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Apple’s XR Investment Is An Insurance Policy

Apple Vision Pro (AVP) is an engineering masterpiece. It marks a significant advance in consumer electronics and is the most complex device ever made, far outstripping competitors in terms of technical competency. Apple starts to ship the headset today, 2nd Feb 2024. AVP swiftly sold out once pre-orders began on January 19, starting at $3,499 for the 256GB memory variant, seven times what the 128GB version of the Meta Quest 3 costs. Whether the few hundred thousand units in initial volumes are followed by a sustained demand will demonstrate the device’s appeal, or a lack thereof, beyond developers, early adopters and Apple’s die-hard fans. 

Apple positions Vision Pro not just as a headset, but as a new spatial computing platform with its own operating system, user interface paradigm and digital content delivery. This strategic shift aims to move the discourse beyond mere headset competition and towards competition between entire ecosystems, signalling Apple’s long-term commitment to this new product line. One surely needs to believe in Apple’s long-term commitment since the use cases demonstrated by Apple were generic and interesting at best. Showcasing familiar experiences like watching movies, working on large virtual screens, and teleconferencing raises questions about whether AVP is a solution seeking a problem (though this criticism could be applied to many VR devices). 

While the over 600 apps developed for Vision Pro add to the 1 million+ compatible App Store apps, the lack of “killer apps” remains a concern. Despite touting entertainment as a major attraction with partnerships including with Disney, Apple suffered setbacks with popular video and audio platforms like Netflix, YouTube, and Spotify choosing not to launch dedicated apps. Without compelling use cases or major first-party apps, Apple’s launch of AVP seems predicated on hope. Apple appears to rely on developers creating the “killer apps” that will replicate the success of the iPhone and iPad App Store. Even if Vision Pro doesn’t gain mass adoption, Apple’s entry into the segment has generated popular awareness regarding the eXtended Reality (XR) industry. 

Apple, we believe, is essentially using Vision Pro as an insurance policy. iPhone is the core of Apple’s almost $3-trillion market cap (at the time of writing). For years, speculation has pointed to augmented reality devices as the potential successor to smartphones as our primary interface with digital life. So far, the XR market has been disappointing – generating a few 10s of millions of unit sales but limited consistent usage outside niche enterprise applications. Furthermore, the technical challenge of making true augmented reality glasses has proven to be beyond the capabilities of even the most technically gifted companies. Therefore, the slow-developing XR industry doesn’t pose an immediate threat to Apple. 

For Apple, the worst-case scenario would be a booming XR market with no Apple product in the game. Even if the market fails to materialize despite Apple’s multi-billion-dollar investment in XR development, the cost, while sizeable, would not significantly impact its cash reserves. 

So, Apple made the logical choice to invest in creating the Apple Vision Pro. In the process, it has amassed an impressive patent portfolio that strengthens its position. 

Should the XR market finally take off, Apple will be ideally positioned to capitalize on the opportunity. However, even if it remains a niche market, Apple has secured its place with a product that will serve as a benchmark for future competitors. 

XREAL Air 2 Pro First Impressions: Promising Entry-level XR Glasses

2023 was the most exciting year in the Extended Reality (XR) space since Counterpoint Research began its XR service more than three years ago. While the most amount of public interest was generated by the announcement of Apple’s foray into the segment through the Vision Pro, its first Mixed Reality (MR) headset, the launch of Sony’s gaming VR headset PlayStation VR2, and the launch of Meta’s MR headset Quest 3, a significant amount of meaningful progress was also made by lightweight and competitively priced AR glasses. We at Counterpoint have been testing one such product – XREAL Air 2 Pro.

Initial thoughts

The XREAL Air 2 Pro with its lightweight and well-balanced design offers comfortable usability. The high image quality, combined with a 120Hz high refresh rate and improved audio, positions it as a good competitor in its category, especially for streaming.

It has several other intriguing features that users in certain regions – surprisingly including the US where it is officially available – are prevented from experiencing to the fullest extent. Overcoming these hiccups and adding more apps could make it one of the most interesting AR glasses in 2024 when Apple’s MR headset finally becomes available, and more consumers seek the XR experience without necessarily wanting to shell out $3,500.

