Executive Summary
It’s that time of year again. As we approach 2025, our annual exercise kicks in: examining the AR & VR events and lessons of the past year and predicting outcomes for the next year. The following pages will do just that… But first, what’s the high-level view of where we are in the spatial computing lifecycle?
AR and VR – collectively known as spatial computing – continue to hold immense potential. Though they don’t represent the imminent tech revolution trumpeted in their circa-2017 hype cycle, they continue to show gradual progress. After a shakeout followed that hype cycle, these sectors then saw another lift that was propelled by the subsequent metaverse hype cycle. Now, after the rise and fall of both these hype cycles – and the distractions that come with them – AR and VR are growing at measured and realistic paces.
But the “spatial spectrum” as we like to call it, deserves more nuanced analysis as there are varying growth curves across AR and VR subsectors. These continue to converge in mixed reality devices like Apple Vision Pro and Quest 3. They also continue to diverge into independent evolutionary paths, including low-immersion smart glasses (lite AR) and high-immersion passthrough AR glasses (heavy AR).
2024 meanwhile saw mixed signals including Microsoft HoloLens’ retreat from the market, and fewer than expected Apple Vision Pros sold. On the positive side were substantive AR advancements such as Snap Spectacles and Meta Orion. And we saw the surprising growth in non-display AI-driven smart glasses such as Ray-Ban Meta Smartglasses. In these and other streamlined AR hardware, AI replaces visuals as the main selling point – a key development.
That brings us to the big topic that defined 2024 inside and outside of the spatial computing realm: AI. Inflections in generative and conversational AI characterize today’s technological momentum. But the question is how AI intersects with XR. A common knee-jerk reaction is that it replaces spatial computing as a source of funding and attention. And that may be true to a degree. However, on more meaningful levels, AI and XR elevate each other. XR can be the face of AI, while AI is the brains of XR. They go together.
This XR/AI convergence isn’t new, as seen in flavors and subsets of XR such as visual search. However, it took on new forms and areas of applicability in 2024. For example, generative AI is being used for 3D asset creation, thus automating and streamlining XR developer workflows. For example, this can be seen in Snap’s GenAI Suite in Lens Studio 5.0.. And on the user end, AI elevates AR experiences such as line of sight intelligence that empowers consumers with deeper situational awareness. This includes multimodal AI from the likes of Ray-Ban Meta Smartglasses, as noted, which engenders a streamlined fusion of visual inputs and audio outputs.
But the story doesn’t end there. The spatial spectrum is broad with several moving parts – many of which evolved in 2024 and are primed for 2025. What will be the impact of Snap Spectacles and Meta Orion? How are smart glasses evolving? And how is mixed reality becoming a new standard in VR? We’ll tackle these questions and more throughout this report.
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MethodologyThis report highlights ARtillery Intelligence viewpoints, gathered from its daily in-depth market coverage. To support narratives, data are cited throughout the report. These include ARtillery Intelligence’s original data, as well as that of third parties. Sources are linked or attributed in each case.
For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 18 years in tech-sector research and intelligence. This includes the past 8 years covering AR & VR exclusively, as seen in research reports and daily reporting.
This approach primarily applies a bottom-up forecasting analysis, secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating figures in a disciplined way. More about our methodology can be seen here, and market-sizing credentials can be seen here.
Disclosure & Ethics StatementUnless specified in its stock ownership disclosures, ARtillery Intelligence has no financial stake in the companies mentioned in its reports. The production of this report likewise wasn’t commissioned. With all market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. ARtillery Intelligence’s disclosures, stock ownership, and ethics policy can be seen in full here.
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