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2017 was quite a year for XR. As is often the case with emerging technology, XR’s early days have included a fair amount of exuberance. 2017 kicked off as such, continuing from 2016. But excitement levels began to recede mid-year as several market signals emerged.

Among those signals, we saw the beginnings of a funding crunch as several companies failed to secure follow-on investing rounds. We saw TechCrunch pronounce (falsely we believe) that VR is dead. Many of these activities stemmed from disappointing consumer VR adoption.

This realization caused the XR world in 2017 to shift attention from high-end VR to mobile AR, given its large installed base. Apple’s June ARkit unveiling amplified excitement levels, which then weakened as the platform’s September release was met with tepid consumer response.

So the question is: Where are we now with XR, and what can we expect in 2018? Drawing from ARtillry’s XR coverage and market sizing over the past two years, we have ventured to answer this question. In short, excitement levels haven’t been misplaced… but some have been mis-timed.

As a historical comparison, e-commerce was prematurely heralded in the early 2000’s dot-com bubble (which Artillry analysts lived through). The market sizing and exuberance at the time wasn’t overblown: In fact it underestimated eventual revenues. It was just early, by about five years.

ARtillery Intelligence believes that has parallels – though a different timeline – to where we now sit with XR. Massive opportunity exists but expectations should be adjusted about its timing. This realization can inform go-to-market strategies and operational execution for XR players.

But how and when will it all come together? What are the top factors and trends to examine? What are key drivers for interlocking pieces in the XR universe (AR, VR and enterprise and consumer segments of each)? And what does it all mean for where you sit?

We took a look back at 2017 to extract measurable lessons, and predict XR’s direction in 2018. It’s all about zeroing in on the pockets of greatest opportunity, and — as always — timing. Spoiler alert: there will be real revenue and value creation in 2018, but they’ll require strategic precision.

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AR and VR stakeholders claim that their market sizes will be massive. And we believe they’re right. But how big are they and how big will they realistically get? ARtillery Intelligence ventured to quantify these sectors in more precise terms. The result is our latest industry revenue forecast.

Applying market sizing and forecast experience from 15 years of analyst work (see methodology), ARtillery Intelligence has devised a disciplined and non-biased revenue forecast for AR & VR, segmented into their product areas.

The forecast provides overall market revenue projections, subdivisions of each product category, and narrative insights all along the way. This is meant to qualify the revenue drivers and rationale behind the numbers.

Lastly, to characterize ARtillery Intelligence’s overall position on AR & VR revenue growth, we maintain a cautiously-optimistic view. Growth and scale will come but slower than most analyst firms project, due partly to the pace of consumer adoption and other signals ARtillery tracks.