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Will AR & VR Technologies Live Up to Expectations in 2019?

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Augmented Reality (AR) and Virtual Reality (VR) technologies have progressed remarkably well over the past few years, with hardware options and digital experiences becoming more readily available and affordable to the average person.

However, both AR and VR have failed to live up to expectations in 2018. This is evident from the fact that smartphone VR device sales declined from about 8 million units in 2017 to less than 3 million units in 2018, per ccsinsight.

This was also reflected in IMAX Corporation’s (IMAX - Free Report) decision to wind up its VR pilot program. Per Variety, lack of popular content and differentiated VR experience compared with already available “in-home VR market” offerings resulted in IMAX’s failure.

IMAX Corporation Revenue (TTM)

IMAX Corporation Revenue (TTM) | IMAX Corporation Quote

IMAX’s exit came as a blow to the AR/VR market. However, the adoption of the technologies has gained traction in fields like healthcare, education, defense & military, aviation, advertising, e-commerce, retail to name a few. This is expected to be the key catalyst for the technologies in 2019 and beyond.

Augmented reality and virtual reality is expected to grow from $27 billion in 2018 to $209 billion in 2022, per statista. Additionally, overall AR and VR headset market is expected to reach 65.9 million units by 2022 from 8.9 million units in 2018, per IDC. Per Research&Market.com, AR/VR market is expected to have 1 billion users by 2020.

Tech Leaders Eyeing the AR/VR Space

Tech giants like Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Google, Snap (SNAP - Free Report) , Facebook (FB - Free Report) and Microsoft (MSFT - Free Report) have already ventured into the AR/VR space. Increasing spending on AR/VR solutions is a key catalyst in this regard.

Per IDC’s latest data, global spending on AR/VR is expected to jump 68.8% year over year to nearly $20.4 billion in 2019. The market research firm anticipates $12.1 billion spending in 2018. The strong growth is attracting tech giants. Here we take a brief view of their initiatives in this space.

Apple is definitely the frontrunner in the AR market, courtesy of its ARKit platform and acquisitions. The Zacks Rank #3 (Hold) stock has also been speculated to foray into the wearable AR glasses space by partnering with lens maker Carl Zeiss and its acquisition of Akonia Holographics, a manufacturer of lenses for AR glasses, strengthens this belief.

Apple Inc. Revenue (TTM)

Google’s ARCore lets developers create AR experiences for Android. The feature, which is available in over 100 million Android devices, has been recently introduced with application program interface (APIs).

Facebook, another Zacks Rank #3 stock, recently launched an Ad-supported AR feature in the Messenger app that enabled users to see products they are shopping for. Also, the company unveiled its new VR headset – Quest – a standalone device, which is expected to be available in spring 2019.

Amazon has launched AR View, which enabled customers visualize online products in their living space via their smartphone cameras. This Zacks Rank #3 stock is also using AR/VR technologies in fields like healthcare, autonomous driving and wealth management.

Snap has been a prominent name in the AR market for some time. The company’s Snappables filters allow users to experiment with their appearances. Additionally, in April, Snap launched ShoppableAR lens on its messaging application, Snapchat, which enables advertisers sell products directly through the filters. Snap has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Snap Inc. Revenue (TTM)

Can Mixed Reality Overtake AR/VR?

Microsoft is actually credited with coining the term mixed reality (MR), which allows users to interact with virtual objects in real time. It is soon expected to overtake AR/VR.

MR technology-based Hololens has gained significant adoption among developers. Microsoft recently fortified its presence in the MR space by introducing Dynamics 365 Remote Assist and Dynamics 365 Layout.

Moreover, this Zacks Rank #2 company recently secured a U.S. army contract worth $480 million to enable U.S. army soldiers combat real-life challenging conditions using HoloLens.

Microsoft Corporation Revenue (TTM)

Other Noteworthy Names in AR/VR Space

GoPro (GPRO - Free Report) released its first VR camera, Omni, in 2016 and now also sells Fusion, a 360-degree VR camera. Fusion allows anyone to shoot virtual reality footage. Additionally, Kolor is a GoPro-owned website and software that allows people to create virtual reality content by combining multiple photographs or videos.

Kopin is a leading developer and provider of VR technologies and solutions for military, industrial, and consumer customers. The company’s VR headset called Elf won 2018 CES Innovation Award for being the industry’s smallest headset ever created. Therefore, Kopin is certainly a company to keep an eye on as it drives innovation in VR.

Dreamscape is looking to provide immersive VR experiences to users, a space where IMAX failed. The startup backed by big names including AMC, IMAX, Fox and Warner Bros. will open a VR location in one of Los Angeles’ biggest malls.

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