markets and low-cost standalone VR headsets such as the Oculus Go make their way into stores. The team estimate sales will increase to 8.9 million units in 2018, up 6%, with growth continuing upwards to 65.9 million by 2022.

“On the VR front, devices such as the Oculus Go seem promising not because Facebook has solved all the issues surrounding VR, but rather because they are helping to set customer expectations for VR headsets in the future,” said Jitesh Ubrani of IDC. “Looking ahead, consumers can expect easier-to-use devices at lower price points. Combine that with a growing line-up of content from game makers, Hollywood studios, and even vocational training institutions, and we see a brighter future for the adoption of virtual reality.”

Although bundling has become unpopular for the telcos, it is worth noting the importance of such sales models. Smartphone penetration was incredibly rapid in comparison to other technological breakthroughs, partly because consumers have more disposable income, but also bundling made the process of purchasing a device simpler and more cost effective. It normalised the product, before consumers become more savvy shoppers, exploring data only tariffs and separate purchases of devices. Telcos might not like bundling devices into contracts, but it is a very important factor in the progression of the data and digital economy, and aiding the market penetration of new devices.

Augmented reality is going to be the poster child of the segment for the immediate future, it is far more accessible, though it shouldn’t be too long before virtual reality starts making waves. IDC forecasts virtual reality headsets to grow from 8.1 million in 2018 to 39.2 million by the end of 2022, believing the commercial market to be equally important and predicts it will grow from 24% of VR headset shipments in 2018 to 44.6% by 2022.

AR and VR has certainly been making progress over the last 12 months, admittedly quite slowly, hopefully Q1 is simply a blip in the progress.