Google Daydream View

Made-up worlds might be as big as mobile.

Augmented reality could mark as big a shift in computing as the smartphone, according to Jitesh Ubrani, senior research analyst for mobile device trackers at the International Data Corporation.

The market intelligence firm predicted shipments of both AR and VR headsets would see a compound annual growth rate of 108 percent by 2020, reaching 76 million units.

Virtual reality is a simulation of a three-dimensional environment that the user interacts with through a headset. AR is similar, but adds a layer of digital elements on top of the real world, such as in Pokemon Go or Snapchat’s new “world” lenses.

The IDC anticipates that more affordable VR devices, such as the recently released Google Daydream View, will continue to lead the market in terms of volume. However, it expects that AR headsets will pick up momentum.

“Augmented reality represents the larger long-term opportunity, but for the near term, virtual reality will capture the lion’s share of shipments and media attention,” said Tom Mainelli, who is program vice president of devices and AR/VR. He predicted that in the next 12 months, there will be a growing number of hardware vendors offering a range of products.

IDC is tracking screenless viewers such as Samsung’s Gear VR; tethered head-mounted displays such as the HTC Vive, and stand-alone HMDs, such as Microsoft’s HoloLens.

The potential retail implications for both are also still to be fully realized. Chinese e-tailer Alibaba offered a VR shopping experience for Singles’ Day that let a shopper look closely at an item and nod their head to buy it. VR devices are also seen as an “empathy machine” that marketers could use to create a more immersive experience. Rag & Bone recently teamed up with Google to create a VR video that took the viewer through the New York Fashion Week experience, while Google created a virtual reality experience with New York holiday window displays.

While the anticipation is growing with high-profile demonstrations from those such as Mark Zuckerberg, Jitesh said the technology is still in its infancy and “has a long runway ahead before reaching mass adoption.”