The IT sector tends to thrive on hype cycles. Technologies typically appear and gain mainstream attention, exciting the imaginations of potential customers. Then, they fail to deliver, and instead disappoint, but many of them are often later resurrected by an audience with more realistic expectations and better technical capabilities.
Virtual reality is no different. Now, though, after several false starts, experts believe it is coming of age — and bringing new opportunities for business customers.
Virtual reality first captured the public’s imagination in the early 1990s, when various arcade games and consumer hardware products hit the market, along with books and movies promoting the concept. The technology failed to deliver back then, but now, a quarter of a century later, we finally have the computing power to make it work.
Sony, HTC and Facebook-owned Oculus are among companies selling headsets of varying quality, and Google is working on its own reference design. Other companies are focusing on augmented reality, which superimposes computerized images over real-world video. Microsoft has its Hololens device, while Google-backed Magic Leap is enlisting content developers for its own technology.
We know that virtual reality will be driven largely by video games as it approaches mainstream adoption. Oculus already anticipates 100 VR games shipping this year, a fifth of which it will develop in-house. However, in its report on these immersive technologies, Goldman Sachs believes the balance may shift over time as commercial applications take hold.
Projecting out to 2025, the company sees 40 per cent of VR and AR revenue being driven by commercial and public sector customers, as opposed to consumers. That represents a sizeable chunk of a hardware and software market that Goldman Sachs values at US$80 billion. This is the mid-range estimate from the bank, based on 125 million hardware unit shipments that year. A more optimistic ‘accelerated uptake’ estimate suggests more than 300,000 unit shipments.
Goldman Sachs’ researchers anticipate several use cases outside video games and entertainment where it could bring real value to the enterprise:
Healthcare. Outside the video game market, healthcare is the most lucrative potential market for VR and AR, according to the bank, which pinpoints the technology as a tool to help doctors in medical procedures and day-to-day tasks. Virtual doctor visits could also be an option, it said, as could the use of virtual reality for physical therapy and the treatment of phobias. People are already experimenting with the latter.
Engineering. This is perhaps one of the most obvious use cases for VR and AR, with its potential to disrupt computer-aided design. Automotive manufacturers already use this technology, but lower costs will allow others to exploit it too.
These use cases beat out live event coverage and video entertainment, which are next in line by potential market size. Other markets, not far behind, still carry billions in potential revenues.
Real estate. For years, real estate companies have experimented with 360° video, accessible by the browser. Now, higher-end firms such as Sothebys are experimenting with virtual reality as a way to show luxury homes. As VR encroaches into this market, it represents a US$2.6 billion opportunity, according to Goldman Sachs.
Retail. Whatever retailers can do to impress customers and improve their buying experience will be appealing in this highly competitive market, where image is everything. Some early adopters are already dabbling. Lowes is developing ‘holorooms’ that will help customers to visualize their remodelling projects:
Others are also exploring the technology to boost sales. Eyewear firm Tom’s shows trips to Colombia on its VR headsets, where customers can see the firm donate shoes to children there. Outdoor-adventure clothing firm North Face treats customers to outdoor adventure videos, although both of these might be categorized as marketing initiatives rather than sales aids.
Education. The education market may be niche, and studies should still be done about the effect of VR on children, but nevertheless the opportunities are there. Companies such as Unimersiv are experimenting with virtual reality material to immerse students in learning situations. Entrepreneur Michael Bodekaer has also demonstrated the creation of virtual laboratories in the classroom. As VR applications for learning become more sophisticated, Goldman Sachs anticipates a US$700 million market for education in 2025 under its base case scenario.
Virtual reality’s time is finally here, and while augmented reality may have some tougher technical challenges, it is also showing promise. Thanks to these immersive technologies, the enterprise of tomorrow could look very different than it does today.
The trick will be to find targeted applications with a solid return on investment rather than on consigning VR and AR to the gimmick ghetto. That will take some 360° vision.
Image courtesy of Free Digital Photos