Lightweight and comfortable design

The Air 2 Pro packs some upgrades into a visibly thinner and noticeably lighter frame compared with the original 2022 Air. XREAL achieved this by reducing the front face thickness by around 14% to 19 mm. The Air 2 Pro weighs 75 gm, a noticeable reduction from the Air’s weight of 79 gm. The weight distribution has also been improved, with the front/rear weight ratio going from 63:37 to 50:50. The Air 2 Pro also comes with multiple soft zero-pressure nose pads which would help users pick one that fits them better, compared to the metallic ones offered with the original Airs. However, sometimes the glasses need to be worn further out on the nose to prevent the lower part of a video, particularly subtitles, from falling outside the visual area.

counterpoint-xreal-air-2-pro-glasses-front

Display: Bright, crisp and vivid

The Air 2 Pro comes with three levels of electrochromic dimming, taking immersion from 0% to 35% to 100%. A 25% increase in brightness, to 500 nits, allows for a better viewing experience, even in brighter conditions. The latest 0.55 Micro-OLED panel from Sony with a 21% higher PPI (pixels per inch) of 4032 also contributes to the increased image quality in the Air 2 Pro. The new device comes with a refresh rate of 120Hz, which has also been added to the original Air through software updates.

Audio: Loud enough for a personal viewing experience

The overall viewing experience also benefits from XREAL’s second-generation sound system which makes audio more immersive. Directional audio reduces sound leakage, although it is still quite noticeable, unless in loud outdoor environments. There are two speakers, one on each side of the temple, making the audio sufficiently loud in most environments.

counterpoint-xreal-air-2-pro-buttons-first-impressions

XREAL Beam: Connectivity hub for reduced latency

The Air 2 Pro can be used with Beam, a handheld accessory that looks like the Apple iPod. It comes with a built-in battery that can offer a continuous runtime of up to three-and-a-half hours. With a 27W fast charger, it can be charged up to 50% in 30 minutes, while also allowing users to use the Air 2 Pro while charging.

counterpoint-xreal-air-2-pro-beam-first-impressions

Built on XREAL’s proprietary spatial computing technology, it can project an equivalent of 330 inches of portable screen in the Air 2 Pro for streaming, gaming, or productivity. Gamers may also use it to connect with PlayStation 5, Xbox One, Nintendo Switch, Steam Deck or even the ROG Ally to mirror the screen on the Air 2 Pro for an immersive gaming experience. The Beam also comes with 32GB of built-in memory, allowing users to sideload Android app APKs.

Limited app ecosystem with availability issues across regions

With the app ecosystem playing a critical role in the success of a product, capable hardware needs to be complemented with enough apps for various use cases. At Counterpoint, we used the device in our US, China, and India offices. We were able to successfully connect it with an iPhone 15, Samsung Galaxy Z Fold5, MacBook Pro 16 (M1 Pro), and a Windows 10-powered Galaxy Book2 Pro 360 where screen mirroring worked well. Using the Nebula app on macOS, we could use three virtual desktops, but only a screen mirroring option was available with a Windows laptop.

We wanted to try some apps, but both the US and India teams could not download any as the Nebula app on Android was not available in those regions. Despite software updates, XREAL Beam (China market version) currently offers only four 2D applications – document management, Bilibili (video APP), iQiyi (video APP), and Alibaba Cloud Drive.

User experience

The Air 2 Pro comes pre-installed with Netflix and Amazon Prime Video apps, and we were able to successfully log in and watch TV shows and movies without a hitch. The experience was immersive and better than expected. Logging in to Netflix and Amazon Prime Video was a bit of a hassle, especially for someone with limited experience of using such devices. This was exacerbated by a dissatisfactory cursor experience as the cursor kept sliding into one of the corners and sometimes failed to appear on the display at all.

After logging in, however, the experience of watching a couple of episodes of ‘Secrets of the Great British Castles’ on Netflix was quite exciting. After some adjustments, the first entire episode could be watched in a single sitting with relative ease. The experience was quite immersive with the drone views of the castles being especially superior on these glasses.

Pricing and availability

The XREAL Air 2 is priced at $399, whereas the XREAL Air 2 Pro comes for $499. They went on sale in October 2023 in the US, UK, Germany, France and Italy. The glasses’ companion handset accessory, the XREAL Beam, sets users back by another $120.

