Executive Summary
Like many research & intelligence firms, one of the things that ARtillery Intelligence does is market sizing. A few times per year, we go into isolation and bury ourselves deep in financial modeling. This takes the insights and observations we accumulate throughout the year and synthesizes them into hard numbers for the current and future spatial computing industry (methodology details here).
In covering spatial computing for eight years, our sector knowledge and perspective continue to expand. That occurs on several levels, including insights and access to insider information, all of which informs our forecast models and inputs. Further reinforcing that knowledge position, the daily rigors of editorial production at our sister publication, AR Insider, embolden our market insights. This also uncovers a steady flow of forecast inputs.
Beyond knowledge position and market-sizing processes, the focus of these forecasts likewise continues to evolve. Our first market forecast six years ago examined AR, VR, and all their revenue subsegments (collectively, XR). More recently, we began to produce separate forecasts for headworn AR, mobile AR, and VR. Though all these areas share technical underpinnings, their nuanced market dynamics deserve deeper and focused treatment.
Accordingly, this report focuses specifically on headworn AR. Given its unique dynamics – in both technology and user adoption patterns – it compels its own focused analysis. This allows us to go deeper into key revenue sources like consumer (B2C), enterprise (B2B) and AR-enablement software (B2B2C). We did the same earlier this year for mobile AR.
Headworn AR revenue is projected to grow from $1.86 billion in 2023 to $5.34 billion in 2028, a 23.52 percent compound annual growth rate. This trails other XR sectors we track, such as mobile AR and VR, as they’re at more advanced stages. Though headworn formats represent AR’s endgame, they’re underdeveloped today, due to highly-advanced underlying tech.
Meanwhile, there’s ample anticipation for AR glasses in the tech press and broader culture… but also a looming reality check. Futuristic visions of all-day AR glasses hit a wall given technological requirements. Not only are these needs intense – involving nuanced optical and display systems – but stylistic viability adds another layer of complexity. AR glasses’ ubiquity is more of a 2030 reality than a 2024 one. But if anything could accelerate that, it’s immense R&D spending from Apple, Meta, and others.
Zeroing in on the most influential of these players, Apple will advance AR adoption with its “halo effect,” flowing from Vision Pro. Its market impact will take several years, due to its price, but it will be influential in bringing AR to a broader segment of enterprises and consumers (in that order). Meanwhile, a new class of low-immersion smart glasses – such as Meta Ray Ban Smartglasses – shows what can be done by leaning on AI as opposed visuals and holography.
As all of the above consumer endpoints materialize, headworn AR has already found traction by helping industrial and corporate enterprises boost productivity. For example, it helps IT services field reps operate with greater speed and effectiveness through line-of-sight guidance and remote support.
Speaking of enterprise adoption, it not only happens in a B2B sense but with B2B2C. We’re talking consumer endpoints such as games, entertainment, marketing, and commerce. The technology to create and support these functions is bought by developers and brands who lean into AR as an interactive touchpoint with their customers or marketing targets. This principle is playing out in mobile AR, such as branded AR lenses, but will follow in headworn AR as the field evolves.
This progression will take a while due to low headworn AR hardware penetration, but we’ll prepare for such market opportunities by beginning to project B2B2C spending in this forecast. With evolving AR hardware from Apple, Meta, and others, B2B2C revenue models could develop in the next few years.
So how do all these principles translate to revenue projections? That’s what we’ll quantify and qualify throughout this report…
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MethodologyARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 18 years in research and intelligence in tech sectors. This includes the past 8 years covering AR & VR as a primary focus.
This report focuses on revenue projections in various sub-sectors and product areas. ARtillery Intelligence has built financial models that are customized to the specific dynamics and unit economics of each. These include variables like unit sales, company revenues, pricing trends, market trajectory, and several other micro and macro factors that ARtillery Intelligence tracks.
This approach primarily applies a bottom-up forecasting methodology, which is secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating revenues and projections in a disciplined way. For more information on what’s included and not included in the forecast (a key consideration when evaluating the findings) see the next slide.
More about ARtillery Intelligence’s market-sizing methodology can be seen here and more on its 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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