Virtual Reality’s iPhone Moment
People are expressing disillusionment with the VR industry. This is a mistake. It’s exactly where it needs to be. Every new technology industry needs time to gestate, even one with a nose-bleed growth-rate like VR.
People say it hasn’t lived up to the hype. And it hasn’t. Not yet. So it’s fair to ask: when exactly will it live up to the hype?
For every new technology industry, there’s a point in its development when it becomes cool. When it’s no longer the remit of nerds in the basement — it’s a popular item that is sought by the general population. This is when hype and reality collide in a sonic boom of window-shattering glory.
Apple has timed these breakout moments well. It has been in large part responsible for making new technology products popular. The iPhone made smartphones cool; the Mac made computers cool, the iPod made MP3 players cool.
There’s a sweet spot for a new product’s coming out party. It’s around 100 million unit sales a year. The first iPhone was released in 2007 when smartphone global annual sales reached 120mm. The Apple iMac was released in 1998, when global PC sales hit 90mm.
This is when a technology starts to be a cultural force. When it becomes cool.
So the smart money would be on a must-have VR product coming out whenever VR devices hit the 100 million unit sales a year mark. When is this likely to happen?
VR sales are increasing rapidly, with 2017 set to reach around 4 million unit sales for high-end devices, compared to 1.5 last year. If this rate continues (around 170% increase year-on-year), VR could have it’s iPhone moment some time in 2021.
That’s probably the most optimistic outcome. What’s the most pessimistic? Before answering this, it’s worth taking a step back and considering the adoption rate of previous technologies.
Smartphone sales increased around 50% year over year (yoy). It hit maybe over 60% at it’s peak. PCs growth was much slower: was 15% to 20% yoy.
Every time a new technology emerges, it is adopted faster than previous technologies. Smartphone growth (50%) was three times PC growth (15%). If VR is again three the growth rate, it should grow by 150% to 180%, which is what we are seeing with this year’s projected sales.
So I think it’s safe to say that the worst case scenario is that the VR adoption rate will increase by 50% year on year.
Here are the two projections of the best-case and worst-case VR sales volumes.
The take home message is that it’ll still be a few years before your grandmother is using one. But everyone will be in VR ten years from now.
VR will break out like a Hemingway character going bankrupt.
“How did you go bankrupt?”
“Two ways. Gradually, then suddenly.”