After a VR-free year from Apple, VR headsets deemed "the biggest loser" of 2016
Apple has been attacked throughout the year for failing to jump on the Virtual Reality headset bandwagon following Facebook, Samsung, Google, HTC, Microsoft, Sony and others. Yet after a year of hype, VR headsets remain a niche that's failing to live up to even conservative expectations.
However, a variety of research firms are now reporting much slower VR sales than expected--due to both limited content and high hardware costs.
Further, the fragmented market split between higher end PC and console-based headsets (including Oculus Rift and Sony's PlayStation VR, below) and various lower end smartphone-based headsets (including offering by HTC, Samsung and Google) has resulted in a dearth of compelling content for any particular ecosystem.
An article by Monica Chen and Joseph Tsai for Digitimes stated that the virtual and augmented reality "market was originally expected to pick up strongly in 2016, but demand for related applications has been weakening recently."
The emergence of new flavors of VR in 2017, including Asustek's ZenFone AR based on Google Tango and Acer's VR HMD based on Windows Holographics, has "some market watchers are concerned that the VR/AR ecosystem may not be mature enough to contribute much to the players," the article noted.
SuperData said that only 750 thousand PSVR units have shipped, explaining that "notably fewer units sold than expected due to a relatively fragmented title line-up and modest marketing effort." The research firm stated that VR is "the biggest loser" of the season.
Facebook's Oculus Rift is expected to only sell 335,000 units this year, while cheaper smartphone-based VR headsets such as HTC's Vive, Google Daydream and Samsung's Gear VR are not doing much better.
Google's effort to standardize VR for Android with Daydream has only shipped about a quarter million units, nearly half the number it was estimated to achieve, while even Samsung's heavily promoted Gear VR has failed to sell (or give away) more than 2.3 million units across 2016.
Contrast that with Apple's own peripheral for its late modeled iPhones: Apple Watch, which has sold by millions each quarter, profitably, at prices from $300 to more than $1,000, while creating demand for fashionable bands, drawing attention to Apple Pay and attracting sports enthusiasts to Apple's ecosystem.
Even if Samsung had shipped each Gear VR at full retail price, its total sales would only amount to a quarter billion in revenue. Apple Watch has contributed billions of dollars in high-margin reviews for Apple each quarter. That hasn't stopped industry wags from portraying Apple Watch as a "failure" while remaining giddy about the hyped potential of Gear VR.
Another similarity between the emerging market for VR headsets and smartwatches is that various industry players--lead by the same firms, including Samsung and joined by Google and Microsoft and their various licensees--also raced to market watches that saw minimal interest from consumers.
However, immediately after launching Apple Watch it took majority market share among smartwatches, trouncing years-old efforts by Samsung Gear and Android Wear, neither of which remain very relevant today.
In September, Cook said in an interview with ABC News, "there's virtual reality and there's augmented reality -- both of these are incredibly interesting, but my own view is that augmented reality is the larger of the two, probably by far."
In October, Cook again touted the benefits of AR over VR, stating "There's no substitute for human contact, and so you want the technology to encourage that."
As with the smartwatch, Apple has repeatedly arrived to market with offerings that were years behind the unfinished, inferior products of its competitors, using new technologies and a fresh approach to addressing users' needs and desires.
Apple's iPod was a substantially better music player; iPhone was a vast advancement over the status quo of smartphones, and iPad crushed existing tablets and has never been bested since by any other tablet maker. That bodes well for Apple's next leap into the AR/VR market, particularly given the poor sales and apathetic response current VR headsets are experiencing.
Wheels come off the VR hype wagon
Apple's "failure" to deliver a VR headset product this year has been the subject of many handwringing articles from analysts and journalists expressing concern for the company given the exciting future promised by VR.However, a variety of research firms are now reporting much slower VR sales than expected--due to both limited content and high hardware costs.
Further, the fragmented market split between higher end PC and console-based headsets (including Oculus Rift and Sony's PlayStation VR, below) and various lower end smartphone-based headsets (including offering by HTC, Samsung and Google) has resulted in a dearth of compelling content for any particular ecosystem.
An article by Monica Chen and Joseph Tsai for Digitimes stated that the virtual and augmented reality "market was originally expected to pick up strongly in 2016, but demand for related applications has been weakening recently."