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XR Gets Apple Vision Pro Boost, Market Set to Bounce Back in 2024

  • XR headset shipments are expected to increase by a record 3.9 million units in 2024, marking a high double-digit YoY growth from a small base.
  • Major releases in 2024, including Apple’s Vision Pro, will sustain the momentum generated by Meta and Sony in 2023 with the launch of Quest 3 and PlayStation VR2 respectively.
  • AR is projected to grow from a very small base, driven by successful launches like XREAL’s Air 2 and Air 2 Pro.
  • North America, the biggest XR market, will further widen its lead in 2024 as Apple’s Vision Pro is exclusively available in the region for much of the year.

Seoul, Beijing, Boston, Buenos Aires, Hong Kong, London, New Delhi, San Diego – January 9, 2024

Extended Reality (XR) headset shipments are projected to increase by a record 3.9 million units in 2024 to clock a high double-digit YoY growth, according to the latest Counterpoint Global XR (VR/AR) Forecast. Apple’s Vision Pro, which goes on sale in the US on February 2 (with pre-orders starting on January 19), will generate user interest and industry movement which will benefit incumbents. 2024 will also carry forward the momentum from 2023, marked by several launches from major players like Meta and Sony.

 

Global XR. (VR & AR) Market Shipments, 2016 – 2024(F)

Commenting on the market dynamics, Senior Analyst Harmeet Singh Walia said, “Apple’s highly-anticipated entry into the XR space has long been expected to mark a watershed moment for the industry. However, we expect Apple to sell about half a million units of Vision Pro, its $3,500 mixed reality (MR)* headset, in 2024. This makes up a low single-digit share of the 2024 global XR market. The first iteration of the Vision Pro headset will primarily attract die-hard Apple fans, developers, early adopters and enterprise users. A more optimistic scenario could unfold if Apple successfully boosts the supply of key components for the headset and experiences higher-than-expected interest from the end market. Moreover, the consumer interest Apple’s entry is generating will benefit market incumbents offering competitively priced headsets, towards which many enthusiasts who wish to try the technology without incurring Apple’s hefty price tag would gravitate, boosting the global XR market.”

2024 will see the continuation of another trend – the transition from pure virtual reality (VR) to MR* as major players, both existing and upcoming, rush to launch MR products or add passthrough to successors of their pre-existing headsets. Since Counterpoint considers such headsets as part of its VR category*, it remains dominant. The standalone form factor is preferred and is likely to remain so despite Apple’s Vision Pro requiring a wired connection with an external battery case.

Augmented Reality (AR) is projected to grow by 54% YoY in 2024, bucking the trend of three years of consecutive declines. This growth will be driven by XREAL’s Air 2 and Air 2 Pro AR Glasses, which quickly became the best-selling AR glasses in China. Besides XREAL, which targets the larger consumer segment, AR will be driven by high-spec and high-price products in the niche enterprise segment. At just about 2%, AR, however, will remain a small contributor to overall XR shipments.

Commenting on the regional performance, Senior Analyst Karn Chauhan said, “North America was already the biggest contributor to XR shipments with nearly 70% of the best-selling Meta headsets shipping in the region. This will grow further in 2024 as Apple’s Vision Pro is available for sale exclusively in the US for most of its first year. While Europe remains a major market, as with its economy, its share of the XR market is expected to lag further behind North America due to slower adoption and limited content. Streaming not taking off as a use case, strict gaming regulations, and the education and enterprise segments, in which XR is popular in China, being niche, growth in China too will remain sluggish in 2024. The rest of Asia-Pacific benefited from the launch of Sony’s PlayStation VR2, which did well in its home country of Japan, among the few major XR markets in the region together with South Korea, Australia and New Zealand that will continue performing strongly in 2024.”

Samsung’s re-entry into the segment, likely with an MR* headset in 2024, will also generate traction, but regardless of its launch price, it will contribute less than Apple to global shipment growth due to a late-year launch.

Pico, owned by TikTok’s parent ByteDance, is unlikely to fully recover from the setbacks its latest Pico 4 suffered in 2023. DPVR, another major Chinese player, while remaining strong in the Chinese education sector, will struggle to break out as a major global player despite having launched E4, its gaming PC VR headset.

*Counterpoint’s XR services currently divide the market into two device types – VR and AR. AR includes glasses and headsets with transparent displays. VR includes headsets that substantially or fully obscure the real world but may use video-pass-through (VPT) technology to feed real-world views to the wearer and/or combine them with digitally created environments, hence covering headsets (including Apple’s Vision Pro) commonly marketed as MR, which Counterpoint currently buckets under its VR category.

