Giulia Carosella (Research Analyst)

With companies continuing to enter and leave the Augmented and Virtual Reality (ARVR) space, one of the biggest questions for the industry is whether these technologies are going to be a boom or a bust.

According to IDC’s European Vertical Markets Survey, industries in Europe are now more familiar with AR/VR technologies, with technology adoption increasing from 7% last year to 15% this year. Actually, 2019 is expected to be a turning point for AR/VR adoption in Europe. With Microsoft releasing HoloLens 2 and hype around Magic Leap and 5G, 2019 will be a pivotal year for the technology.

The Two Sides of the “Reality” Coin

So, what is the difference between AR and VR? While AR overlays digital content onto a user’s view of the real world, VR immerses the user into a completely virtual world.

From a technology perspective, while VR requires a headset to be placed on users’ eyes, either screenless viewer, device, or head-mounted display, AR can use some devices such as headsets, smartphones, and tablets.

Apart from gaming apps, retailers are looking into AR apps for smartphones to improve customer experience (CX) and keep clients engaged. Nike, for example, is using AR apps to sell limited-edition items to customers.

Well, it’s not only a matter of definition: AR and VR also have different market dynamics. According to IDC’s Worldwide Semiannual Augmented and Virtual Reality Spending Guide, in 2018 VR accounted for 80% of the European AR/VR market of about €850 million. Yet, strong spending growth is expected for AR technology, which is forecast to take over the market by 2021.

Looking at the major industries served by the technologies, VR is used mainly in the consumer market, which accounted for more than 70% of total European VR spending in 2018. The main gaming products that dominate the market include: PlayStation VR, HTC Vive, and Oculus Rift.

Virtual Reality uptake in business applications is more limited, despite use cases such as training, product design and development, and business collaboration.

Augmented Reality technology is an exception in the devices market, being business rather than consumer driven. AR glasses from providers such as Vuzix, Realwear, DAQRI, and Epson have gained a foothold in the market, being lightweight, comfortable, and affordable. AR in enterprise enables workers to be more productive and to work more efficiently and safely. DHL, for example, has implemented an AR solution to provide workers with picking instructions, and Volkswagen is using AR for indoor navigation at some of its factories.

AR also enables knowledge transfer, helping companies to train new employees and retain the knowledge of longer-term employees. The top industries for AR applications include manufacturing, transportation, and construction, where AR is used in assembly, maintenance, and repair.


The Journey Ahead

The VR market has grown steadily in recent years. The focus now is on developing business opportunities and finding new business cases, particularly in client-facing applications, improving resolution (eye-tracking features, for example) and user experience through more comfortable devices and enhanced interfaces.

AR will continue to expand in the commercial market, where the focus will be on platforms and tools for software development to reap the benefits of low-hanging-fruit use cases.

Some trends and other emerging technologies will play a role in the evolution of the AR/VR market:

  • 5G technologies will play a fundamental role in AR/VR market evolution. The promise of cheaper, more stable connections and lower network latency is a basic need for better VR resolution and AR/VR cloud workloads.
  • An augmented workforce will be a key driver of AR/VR enterprise adoption. Enabling hands-free field service operations, retaining employee knowledge, and empowering immersive training and collaboration to augment employees’ capabilities, productivity, and experience will continue to push AR/VR in business applications.
  • Customer experience will be another major driver of commercial investments in these technologies. AR/VR enables organizations to attract and engage clients and offer more meaningful experiences, injecting more content and more fun into the customer journey.

The next few years will be key to understanding AR/VR technology evolution and assessing whether these technologies have the potential to move to the next level of market maturity. Synergies with other technologies and taking advantage of emerging trends and new market opportunities will be crucial to make AR/VR a viable business over the long haul.


If you want to learn more or have any questions, please contact Giulia Carosella or head over to

You may also like: