“Behind the Numbers” is AR Insider’s series that examines strategic takeaways from ARtillery Intelligence data. Each post drills down on one topic or chart. Subscribe for access to the full library and other knowledge-building resources.
AR continues to show early-stage characteristics, including erratic interest and investment. But how big is it, and how big will it get? AR Insider’s research arm ARtillery Intelligence has quantified the revenue position and outlook, resulting in the fourth and latest wave of its AR forecast.
At a high level, the firm projects AR revenues to grow from $1.96 billion last year to $27.4 billion in 2023. That includes lots of moving parts and sub-sectors including consumer, enterprise, hardware, software, advertising and AR commerce enablement (full list of inclusions here).
Drilling Down: AR Hardware
Drilling down into one of those areas, how does AR hardware penetration look? Starting with headsets (mobile explored below), ARtillery Intelligence projects unit sales to grow from 130,000 in 2018 to 2.89 million in 2023. That correlates to an installed base of 5.03 million units by 2023.
This includes both enterprise and consumer, the former leading in early years with 160,000 units sold in 2019. Consumer AR glasses will pull ahead in 2022 with 1.15 million units sold. This will result from improving standards, specs and pricing for consumer-grade smart glasses.
That will be further accelerated by Apple’s market entrance – both through its own AR glasses sales and the halo effect they create on the rest of the market. Much of the above is based on the projection that Apple AR glasses will hit the market in 2022, with a fall 2021 announcement.
Though longstanding rumors indicate 2020, several signals point to a later arrival, including the state of the underlying technology and Apple’s historical market entrance timing. Either way, we believe AR glasses are coming as part of a wearables suite to offset declining iPhone sales.
Mobile AR: Numbers Game
Meanwhile, mobile AR is where scale lies, especially in consumer markets. Given that mobile AR piggybacks on an already-ubiquitous device, it’s the near-term reach play. That will be the case for several more years as AR glasses incth towards the projected outer-year figures above.
Breaking that down, the mobile AR installed base is often cited as “1 billion units.” This is true if counting ARkit and ARcore compatibility. However, an increasingly-fragmented set of mobile AR platforms creates a more complex picture, and a larger installed base than often cited.
Starting at the top, there are 3.39 billion total smartphones on the planet. Those that are AR-compatibile include web AR (2.97 billion), Facebook’s Spark AR (1.6 billion) and Snap’s Lens Studio (190 million). Those are followed by an increasingly fragmented mix of platforms.
But the above figures measure total devices and AR compatibility. The number that matters more is active AR users. That total comes to 334 million, growing to 1.076 billion by 2023. This figure tallies and de-duplicates active users across platforms, except those endemic to China.*
At a high level, ARtillery Intelligence’s position on AR revenue growth is best characterized as cautiously optimistic. Growth and scale will come, but slower than many industry proponents have thought, due partly to pace of adoption and other signals that ARtillery Intelligence tracks.
In fact, you may notice that AR revenue projections in outer years are lower than other figures you may have seen. They’re also lower than ARtillery’s past estimates, as it adjusts to market signals. This is common in market forecasting, as market watchers course-correct to market variables.
Stay tuned for more forecast tidbits and insights over the coming weeks. Meanwhile, find out more about the report methodology or access the entire thing here. There will be lots to unpack as the AR market unfolds and brings us a combination of expected outcomes and surprises.
*Platforms endemic to China aren’t as accessable to companies and consumers outside of China so are measured and analyzed separately. More inclusions and exclusions are spelled out here.
Disclosure: AR Insider 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.