The emergence of new flavors of VR in 2017, including Asustek's ZenFone AR based on Google Tango and Acer's VR HMD based on Windows Holographics, has "some market watchers are concerned that the VR/AR ecosystem may not be mature enough to contribute much to the players," the article noted.
VR Fail Sales
A report by James Brightman for Games Industry Biz, citing sales figures from SuperData, indicated that while premium gaming consoles such as Sony's PlayStation 4 were selling well due to aggressive promotions (recently having reached sales of 50 million units, across three years), Sony's $399 PSVR offering fell far short of its estimated forecast of 2.6 million units.SuperData said that only 750 thousand PSVR units have shipped, explaining that "notably fewer units sold than expected due to a relatively fragmented title line-up and modest marketing effort." The research firm stated that VR is "the biggest loser" of the season.
VR is "the biggest loser" of the season - SuperData
Facebook's Oculus Rift is expected to only sell 335,000 units this year, while cheaper smartphone-based VR headsets such as HTC's Vive, Google Daydream and Samsung's Gear VR are not doing much better.
Google's effort to standardize VR for Android with Daydream has only shipped about a quarter million units, nearly half the number it was estimated to achieve, while even Samsung's heavily promoted Gear VR has failed to sell (or give away) more than 2.3 million units across 2016.
VR vs Apple Watch
Samsung's Gear VR is low end, $100 headset peripheral that requires a premium Samsung phone (such as a Galaxy S6, S7 or Note 5). As a vehicle for drawing interest to Samsung's high end, it has clearly failed.Contrast that with Apple's own peripheral for its late modeled iPhones: Apple Watch, which has sold by millions each quarter, profitably, at prices from $300 to more than $1,000, while creating demand for fashionable bands, drawing attention to Apple Pay and attracting sports enthusiasts to Apple's ecosystem.
Even if Samsung had shipped each Gear VR at full retail price, its total sales would only amount to a quarter billion in revenue. Apple Watch has contributed billions of dollars in high-margin reviews for Apple each quarter. That hasn't stopped industry wags from portraying Apple Watch as a "failure" while remaining giddy about the hyped potential of Gear VR.
Another similarity between the emerging market for VR headsets and smartwatches is that various industry players--lead by the same firms, including Samsung and joined by Google and Microsoft and their various licensees--also raced to market watches that saw minimal interest from consumers.
However, immediately after launching Apple Watch it took majority market share among smartwatches, trouncing years-old efforts by Samsung Gear and Android Wear, neither of which remain very relevant today.
Apple sees AR as a bigger opportunity
In August, Apple's chief executive Tim Cook told the Washington Post that he thought augmented reality was "extremely interesting and sort of a core technology."In September, Cook said in an interview with ABC News, "there's virtual reality and there's augmented reality -- both of these are incredibly interesting, but my own view is that augmented reality is the larger of the two, probably by far."
In October, Cook again touted the benefits of AR over VR, stating "There's no substitute for human contact, and so you want the technology to encourage that."
As with the smartwatch, Apple has repeatedly arrived to market with offerings that were years behind the unfinished, inferior products of its competitors, using new technologies and a fresh approach to addressing users' needs and desires.
Apple's iPod was a substantially better music player; iPhone was a vast advancement over the status quo of smartphones, and iPad crushed existing tablets and has never been bested since by any other tablet maker. That bodes well for Apple's next leap into the AR/VR market, particularly given the poor sales and apathetic response current VR headsets are experiencing.
Comments
AR, on the other hand has been adopted by millions of users already (pokemon go).
There is no VR unless you introduce your very self into the scene. That requires an untethered headset and a body kit.
VR is something you might do in your bathroom (if you were sad enough) but in public, it's all of the downside of Google Glass on steroids.
AR - indications of interesting/important events close-by - has much more appeal, utility (and class).
I can’t believe it! A positive statement about Apple. I also recall the CEO of Oculus blathering on about how he wouldn’t be developing for the Mac until it had “decent” specs. What a difference a year makes.
Products exist, but they're ugly and awkward. Apple is developing a sleeker alternative that will transform the category.
I'll just wait for the Holodecks.
