Will AR Supersede VR in Consumer Adoption?

on July 21, 2016
Reading Time: 3 minutes

With all of the interest and hullabaloo around Pokemon Go and its clever use of AR, one has to wonder if AR has superseded VR as “The Next Big Thing” or is it a one hit wonder and VR will continue to be where the real action is when it comes to new and improved user interfaces and immersive user experiences.

If you have read my columns on VR for the last six months, you know that, while I am a big fan of VR, I do not see VR gaining any serious consumer adoption anytime soon. In fact, my prediction is VR will not really enter the mainstream consumer space until at least 2020 at the earliest. I make this prediction based on my years of research on how new technology gets adopted by consumers.

Research shows in most cases, any new technology goes through three distinct stages before it hits the consumer in a big way.

In the first stage, a new technology starts with early adopters. These tend to be the high-end techies who will take the technology, sometimes even in its earliest forms, and try to use it both for its intended purpose as well as to see what other things that technology can do for them. During this period, that technology sort of gets flushed out and starts to find its initial niche.

In the case of VR, the early adopters are using it for high-end gaming and, in the process, this shows off how VR works and cements its early value proposition in the market. This stage could last from one to three years depending on the technology. Also during this stage, competitors start to bring out similar technology and solutions and start to drive prices down by as much as 20-25%.

The second stage takes place when what we call vertical markets jump in. At this stage, the new technology usage by early adopters influences vertical users who try implementing it within their industries. In the case of VR, we are in that stage now as the travel, real estate, entertainment, sports and many other industries play with VR technology and experiment with ways to determine how they can use it to enhance their customer experiences and as a sales, marketing, teaching or learning tool for both internal and external use. This stage lasts for at least two to four years and, during this time, costs come down on average 15%–35% from the prices of the technology when it was introduced to the market. In the case of VR, this is the stage we are in now.

The third stage is when the technology has been flushed out by early adopters and the vertical markets and has been proven to be something that can transcend to a broader consumer market. At this point, prices are down as much as 60-70% from when these new technologies came to market and, more importantly, the market has developed compelling apps and services at a consumer price point that can drive broader consumer adoption. That usually takes place over a two to five year period.

If you total the years of adoption from entry to mass market, it almost always takes place over a 10-15 year period, depending on the value proposition of the technology and the downward pricing that makes it possible for broader adoption. In the case of VR, I believe we are in just the 2nd year of the vertical cycle, which is why I don’t believe we get to the consumer VR cycle until at least 2020 at the earliest.

As for AR, on the whole, we are at the very earliest stage with Microsoft’s HoloLens representing the high-end definition of the AR experience. At the moment, it is getting ready to go through the early adopters stage with gaming being the area that will flush out AR first. That should take at least another year or two before the vertical markets can grasp it and then another four to eight years before AR might hit the mass market.

However, Pokemon Go has thrown a slight curve at this formula in that it has introduced AR to a very broad consumer audience, at least in terms of helping to show this audience an example of AR and its ability to put images on top of any scene or location. It has given them, at the very least, a taste of what AR is about. I suspect that, at least at a simple gaming level, we may see other AR-enhanced games soon that could help AR get more play in consumer markets at this level sooner.

But I believe this three-tiered adoption of new technologies will still apply to AR and ultimately will gain ground at the early adopter stage first, then the vertical markets jump in and then, eventually, a more powerful form of AR that will go well beyond games will be brought to the mass market many years out.

I do not see AR superceding VR in terms of adoption and still believe VR will have the greatest impact on immersive computing experiences first. But AR will not be far behind in providing another rich dimension to user interfaces and eventually, like VR, have a very broad impact in ushering in a new golden era of computing.