Apple will likely kickstart the AR/VR market in 2023. Which technology will dominate?

Augmented and virtual reality (AR/VR), now also known as the Metaverse, is nothing new. The concept of virtual worlds in which people interacts has been around for at least 40 years in movie making and over 20 years in real life.

However, there has been a rapid acceleration of development activity around the concept over the past five years. This sudden acceleration is due to two main factors. First, smartphone players are seeking the next big thing. They are set on AR/VR headsets as a ‘natural’ extension of the smartphone. Second, this is the first time that hardware and software are converging in terms of portability and efficiency. Rather than a new concept, the AR/VR and Metaverse can be seen as an alternative reality where people interact in different ways. One could consider this as the future version of the Web, powered with new properties that will open new usages and business models. From what we understand today, this market is destined to see multiple giants competing. At first, Meta and Apple are leading with two opposite visions of this market. But other players are already in the field, like Sony and Microsoft.

Yole Group has always followed technologies that could suit the AR/VR market closely, even in its infancy. Our knowledge around this is still evolving as the industry is maturing. Recent signs have showed us that key milestones have been reached. The metaverse and AR/VR’s potential should therefore become clearer sooner than we thought. Technologies that enable more convenient and effective high-quality AR and immersivity will transform adoption. These include lightweight glasses and headsets that provide easy transition between VR, AR, and the physical world. One can be doubtful about such systems, but who anticipated smartphones in 2007? Similarly, we will have bulky, limited, and un-optimized first generations of products, but the potential is there.

What will drive adoption? This is what concentrates most value and drives most innovation right now. It is linked to the displays and optical waveguides, because this is ‘where the magic happens’. Adoption will be driven at the end of the value chain. If the user interface is half-baked or offers a bad sensation seeing through the headset then that will be fatal, even if the sensor, battery, computing power and overall technical specifications are otherwise excellent.

Semiconductor companies are investing gigantic amounts of money in reflective, diffractive, or holographic optical elements and display engines needed to achieve state-of-the-art immersive AR/VR to make their dreams come true.

Over the last few years, Yole Group has looked at the different technologies that will play major roles in this new era. They include regular sensors such as Inertial Measurement Units (IMUs), microphones, and pressure sensors. Two-dimensional (2D), 3D Time-of-Flight (ToF) and event-based sensors can all enable 3D imaging and sensing. Yole Group has also analyzed biometry with gaze tracking, displays with microLEDs and optical guides for truly immersive AR/VR experiences.

The Yole Group’s market and technology reports, tracks and teardowns reports offer complete collections dedicated to AR/VR and indirectly the metaverse, from system to semiconductor wafer level. And we are only seeing the tip of the iceberg – stay tuned for even more dedicated reports in 2023.