Is Augmented Reality The ‘Fourth Wave’ Of Computing?

AR/VR technology has seen plenty of hype. But a Digi-Capital report declares a coming revolution, with a forecast of $120 billion in revenue from the technology by 2020.

Virtual reality has been a hot topic for months, but Digi-Capital has put a numerical figure on the hype: The company’s Augmented/Virtual Reality report forecasts that the technology is set to disrupt mobile by 2020, bringing in $120 billion in revenue.

“Consumer computing platform changes aren’t straight lines, they’re waves,” said Tim Merel, founder and CEO at Digi-Capital. “PC, internet, and mobile were the first three waves, and each was faster, larger, and more disruptive than the last. Now the fourth wave of virtual, augmented and mixed reality is bearing down on us.”

The idea of AR/VR as the “next big thing” in mobile isn’t exactly new — but the fact that it will be the fourth major “disruptor” of consumer behavior and bank hundreds of billions by 2020 is a bolder prediction. So, why now?

2018: The Tipping Point?

To see the mass appeal of augmented reality, one only needs to take a step outside: Pokemon Go mania is sweeping the nation.

In other words, there’s already an appetite for the technology even while it’s still tied to the smartphone — and according to the report, revenue will approach the $20 billion mark by 2017. For the AR/VR “wave” to break, though, a few developments currently in process need to come to fruition.

“There will need to be that magic combination of hero device, long battery life, cellular capability, strong app ecosystem and telco cross-subsidization to make AR as useful and accessible to mass consumers as smartphones are today,” Merel said. “Based on current roadmaps, that looks like it might be around 2018.”

And despite AR in particular’s relatively high cost today, long-run hardware price points similar to the cost of smartphones are forecast to drive large revenues — with the report stating that AR software and services might have similar economics to today’s mobile market.

As of now, AR appears largely focused on enterprise users this year, with most consumer AR expected to launch around 2017 (although wild cards like Magic Leap could change that, Digi-Capital reports). This effectively pushes AR consumer market revenue back by 12 months, with AR now forecast to hit $90 billion by 2020. VR’s topline remains largely unchanged, with $30 billion forecast by the end of the decade. Essentially, both technologies will be big: AR just might be bigger and take a little longer.

“Together with innovative applications nobody has thought of yet, AR’s scale could prove a bonanza for mobile networks’ voice and data businesses,” Merel concluded. “Someone has to pay for all that mobile data. Right now VR/AR/MR is in peak hype cycle, but going into next year we could enter “facing reality” (no pun intended) mode. It’s time for [marketers] to get ready.”