Interesting insights on the XR hardware market from Deloitte Digital Reality

Deloitte Digital Insights recently published an article on the XR hardware market analyzing 2019-20 and looking forward to 2021. Here is the link to the full article: “From virtual to reality: Digital reality headsets in enterprise and education TMT Predictions 2021.” Here are some key takeaways from the article.

1. The market for VR, AR, MR will double in 2021 over 2019 levels. We don’t know if it will double, but it will grow. I believe the software market will grow faster than the hardware because of cost and technical hurdles. Hardware will be a shared resource in enterprise applications. 

2. Interesting but not surprising that fewer than 100,000 VR, AR, and MR headsets purchased annually by enterprises and schools from 2015 through 2019. COVID has definitely increased the interest and forced the forward thinking companies to jump headlong into solving pain points XR technologies. There are enough proof points to demonstrate business value. But will it stick as business and life return to the new “normal” ? I believe it will, but there are a range of adoption hurdles that have to be overcome to scale XR into the enterprise.

3. Hardware vendors have pivoted, relaunched, to enterprise. With the clear use cases and spending in product development, training and maintenance this is a better bet than consumer (unless you are Apple or Facebook!)

4. Consumers spent more than $3B on VR in 2019. This is significantly larger compared to enterprise and education spending. Headsets are shared technology/resource. Hardware spend appears to be only a 5th or less of the overall XR project spend. I expect the man power service component to build experiences is the bulk of the cost. A simple PoC experience built on Unity can cost upwards of $20,000. I can only imagine that a larger pilot or production that requires bespoke development can easily cost millions. 

5. Education is poised to become the fastest growing segment. I think it will take longer than projected in k-12. I can imagine my kids using 3D technologies on their laptops, tablets, and phones. But putting on a headset like Oculus Quest or Hololens (forget about the cost) is too cumbersome for daily use. Its cool but not useful enough for broad use. In contrast I believe augmenting technical training one step below the training we see in manufacturing enterprises is a natural fit. Can’t visit a workshop and touch real hardware? Take apart an engine in a virtual workspace, learn from an instructor, and other collaborate with students located anywhere in the world.  

6. XR is here to stay and it will grow. More generally beyond the hardware interfaces, this is a paradigm shift from sharing/collaborating with digital documents to sharing/collaborating in digital reality.

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