Goldman Sachs Has Four Charts Showing the Huge Potential in Virtual and Augmented Reality

Virtual reality started making fresh headlines in 2014, when Facebook made a $2 billion acquisition of Oculus VR. Now Google Inc. has ramped up its “VR” game by focusing Clay Bavor, vice president of product management, solely on virtual reality.

As Wall Street tries to calculate the possible impact on a number of industries, Goldman Sachs Group has put forth some charts laying out its assumptions for what it believes will be an $80 billion market by 2025.

Here’s what caught our eye.

The first chart looks at how the virtual reality and augmented reality business will fare when compared to the adoption process undergone with smartphones and tablets. Goldman believes it will take a while longer to see such adoption, but “as the technology advances, price points decline, and an entire new marketplace of applications (both business and consumer) hit the market, we believe VR/AR has the potential to spawn a multibillion-dollar industry, and possibly be as game changing as the advent of the PC,” the analysts noted.

2. Market size depends on the uptake

The second chart shows how the analysts get to that $80 billion number for industry revenue. The team at Goldman, led by Heather Bellini, looked at possible uses, their “volume adoption framework” and future pricing. The base case is for $80 billion, while the “accelerated uptake” scenario puts the market at a whopping $182 billion.

3. Virtual reality could be used for these functions

Goldman has nine areas in which virtual and augmented reality can be used, ranging from video games to retail. While video games make up the largest portion, everything from health care to real estate could experience disruption.

4. The price of head-mounted devices (HMDs) is expected to fall

Last, prices typically fall as technology progresses. This is key for hardware adoption, Goldman said, so it looked at how the cost structure might look in the future. “We found that major hardware devices have experienced pricing declines in the range of 5-10 percent annually over the past 20 years,” the team said.

Goldman isn’t the only firm publishing virtual reality research this week, Macquarie Bank also sent out a note to clients about the future of this business.

“We continue to believe that VR/AR is poised to be the next computing platform. And like the transition from desktop to mobile, it will be disruptive. …The first half of 2016 will see the most significant progress on VR/AR ever,” Analyst Ben Schachter wrote in the note, published on Wednesday.

The analyst says he has been sampling some new virtual reality products and has come away even more optimistic on the market. “We have been fortunate to be in the relatively unique position of having tried the latest versions of almost all known devices. And while each has its pros and cons, it is clear that progress is being made,” he said.


Written by  julieverhage


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Building for virtual reality? Don’t forget about women


Last week at CES, I got to try a haptic jacket straight out of Ready Player One. It’s gotten glowing reviews from testers, but in order to work, its electrode-lined fabric needs a direct connection with your body. On anyone built roughly like its male creators, it looks like a snug wetsuit. On me, it could have fit over a puffy winter coat. I managed to get a death grip on the fabric and pull it back, but all I felt was a pleasant massage, not the nerve-shaking jolts I’d been promised. It was a letdown, but not an unexpected one. Welcome to being female in virtual reality.

There’s a decent amount of overlap between men’s and women’s physiology. But our (on average) smaller bodies are distinctly not the norm in the world of virtual and augmented reality development, and it shows. I’ve tried headsets that barely tighten enough to fit on my head. Augmented reality glasses whose lenses are too far apart for me to focus on the image, or whose frames immediately fall off my face. Motion control rings that leave a quarter-inch gap between my finger and the hardware. Gloves that bunch up around my fingers. Products designed for a range of body types that I — a fairly normal-sized woman — cling to the very lower edge of.

When we talk about environments being unwelcoming to women, the response is always a lot of “toughen up” and “if you can be scared away by [x], you weren’t a real [y] anyway.” But this isn’t about anybody’s feelings. It’s a literal, concrete inability to use technology in the way it’s intended to be used, simply because you’re outside an artificially-skewed norm. I happen to love virtual and augmented reality, but I wouldn’t blame someone else for checking it out, getting a substandard demo, and wondering what all the hype is about.


Without just the right focus, a VR headset is a blurry migraine generator, and a projected image gets dim or distorted. Ill-fitting hand controllers either restrict your range of motion or don’t pick up input at all. Sizing for women (and other smaller people) is an issue in wearable tech like smartwatches too. But the problem is harder to get around with virtual reality and motion control products, which often require precise calibration. It’s extremely intimate technology, more an extension of your body than a separate machine — which makes it all the more alienating when that intimacy ends up shutting you out.

I understand the reasons for this imbalance, and they’re not malicious at all. People quite reasonably test projects on themselves first, and since the modern VR industry skews overwhelmingly male, so do the prototypes. If you can only bring one design to a show, something big will work for more people, even if it works poorly for many of them. That’s especially true when the gender gap dictates that most of your visitors will be male. It’s a lot of small, rational choices that stack up like bricks in a wall.

But it’s also easy to chip away at that wall. Most of the companies I cover are well beyond the single-prototype stage; they’ve often got multiple units on display anyway, or different sizes of product that get left at home. Sometimes all it seems to take is having women test the tech, period. One eye-tracking headset stubbornly ignored my pupils until an employee asked if I was wearing mascara. When it got recalibrated perfectly a few minutes later, I was surprised — not by the fact that it worked, but by the fact that anyone had thought to troubleshoot makeup. Incidentally, this was one of the only VR startups I’ve ever covered with a female founder.


Whatever the reasons that VR and AR initially attracted men, designing for them perpetuates the gap. It suggests women are a niche demographic for products that are widely touted as the future of entertainment and computing. It’s a message that the community, invested in a world where everyone uses reality-altering technology, almost certainly doesn’t mean to send. And it undercuts the medium’s utopian promise. Virtual reality can make me a bird or an expert bomb defuser, but it can’t give me a world where I belong.

Besides, this isn’t a matter of abstract morality. If I’m not able to test a product, it doesn’t just get passed off to one of my male colleagues. For all intents and purposes, it doesn’t work. Because in the real world, I’m not an exception. I’m half the audience.

Whatever problems I’ve had, companies are proving that things can change. Among its various oversized designs at CES 2016, optics company Lumus had a pair of glasses that felt practically made for my head. And after my less-than-ideal haptics demo, the creators promised to work on something that would fit me. I can’t wait to try it out.

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