Feel free to reach us at press@counterpointresearch.com for questions regarding our latest research and insights.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Follow Counterpoint Research

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Global XR (AR & VR Headsets) Market Share: Quarterly

A repository of quarterly data for the global XR (AR & VR Headsets) shipments market

VR headsets Global XR market share Q3 2023

Brands Q3 2022
Meta 72%
Pico 12%
HTC 3%
Others 13%
Brands Q4 2022
Meta 84%
Pico 7%
Xreal 3%
Others 6%
Brands Q1 2023
Meta 52%
Sony 33%
Pico 7%
Others 8%
Brands Q2 2023
Meta 53%
Sony 30%
Pico 9%
Others 8%
Brands Q3 2023
Meta 49%
Sony 32%
Pico 9%
Others 10%

Source: AR & VR Headsets (XR) Quarterly Model Shipments Tracker: Q1 2020 – Q3 2023

Highlights:

  • Global XR headset shipments plunged 29% YoY in Q3 2023, marking their lowest quarterly volume since Q4 2020.
  • This drop in volume was driven by a lack of compelling headset launches from top OEMs and softer consumer demand. Consumers are showing less interest in buying XR headsets as there are no exciting use cases.
  • Meta’s market share slipped below 50% for the first time in four years, mainly due to the PSVR 2’s presence. However, with the launch of the Quest 3 in the holiday season quarter, Meta is expected to drive significant volumes.

WATCH: AjnaLens VR Training – Teleporting Trainees to Job Site

For a more detailed AR & VR headsets (XR) shipments tracker, click below:

This is a comprehensive database of Extended Reality (XR) headset model level shipments by quarter including retail price and 30+ specifications and features. It covers tethered as well as standalone Virtual Reality (VR) and Augmented Reality (AR) headset models. We are tracking 35+ XR brands and 70+ headset models by memory variants.
Covers 99% of the global market
Data: Model level shipments of XR headsets including retail price, specs, and features.
Time Period: Q1 2020 – Q3 2023

  Contact us button    Read more button

For detailed insights on the data, please reach out to us at sales(at)counterpointresearch.com. If you are a member of the press, please contact us at press(at)counterpointresearch.com for any media enquiries.

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US data page      China data page

India data page      Global smartphone data page

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China’s VR Shipments Declined 56% YoY in H1 2023 – Will Apple and Meta Revive it?

  • China’s Virtual Reality (VR) market declined by 56% year-over-year (YoY) in H1 2023, marking an end to the market’s two-year growth streak spanning 2020-2022.
  • Market leader Pico has chosen to strategically scale back its marketing investments since 2023 to ensure a healthier operation amid China’s tepid economic recovery, resulting in lower shipments target for its VR headsets.
  • Despite the bleak sales figure of the existing market, launch of Apple’s Vision Pro has ignited a wave of inspiration to drive the industry forward.

China’s VR market shipments declined significantly by 56% YoY in H1 2023, according to the latest data from Counterpoint’s China eXtended Reality (XR) research service. This marked the end of the Chinese VR market’s two-year growth streak, spanning 2020-2022, and reverting to a state of stagnation. The decline in China appears to be more severe than that observed in the global VR market, which fell 39% YoY in H1 2023. Consequently, China’s share of the global VR shipments in Q2 2023 accounted for only 10%, which is relatively low compared to its 20%-30% share in the global smartphone market.

Exhibit 1: China VR Market Shipments and YoY Growth, CY2018-H1 2023

Counterpoint Research
Source: Counterpoint China XR Tracker, Q2 2023

Note: VR headsets referred to here exclude smartphone boxes that rely on a smartphone to serve as the display panel.

 

The subdued market demand in China can be attributed to several factors. Firstly, the market’s growth over the past two years was largely driven by the extensive marketing efforts of China’s leading VR player, Pico. After it was acquired by internet giant ByteDance in September 2021, Pico significantly ramped up its product promotion to drive sales. However, since 2023, Pico has chosen to strategically scale back its marketing investments to ensure its operations are more stable amid China’s tepid economic recovery. Consequently, this decision has resulted in a lowered shipment target for Pico’s VR headsets. Secondly, despite Pico’s efforts to educate consumers on the enjoyable and entertaining experiences offered by VR headsets over the years, the absence of killer applications and a robust content ecosystem remains a significant challenge in China’s VR industry, hindering user adoption and retention. Additionally, during H1 2023, the absence of enticing new products in China dampened consumer demand. While the sales generated by new models such as Sony’s PSVR 2 and the Pico 4 Pro showed promise, they were insufficient to counteract the noticeable decline in the overall market.

