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Like many analyst firms, market sizing is one of the ongoing practices of AR Insider’s research arm ARtillery Intelligence. A few times per year, it goes into isolation and buries itself deep in financial modeling. One such exercise recently examined the full spatial spectrum.
By that, we mean the main tentpoles of XR: mobile AR, headworn AR, and VR. These each get their own standalone forecasts, but are also assembled together once per year for a holistic view. We don’t do market sizing around the m-word because, well, it doesn’t exist yet.
So what did this forecast uncover? At a high level, global XR revenue is projected to grow from $15.7 billion in 2021 to $73.1 billion in 2026. This steep growth is driven by the collective revenue generation around several markets, and the projected outer-year inflections in headworn AR.
Drilling down, our latest Behind the Numbers installment looks at the forecast’s outlook for XR-driven enterprise productivity. How much is spent on hardware (e.g., AR headsets) and software (e.g., interactive guidance)? These are leading categories due to a strong business case.
Addressable Market
Jumping right in, spending on enterprise XR productivity is projected to grow from $6.5 billion in 2021 to $35.1 billion in 2026. This includes live guided support in industrial settings (e.g., assembly, maintenance) and collaboration in corporate settings (e.g., design, training).
These functions cut across several verticals and functions, which creates a sizeable addressable market. Boosting the market size further, these spending totals include both hardware* and software, as well as AR and VR. These modalities map to different use cases.
For example, the majority of spending happens in VR ($4.78 billion in 2023), followed by mobile AR ($4.18 billion in 2023) and headworn AR ($2.62 billion in 2023). VR leads because of its deployment and proven value enterprise AR’s leading use case: immersive training.
As for mobile versus headworn AR, the former leads because it piggybacks on an installed base of 3 billion+ global smartphones. Enterprises are also more comfortable with the mobile form factor. However, headworn AR offers greater benefits and will take the lead in spending over time.
*Hardware spending includes VR and headworn AR but not Mobile AR. The latter happens on existing smartphones whose AR deployment is secondary or non-exclusive.
Patterns of Inertia
Sticking with the theme of enterprise comfort levels, this is a big gating factor. Like many technologies, XR faces organizational resistance to change. But it continues to demonstrate a strong business case that will eventually overpower those common patterns of inertia.
As this happens, adoption could follow similar steps as enterprise smartphone adoption a decade ago, including a tipping point, followed by accelerated adoption. This is a historical sequence that could play out, though on a smaller scale due to XR’s cost and complexity.
Meanwhile, an adoption accelerant looms: the economy. XR lets companies be more effective with less headcount using things like remote support in assembly and maintenance. This has already gotten the chance to shine, given the remote work needs of the Covid era.
Speaking of macro factors, retiring baby boomers cause a skills gap, which XR helps fill. It does this by placeshifting subject matter experts (e.g., remote support) while transferring institutional knowledge through immersive training. That need is evident again in the “great resignation.”
We’ll pause there and circle back in the next behind-the-numbers installment with more numbers and narratives.
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