Giulia Carosella (Senior Research Analyst, European Digital Transformation Practice)

Augmented and Virtual Reality is a disruptive technology that has the potential to truly change and empower the way in which humans interact with their surrounding environment. There is a lot of buzz around AR/VR, understanding is now widespread across Western Europe, with 99% of companies having already heard of AR/VR, as confirmed by the IDC European Vertical Markets Survey 2017.  The technology is rapidly moving beyond its early stage providing interesting opportunities and new scenarios for forward-looking companies across industries. Whether it’s in museums to enhance visitors’ experience or to improve site design and management for architectural companies this technology can help businesses to become agile and take a step forward along their digital transformation journey.

Three questions are cluttering the mind of AR/VR vendors.

Who is going to win the AR vs VR battle?

Simply stated the difference between AR and VR is that while with AR digital content is added to physical, real world environment either through a wearable or a mobile device, VR immerses the user in a completely digital world by placing viewers over the users’ eyes. According to the latest release of the Worldwide Semiannual Augmented and Virtual Reality Spending Guide, currently the maturity of the VR ecosystem (including hardware, software and services) spending is higher, with VR technology capturing about the 80% of the total ARVR market. Nevertheless, AR technology will grow at a fastest pace, with a 127% 2017-2022 CAGR it is expected to overcome VR spending in 2020.

Which place will have European industries?

There are no doubts that the largest slice of the AR/VR market is captured by the consumer market with top applications lying the gaming space. However, it is in the commercial space, that most potential of AR/VR is still untapped.  Among the commercial industries with the highest ARVR spending for 2017 there is manufacturing, both discrete and process. Adoption in these industries is driven by use cases such as product development, industrial maintenance and training and it will particularly evident in those subindustries where there is high cost per part, high precision required and there is opportunity for large scale.  Examples of these subindustries are automotive and aerospace. Companies such as Ford and Volvo are already using VR for improving design process and customer visualization. Among the industries expected to grow more there is retail, with a 159% 2017-2022 CAGR. For retail ARVR growth will be customer-centric, driven by the need to amplify customer experience along the omni-channel digital transformation path.

Which use cases are to be watched?

The largest AR use cases in terms of spending are industrial maintenance and logistics & package delivery management. In the first case AR can provide access to historical and real time operational data of assets and infrastructures to improve maintenance, repair and operations (MRO) workflows. The second application relates to the transport/logistics industry where AR can be used to provide drivers with critical package, routing and customer information to improve performance metrics. Within the VR ecosystem the largest use case is training, a cross verticals use case, which relates to the use of VR for creating virtual environment to train employees on different topics leveraging the learning-by-doing approach.  It is particularly suited for training around physical objects such as tools, equipment and materials.  For example, in the oil & gas industry, Baker Hughes, a GE company (BHGE) has adopted VR solutions for training programs that leverage 3D simulation to reproduce a “digital twin” of a tool, equipment or site. Another interesting and fast-growing use case is retail showcasing (both online and offline), where AR or VR can be used in physical locations or online to enrich shoppers’ experience allowing them to envision, customize, try and purchase products.  The fashion retailer ASOS has recently announced that they started experimenting with AR to show how products will look like on different body shapes allowing customers to make better decision having a clearer idea of how items will suit them in real life.

In a nutshell, the ARVR ecosystem is subject to continuous changes as quality in technology improves and new players and use cases come to the market. In such a scenario, vendors need to provide guidance for unlocking the commercial potential of ARVR by leveraging success stories. End users need case studies and a clear vision of how these technologies can help offer better services and products. Furthermore, a complex ecosystem such as ARVR where there are different technologies still under development and a number of specialized partners, partnerships are key to cover all the aspects of the ecosystem and provide comprehensive solutions.

If you would like to know more on successful case studies and meet visionary players in the market join me at the 3rd Annual VR World Conference 2018, hosted in London on 22nd and 23rd May. I will be there moderating the panel “Can VR Make Us Feel More?” investing the role of VR in influencing human feelings and behaviors and its related applications.

For more information on IDC’ s ARVR Market research check the latest Worldwide Semiannual Augmented and Virtual Reality Spending Guide.