A common battle cry in the wake of Apple’s June ARkit’s unveiling was that it creates the world’s largest AR developer platform overnight — compatible with hundreds of millions of existing iPhones.

Since then, lots of numbers have been thrown around casually. So to quantify ARkit’s addressable market, we calculated the installed base of compatible iPhones. The verdict: there are 381M devices active today, a half billion projected by the end of 2017 and about 850M by 2020.

This doesn’t include iPads, which we’ve projected to total 32M compatible units in the wild by the end of the year. AR’s use case on the iPad could be narrower based on less range of motion, portability and optics; but we’ll certainly see some apps enhanced by a bigger screen.

See the chart below for more, and we’re in the process of devising a more comprehensive forecast report (our market-sizing credentials can be seen here). Meanwhile, here’s a high level glimpse at the reasoning and methodology behind the iPhone unit calculations:

— iOS devices compatible with ARkit include those with A9 chips or greater, which includes iPhone 6s or greater, iPad Pro and the 2017 iPad.

— Sticking with iPhone for now, that includes devices sold after September 2015, representing sales starting in Apple’s Q1 2016 (due to the orientation of its fiscal calendar).

— The replacement cycle for iPhones is 2.5 years, meaning the installed base at any given time roughly equates to the cumulative unit sales over the previous 10 quarters, plus a portion of sales going back four additional quarters (considering second-hand market).

— ARkit’s current addressable market includes cumulative unit sales of iPhones going back to October 2015, totaling 380M units, or 49 percent of the total iPhone installed base.

— By the end of the year, we project that to grow to 505 million units — roughly 65 percent of the total iPhone installed base at the time — driven mostly by holiday quarter sales that tend to move 75M+ units. This year will be amplified by new design and the novelty of AR-centric hardware.

— By the end of 2018, replacement cycles will wipe out all but about 50 million non-ARkit-compatible phones in active use.

— Moving towards 2020, almost all 850M iPhones we project as an installed base will be ARkit compatible, considering a very small portion of activated devices that are more than 4 years old at the time.

None of this alters the qualitative rhetoric around ARkit’s sizeable impact in accelerating mobile AR… but it hopefully helps quantify it. Stay tuned for more data, commentary, and a longer report that fleshes out these and other forecast numbers around ARkit (including iPad).

See our market-sizing credentials here, and subscribe to ARtillry Intelligence reports here.

Disclosure: ARtillry has no financial stake in the companies mentioned in this post, nor received payment for its production. Disclosure and ethics policy can be seen here.

Header image credit: Apple

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