My biggest tip to people is to give it a try and see for yourself. It'll open your mind to what the future has in store.
2016 was the first year that consumer PC VR headsets came out. To me VR / AR in 2016 feels like 1995-2000 when the first serious consumer 3D GPUs were coming on to the PC market. It has taken around 20 years to go from S3 ViRGE to an Nvidia GTX 1080, in that time the industry matured and 3D content and applications (from 3D games to supercomputer simulations) became very compelling.
Nowadays you can't buy any PC/Mac, or even smartphone, without some form of 3D GPU in it.
In my opinion the current state of Oculus Rift and HTC/Valve Vive on PC hardware is already good enough, and it will build rapidly forward. The real challenge is producing compelling content and making it more affordable. But all emerging technologies started out this way.
Recently Khronos (the people behind OpenGL and Vulkan) have started the formation of an industry VR consortium (https://www.khronos.org/vr/). Just think about that, VR in 2016 is like consumer 3D GPUs in 1995 when well supported consumer industry wide API weren't even around (we now have mature OpenGL/Vulkan and Direct X support in the two major GPU companies)!
Notably both Apple and Microsoft are currently missing in the Khronos group, it is an indication of the strategy of both these companies.
Basically it's too early to tell whether VR will be a niche or the next computing platform, the next couple of years will create a clearer picture. Right now I'm just marvelling at where the technology is at. In 2012, the original KickStarter supporter for Oculus started and four years on we have the first commercial units selling in the hundreds of thousands. By 2020 it'll be really clear where things are at, and Apple will probably jump in at this stage.
One correction on the AppleInsider post:
"Facebook's Oculus Rift is expected to only sell 335,000 units this year, while cheaper smartphone-based VR headsets such as HTC's Vive, Google Daydream and Samsung's Gear VR are not doing much better. "
Last I heard the HTC Vive was not a smartphone-based VR headset.
As an owner of the PSVR, let me just say that I'm completely blown away by it, especially considering that it's a first-gen product. I've had several experiences where my jaw was figuratively on the floor with what I was seeing. Not all the software out there is equally impressive, there are definitely some duds and half-baked demos, but the ones that work well are really, truly amazing.
I tried a couple passive demos at first where you can only look around, but once I played the Batman game where I could grab Batarangs from my utility belt with the Move controllers and wave/rotate them in front of my face and interact with the environment, I finally got it — it's the future of gaming, and going back to a 2D experience on the TV felt like a second-class experience IMHO. I can totally imagine how much more amazing it'll get with a wider field of view, higher resolution, etc, but again — amazing for a first-gen console add-on product.
It's not something you can figure out by watching a video online or having someone describe it to you, you have to experience it for yourself. That, I would imagine, is going to be the biggest uphill battle in selling a lot of these things.
You have obviously not used this technology. The reason you wear the headset is so you can move and look around in a fully three dimensional environment. This is not the same as moving a controller and watching your view pan around on a TV in front of your eyes. A good example is an interactive "film" type thing on a miniature stage with claymation type characters I was watching, where you could literally peer around a corner to see another character walking down a street that you couldn't see before. Or walking toward an object and looking down into an opening in the top of a ship to see the characters doing stuff inside of it, as if the object is right in front of your chest. By moving your head, and your feet (to a limited degree). Or in a 3D world where you're standing in an alley, and you can look up and crane your head to peer around a fire escape, or around a corner to spot an enemy. It "feels" like you can reach out and literally touch things in front of you. As I said in my previous posts, trying to describe it is difficult. Trust me, it's nothing like your 2D flat screen.
Edit: maybe you're focusing on the tethered aspect of it, but it's not that big of a deal. Nobody is going to set up a full walk-around multi-camera setup in their living room. The PSVR limits you to probably the average amount of space that most people have in front of their TV/living room area. Move controllers give you wireless dual hand controllers, some software just uses the DualShock controllers which is better suited to some types of games, etc.
Just another faddish gimmick that may or may not ever become mainstream.
And that Samsung (?) commercial doesn't help one bit.
You've seen it. It shows a guy pawing at the air while wearing a headset.
If you don't even attempt to show the wondrous vista he sees, you've completely failed to sell the product.
You're just making it look like vaporware.