In terms of the competitive landscape, China’s VR market has seen significant consolidation, with just a handful of dominant vendors. As market leader, Pico holds a substantial market share of roughly 50%. However, even Pico experienced an over 50% YoY decline during H1 2023. Sony captured a 19% share of the market thanks to a significant sales surge following the release of PSVR 2, which attracted Chinese PlayStation enthusiasts to purchase and explore the product. Nevertheless, it is expected that the momentum of the PSVR 2 will wane during H2 2023. DPVR continues to lead in China’s enterprise segment due to its competitive pricing, but it also faces a decline due to a slowdown in spending on digital transformation by Chinese enterprise customers. Apart from the top three players, there are limited providers competing in China’s VR segment, with iQiyi withdrawing from the market due to operational difficulties.

Exhibit 2: Market Share (%) of VR Headset OEMs in China and YoY Growth (%)

Counterpoint Research
Source: Counterpoint China XR Tracker, Q2 2023

Notably, Meta’s Quest VR is not yet officially available in the Chinese market, while Chinese smartphone OEMs such as OPPO, vivo and Xiaomi, despite their success in the global smartphone market, appear to be cautious when it comes to introducing a commercial VR headset.

 

Will Apple and Meta MR Headsets Revitalize Sales in China?

Despite the bleak sales figures of the existing market, the launch of Apple’s first MR headset, the Vision Pro, along with the accompanying “spatial computing” concept, has generated a significant buzz in the Chinese technology industry. Apple has set an industrial standard for what an ideal product can be, and we believe that the Apple Vision Pro (AVP), though not yet available in the market, has ignited a wave of inspiration to drive the industry forward.

  • Since the release of the AVP, China’s dedicated VR companies have actively delved into its technology specifications and ramped up their R&D endeavors. They are particularly focused on optimizing ultra-low-latency color video see-through technologies, optical solutions, and hand tracking algorithms, aiming to bridge the technological gap with Apple.
  • Chinese smartphone OEMs (Original Equipment Manufacturers), previously cautious with a “wait-and-see” approach to commercializing AR/VR headsets, are now re-evaluating their investments. Fearing the risk of lagging behind in the “spatial computing” era, strategic initiatives have been launched within these companies to reassess their projections regarding technology development trends and potential breakthroughs in the consumer XR segment. Additionally, we’ve noticed several OEMs bolstering their XR research teams to prepare for their first commercialized product, forging closer partnerships with industry players such as Qualcomm and Google.
  • Meanwhile, China’s internet giants, some of whom had scaled back investments or disbanded their “Metaverse”-related departments in early 2023, are now re-entering the arena. Tencent, for instance, is reported to have recently established the XR Device & Content Business Group within its Interactive Entertainment Group (IEG) to oversee the development, sales, and promotion of its forthcoming XR products. The company is also in discussions with Meta regarding a potential partnership to localize the Quest VR and integrate Meta’s content ecosystem in China.
  • Chinese Augmented Reality (AR) companies also have a more optimistic outlook for their future development, thanks to the emphasis on Mixed Reality (MR) features by the AVP. They strongly believe in the significance of the interaction between virtual objects and the real world, which may position AR as the ultimate future solution. In contrast to the challenges faced by China’s VR segment, Counterpoint’s China XR tracker indicates robust YoY growth in China’s AR glasses market during H1 2023. China is also a global leader in the development and commercialization of consumer AR glasses, despite the relatively small market base at present.
  • In the software domain, Shanghai is among the cities where the Developer Lab for the AVP is located, alongside Cupertino, London, Munich, Singapore, and Tokyo. Apple has commenced hosting Chinese developers since June, supporting them to create and run their applications on the VisionOS platform. We expect this to invigorate the Chinese application ecosystem for MR headsets, creating new opportunities for applications beyond just gaming.

Despite the positive impacts that the AVP has had on China, it remains to be seen how tangible of a sales boost it will provide to the market. The product is primarily aimed at developers rather than consumers, with a price tag of $3,500. Additionally, the user experience of the AVP, which relies on the combination of Apple’s proprietary M2 System on Chip (SoC) and R1 co-processor, presents a significant challenge for Chinese hardware players to catch up in the short term.

