It wasn’t long ago that virtual reality (VR) and augmented reality (AR) headsets, smartwatches, and voice-controlled homes were the fantasies of books and movies. Today, VR, AR, wearables, and smart home tech have passed the early-adoption phase and are all firmly part of the “mass market,” according to research that the International Data Corporation (IDC) shared today. The global research firm predicted that the combined market will hit $369.6 billion by the end of 2021 and grow to $524.9 billion in 2025.
IDC expects AR and VR combined to show the most growth out of the three categories, thanks to both businesses and individual consumers. The latter is particularly interested in “robust gaming solutions,” IDC said. Businesses represent the bulk of AR spending today, but IDC thinks the market for AR headsets targeting the general public will grow. It predicted a 67.9 percent compound annual growth rate from 2020 to 2025 for AR and VR combined, which is more than 10 times the next competitor, smart home tech (10.1 percent growth rate).
Smart home tech will represent the most valuable market, however, with a predicted 2025 value of over $400.3 billion. The biggest sellers will reportedly be smart TVs, streaming players, and other “networked entertainment devices,” which are expected to represent $229 billion in 2025.
According to Adam Wright, senior research analyst for IDC’s Smart Home and Office Devices team, smart home and office tech will be driven by services more than hardware features and reliability.
“The breadth, depth, uniqueness, and quality of data sets will increasingly determine the value potential of a smart home vendor, and as device margins are pressured, the role of devices will largely be relegated to vehicles for service delivery,” Wright said in a statement accompanying today’s announcement.
Earwear and smartwatches, meanwhile, are expected to be drivers of the wearables market during this five-year time period. IDC thinks the wearables space will see the slowest growth rate among the three categories, despite being valued higher than the AR and VR market in both 2021 and 2025.
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