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AR/VR headset shipments declined in Q1 2023

Global shipments of augmented reality (AR) and virtual reality (VR) headsets slowed significantly in the first quarter of 2023 (1Q23) as macroeconomic conditions worsened and the market cooled compared to the pandemic driven highs seen last year. According to new data from the International Data Corporation (IDC) Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, the overall AR/VR headset market declined 54.4% year over year in 1Q23 with VR headsets representing 96.2% of headsets shipped.

Among the top 5 AR/VR headset makers, Meta continued to lead with 47.8% share although it did lose ground to Sony’s PSVR 2, which captured 35.9% share during the quarter. ByteDance (Pico) managed to grow its share from 4.4% last year to 6.1% this year thanks to new products and new markets. DPVR and HTC rounded out the top 5 with each having less than 2% share.

“Despite the recent downturn, it’s an exciting time for the AR/VR market as new entrants and the next generation of headsets are expected to rollout in the coming weeks and months,” said Jitesh Ubrani, research manager, Mobility and Consumer Device Trackers at IDC. “After Sony reemerging as a major competitor to Meta, all eyes are on Apple, which has yet to announce its headset. Apple’s sizeable installed base of existing products and services will certainly help set the company’s headset apart from other AR/VR vendors though Apple’s share gains will be limited in the near term given the rumored prosumer approach and hefty price tag associated with the headset.”

In addition to new devices from multiple companies, the AR/VR market is still in its critical developmental stages. “It’s amazing to see the new features and functionalities appearing on AR/VR headsets today, and although they may appeal to a select audience initially, these will evolve and eventually gain salience with users,” says Ramon T. Llamas, research director for Mobile Devices and AR/VR at IDC. “Features like eye tracking and environmental sensors, and the potential of AI-powered experiences and software – all of which are in their infancy today – will eventually become more ubiquitous and spur new use cases. Even the AR/VR headsets arriving as early as 2025 will make today’s headsets look quaint.”

While VR headsets (those that occlude a user’s vision) currently dominate the overall market, AR headsets (with see-through or semi-transparent displays) experienced another solid quarter of growth in 1Q23, up 12.6% year over year. The market was driven by simplistic headsets from the likes of Nreal (now Xreal), which act as external displays for connected devices. Meanwhile, more advanced headsets capable of simultaneous location and mapping (SLAM) and 3D object manipulation suffered during the quarter largely due to Microsoft’s struggles.


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