Meta’s newly launched Quest 3 headset, the first MR product to hit the consumer market based on Qualcomm’s XR 2 Gen 2 platform, has emerged as a more attainable benchmark for Chinese companies in the near term. Based on the hardware specifications disclosed by Meta, the Quest 3 has demonstrated substantial improvements in MR features, which are poised to open up new avenues and application scenarios for developers. However, it also seems that the Quest 3 has not fully tapped into the best capabilities of the XR 2 Gen 2 platform. Consequently, there may be opportunities for improvement that Chinese latecomers can explore. We expect these opportunities to catalyze the launch of new products by Chinese hardware OEMs in 2024/2025.

Furthermore, the advancements made by Meta with both the Quest 3 and its upcoming products, coupled with the competition presented by Apple, are likely to expedite the closing of a deal between Tencent and Meta within the Chinese market. This presents a noteworthy opportunity to enhance the sales and adoption of XR products in China.

We will closely monitor the market to observe how the competitive landscape will be reshaped with the entrance of these newcomers.

 

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Global XR Headset Market Declined in Q1 2023 With No New Quest Model

  • Global XR headset shipments (covering AR and VR headsets) declined 33% YoY in Q1 2023.
  • Consumers are losing interest in the XR market, as market leader Meta’s Quest series has not been refreshed in over two years.
  • Quest series has cumulatively shipped more than 20 million units as of Q1 2023, with the Quest 2 contributing 18 million units.
  • The newly released PSVR2 garnered significant attention from the video-gaming brand’s user base, leading Sony to capture the second position in Q1 2023.
  • 2023 is the year of next-generation VR headset launches. The PSVR2, E4 and Vive XR Elite are some of the prominent launches so far. And then, of course, Apple has announced its Vision Pro.

London, San Diego, New Delhi, Beijing, Buenos Aires, Seoul, Hong Kong – July 5, 2023

Global extended reality (XR) headset shipments (covering augmented reality (AR) and virtual reality (VR) headsets) declined 33% YoY in Q1 2023, according to Counterpoint Research’s XR Model Tracker. Consumers are losing interest in the XR market, as Meta’s Quest series, the market leader, has not been refreshed in over two years. The performance of the newly launched next-generation Sony PSVR2 (PlayStation VR2), along with the price reduction of the Quest 2 by Meta, saved the global market from a more drastic decline.

Meta was the best-selling global XR headset brand during Q1 2023 with the Quest 2 as its long-time best-performing VR headset. The Quest series has cumulatively shipped more than 20 million units as of Q1 2023, with the Quest 2 contributing 18 million units. The Quest 2 continues to sell relatively well and to maintain its momentum, Meta is making the headset more affordable by lowering its price after last year’s price increases. Besides, Meta has announced the launch of Quest 3 later this year, which is expected to further boost sales and transition from the success of Quest 2.Global XR headset market

Nevertheless, Meta’s shipment share fell to 49% in Q1 2023, the lowest since the launch of Quest 2 in Q4 2020. This decline was a result of the highly anticipated launch of Sony’s successor to its 2016 headset PSVR. The newly released PSVR2 garnered significant attention from the video-gaming brand’s user base, leading Sony to capture the second position in Q1 2023 with a 32% market share. Besides, the PSVR2 shipped 1.2 times more units than its predecessor in the first quarter of its launch.

Pico and DPVR took third and fourth places with market shares of 7% and 6% respectively. While Pico’s performance had earlier improved after its acquisition by TikTok’s parent company ByteDance, a lack of attractive consumer use cases and limited high-quality content resulted in a 38% decline in its shipments in Q1 2023.

DPVR’s shipment volumes are primarily driven by its enterprise partners, with whom it has established strong relationships. These partners regularly place orders for several thousand units. However, delays in orders from education sector partners led to a 40% decline in DPVR’s shipments in Q1 2023.

2023 is the year of next-generation VR headset launches. Sony’s PSVR2 , DPVR’s E4 and HTC’s Vive XR Elite are some of the prominent launches so far this year. Having advanced technology and features, these headsets are retailing at around or over $500, which will likely negatively impact their sales potential. It will also depend on how much value consumers perceive these VR headsets are delivering.

