Virtual reality, augmented reality markets poised for growth spurt

VR and AR are more than just fun and games -- recent research predicts the adoption of these technologies in multiple industries, including education, healthcare, and travel.

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Virtual reality (VR) and augmented reality (AR) are quickly making their way into the mainstream. Just go to your local shopping mall and you can play around at a VR kiosk. And the AR game Pokémon Go is a smash hit.

But it's not just fun and games. As recent industry research shows, the technologies are being deployed -- or will be soon -- in a variety of industries and for a number of applications.

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VR and AR: The Business Reality

Virtual Reality and Augmented Reality are going to be useful for far more than just gaming. We explore the ways the technology will be used for training, marketing, product design, and much more.

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A September 2016 study by Yeti LLC, a design and development studio that helps customers improve their product development processes, provides an interesting look at the emerging market.

The report, "The State of Virtual Reality - 2016", based on a survey of more than 100 product developers in the US that Yeti conducted in the second and third quarters of 2016, showed that 85 percent of those surveyed said they either already have VR projects underway, or will do so within one to two years.

The majority of the respondents also already have at least one VR-capable developer on staff, but recognize that they are not yet staffed to handle their larger VR-related ambitions.

When asked to identify which primary industries they think VR usage will significantly accelerate in the next two years, a majority of respondents (84 percent) cited entertainment. That's not surprising given the wide use of the technology for gaming purposes.

But education also scored high in terms of VR use (74 percent), as did media (63 percent), medical and healthcare (60 percent), high tech (56 percent), travel (54 percent), arts (52 percent), and real estate (51 percent). Also showing up on the VR radar screen were recreation, consumer goods, manufacturing, construction, service industry, and transportation -- among others.

Worldwide revenues for the AR and VR market, including hardware, software, and services, are expected to reach $162 billion in 2020, according to the Worldwide Semiannual Augmented and Virtual Reality Spending Guide from International Data Corp. (IDC). That's up from $5.2 billion in 2016, representing a compound annual growth rate (CAGR) of 181 percent over the 2015-2020 forecast period.

"For many years augmented and virtual reality were the stuff of science fiction," noted Chris Chute, vice president of customer insights and analysis at IDC. Now, with smartphones powering inexpensive VR headsets, the market is primed for new "content-driven experiences," he said.

Recent developments in the healthcare sector show the powerful impact AR headsets can have, Chute said, and over the next five years IDC expects to see that promise become realized in other sectors such as education, logistics, and manufacturing.

The rise of new, less costly hardware will put VR and AR technology within the reach of growing numbers of companies and individuals, according to Tom Mainelli, vice president, devices and AR/VR at IDC. But what users can do with the hardware will depend on the applications and services that power the products, he said.

In the coming years, IDC expects developers to create a range of new experiences for the devices that will fundamentally change the way many people do their work.

The growth of these technologies will come with their share of challenges. According to the Yeti survey, 40 percent of respondents cited budget challenges for VR projects as a major obstacle in moving VR ahead in their organizations. And despite the enthusiasm for VR that survey respondents demonstrated, 40 percent admitted to having only an average or below average understanding of the VR development process.

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