CES 2017 Reveals AR/VR Industry has Shifted Its Focus from Hardware to Applications

Estimated reading time: 2 minutes

AR and VR continue to grab attention worldwide and their uses have expanded into tourism, work, warehousing operations and drones, reports TrendForce from CES 2017. The related demonstrations and announcements made at this year’s event have shown that the AR/VR industry as a whole is shifting its focus from hardware development to expanding applications. TrendForce forecasts that the annual global shipments of VR devices will reach 5.1 million units in 2017 and grow to 8.5 million in 2018. Note that the projected figures exclude mobile VR products.

"This year's CES has shown that the novelty surrounding AR and VR has worn off slightly when compared with the level of excitement during last year's event," said Jason Tsai, TrendForce wearable device analyst. "With market entrants seeing limited returns for their efforts, only those companies that are truly committed in this field will keep launching new products and exploring new applications, thereby turning concepts into practical innovations."

Tsai noted that AR has received more attention at the event compared with VR. There were demonstrations of AR smart glasses from brands such as Osterhout Design Group (ODG), Vuzix, Epson and Kopin. Vuzix's products in particular are running on Intel’s chips, while ODG’s smart glasses are equipped with Qualcomm’s latest solution Snapdragon 835.

Looking at VR, this year's CES has shown that technology brands worldwide are still launching and developing new devices. However, the three leading brands Sony, Oculus and HTC are now concentrating mainly on improving the accessories to their devices. As they are not expected to release their next-generation hardware until 2018, the market demand for VR devices is going to cool down a bit this year.

TrendForce's latest VR device shipment projection indicates that around 2.5 million units of PlayStation VR (PS VR) will be shipped worldwide this year. PS VR will therefore make up the largest share in the total annual shipments of 5.1 million units. Also, device shipments of HTC and Oculus for the entire 2017 are estimated to reach 0.6 and 1.2 million units, respectively. Excluding the top three vendors, combined VR device shipments from other brands in 2017 will come to about 0.8 million units. 

Tsai added that this year's CES has also witnessed a further expansion of applications for AR and VR technologies in addition to the usual VR gaming. The AR/VR industry is taking its solutions to areas such as tourism, work, warehousing operations and drones. "Growing these application markets will be critical to the foundation of the industry, as opposed to hardware vendors putting out similar products," Tsai pointed out. 

TrendForce estimates that the combined annual revenue of VR hardware and software markets will hit US$3.4 billion in 2017. Industry participants will need a period to find and develop profitable applications before explosive revenue growth can occur. TrendForce furthermore anticipates that both hardware and software markets will finally start to take off in 2020, when their combined annual revenue is forecast to reach US$22.4 billion.