And then, of course, Apple has announced its Vision Pro, which has set a new high bar for consumer XR devices, though at a price above most people’s reach. Apple will nevertheless cast a shadow over the market ahead of the Vision Pro’s actual release.

Background:

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Karn Chauhan

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Peter Richardson

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Harmeet Singh Walia

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Quest 3 to Help Maintain Meta’s XR Dominance Even as Apple Entry Looms

  • Meta announced the launch of the Quest 3 headset on June 1. To be retailed at just under $500, it will be released in autumn. The Quest 3 will have both VR and MR capabilities.
  • The Quest 2 has also received a $100 price cut, with the entry-level variant available at $299 starting June 4.
  • Together with its newly discounted predecessor, the Quest 3 is expected to help the company maintain market dominance for now.
  • Meta’s announcement came days ahead of WWDC, where Apple will reportedly announce its own MR headset.

London, San Diego, New Delhi, Beijing, Buenos Aires, Seoul, Hong Kong – June 5, 2023

The announcement of Meta’s Quest 3 headset at $499.99 and the Quest 2’s $100 price cut to $299 just before the rumoured launch of Apple’s first mixed reality (MR) headset shows the social media parent’s determination to lead the extended reality (XR) headset market.

Meta described the Quest 3, which will have both VR and MR capabilities, as its “most powerful headset yet”. The announcement of a successor to the best-selling XR model in history after three years of no consumer-grade headset launches by Meta is an important step forward for the company as well as for the industry.

In line with the season’s flavour, mixed reality, the Quest 3 features the next generation of Qualcomm’s Snapdragon chipset and yet to be disclosed but likely superior display resolution, memory, battery life and weight.

The Quest 3’s launch in autumn, together with the price cut of the Quest 2, will be enough to maintain Meta’s market dominance in terms of shipments for the foreseeable future.

Meta XR dominating the market

Apple’s expected announcement of a $3,000 MR headset during this year’s Worldwide Developers Conference (WWDC) on June 5 will create the biggest challenge to Meta since its entry into the segment through the acquisition of Oculus VR in 2014. If Apple succeeds in bringing the cost down and gaining a foothold in the market through successive iterations of the $3,000 headset, it may supplant Meta as the biggest revenue generator in the market which Meta has dominated thus far both in terms of revenue and shipments.

 

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Feel free to reach us at press@counterpointresearch.com for questions regarding our latest research and insights.

Analyst Contacts

Harmeet Singh Walia

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Peter Richardson

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Karn Chauhan

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More Than 1 Million XR Headsets Shipped in China in 2022, Pico Number 1

  • XR shipments crossed 1.1 million units in China in 2022.
  • VR remains the dominant segment, contributing more than 95% to overall shipments in 2022.
  • Pico is the number one brand with a shipment share of 43%, followed by DPVR at 36%.
  • iQIYI, HTC and NOLO, each captured a single-digit share.

London, San Diego, New Delhi, Beijing, Buenos Aires, Seoul, Hong Kong – March 15, 2023

Extended Reality [XR: Augmented Reality (AR) and Virtual Reality (VR) headsets] shipments crossed 1.1 million units in China in 2022 according to Counterpoint Research’s XR Model Tracker. VR remains the dominant segment within XR, contributing more than 95% to overall shipments in 2022. The Chinese market has considerable untapped potential but is growing slowly because available headsets do not offer enough value in the consumer domain for mass consumption.

While the consumer segment did not see a major shift, volume growth was produced by enterprise deals, mostly in the education and training sectors. The potential for further volume growth is limited in the enterprise segment which remains niche as the currently available headsets are not yet advanced enough to offer enticing use cases. So, brands have started to focus more on the consumer segment, particularly gaming. However, Chinese brands are offering few and mostly simple VR games. Brands must develop high-quality games to increase consumer traction.

Pico is the number one brand in China’s XR market with a shipment share of 43% in 2022, followed by DPVR at 36%. iQIYI, HTC and NOLO, each of which captured a single-digit share, also made it to the top five.

China XR market 2022

Pico, since its acquisition by TikTok’s parent, ByteDance, has gained greater global as well as local prominence. The additional financial, human and soft resources that ByteDance is pouring into Pico helped it to become a major player. Since the acquisition, Pico’s strategy has been to establish itself as a major player in the consumer XR segment. For this, it has priced its recent Pico 4 headset at close to $400, similar to Meta’s Quest 2.

DPVR shipped the next highest number of XR headsets in China and is the biggest player in the enterprise segment. Existing partnerships and growing regional prominence will ensure a healthy growth rate for DPVR, but it has a limited opportunity for volume growth in the enterprise segment. It is therefore betting big on its E4 gaming headset.

iQIYI, with a focus on VR content and streaming, took the third spot on the list while HTC’s volumes continued to be driven by Vive Flow. However, HTC is facing difficulty to sell its headsets owing to their high price points. NOLO also made it to the top five list thanks to its consumer-grade headsets targeted at gamers.

China’s market has a large base of home-grown content producers who benefit from a largely common language. We expect these players to increasingly invest in content for VR leading to a virtuous circle of increasingly capable hardware supported by content from multiple producers. The adoption of XR in sectors ranging from education and healthcare to industrial and supply chains will also enable more holistic growth represented by both the consumer and enterprise segments.

China is also expected to benefit from the early adoption of 5G since telecom operators see VR content as a driver of data consumption.

Background:

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

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Related Posts

Crucial Technologies Unveiled to Expand XR Universe

At CES 2023, which was held in early January, interest in XR was hot, and the number of innovation awards related to virtual/augmented reality surged to 25 in two years. Several startups and manufacturers also showcased new XR-related technologies along with their products at the show.

Here, we will focus on two of the XR-related technologies showcased at CES 2023 – a transparent display with XR and hands-free controllers. These technologies are the foundation for XR to expand into various areas such as health and education.

1. Transparent display with XR technology

Transparent display categories include HUD (head-up display), HMD (head-mounted display), transparent OLED, and more. HUD is often used as a display for vehicles. However, until now, commercialized HUD for vehicles has taken up only a part of the front glass. But at CES 2023, several automakers introduced AR HUD with more advanced forms and expanded areas.

Most prominently, BMW unveiled ‘BMW i Vision Dee’ and announced its plan to commercialize by 2025 advanced HUDs that use the entire front glass. Also, BMW will expand its personalization experience by allowing the driver’s avatar to be displayed in the side window. This advanced HUD is combined with the MR slider to set a range of information displayed on the HUD. The range varies from driving-related information to virtual/augmented reality information.

BMW i Vision Dee

Counterpoint Research Q1 2023

Source: BMW

However, in the future, if the transparent OLED introduced by LG Display at CES 2023 is commercialized, it could replace HUD that transmits images to the windshield. LG Display introduced a concept car equipped with a 55-inch transparent OLED at CES 2023. The transparent OLED serves as a window, provides content such as advertisements and news, and provides information on places outside the window in real-time through AR technology. This means that AR technology can expand opportunities to provide various experiences to all occupants, not just driver assistance features.

LG Concept Car With Transparent OLED

Counterpoint Research Q1 2023

Source: LG Display

2. Hands-free tracker

Among the CES’ innovation awards in the virtual/augmented reality category, controllers were included to highlight how they allow users to have various experiences hands-free.

Contact Glove of Japanese company Diver-X is a haptic VR controller in the form of gloves. The glove is a tactile controller compatible with all SteamVR games, allowing VR gamers to enjoy an in-depth gaming experience. In addition, the device can capture the user’s hand movements and manipulate buttons and sticks with only finger movements.

Contact Glove by Diver-X

Counterpoint Research Q1 2023

Source: Kickstarter

Another innovation award-winning Surplex, a body tracker in the form of shoes, was announced by the Chinese company Shenzhen Qianhai Xiangfang Future Technology. The device, with its 480 embedded pressure sensors, has the advantage of not being space constrained. Also, it is compatible with all SteamVR-compatible headsets such as the Oculus Quest 2. Such hands-free controllers are expected to be of great help in expanding the use cases in the industrial segment as well as the experience of general consumers in virtual/augmented reality.

Surplex Full-body Tracking Shoes

Counterpoint Research Q1 2023

Source: CES

 

In 2021, the total XR market size was about 11 million units and Meta was the main player with about 75% market share. According to the latest Counterpoint Global XR(VR/AR) Forecast, the XR market is expected to grow to about 63 million units by 2027. However, Meta is expected to lose its market share as new players such as Apple will enter the market. Therefore, competition in the XR market is expected to intensify, and manufacturers will constantly diversify the use of XR devices to defend market share. Accordingly, it is anticipated that new technologies related to XR will continue to pour in.

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