Augmented Reality has officially gone mainstream. One considered too complex and expensive for most companies investing in digital transformation, AR has quickly evolved into a versatile, highly accessible toolkit for a variety of different use cases. Today, companies and consumers alike are using AR for everything from enhanced shopping experiences to team collaboration.
Additionally, the statistics show demand for Augmented Reality is increasing too. Around 57% of customers say they’re more likely to buy from a brand offering AR experiences, and 70% of consumers believe AR will become a part of their everyday lives in the years to come.
So exactly how big is the AR market, where is it having the biggest impact on consumers, and what factors are driving its continued growth?
The Size of the Augmented Reality Market
Various reports show the size of the AR market is growing, and at a pretty incredible rate too. According to Grandview Research, in 2021, the value of the AR market was around $25.33 billion, but the space is expected to grow at a CAGR of approximately 40.9% through to 2030.
Fortune Business Insights suggests the market will be worth around $97.76 billion by 2028, representing a growth rate of 46.8% between 2021 and 2028. Elsewhere, Markets and Markets tells us the AR space will be worth around $88.4 billion by 2026, benefiting from a CAGR of approximately 31.5% between 2023 and 2026. While the exact projections vary, the overall consensus is that the augmented reality market is huge, and it’s getting bigger all the time.
Of course, AR is driving more attention in some spaces than in others. For instance, in 2021, North America held the largest revenue share (33.9%) for the AR market, with the US representing a significant number of AR buyers. This makes sense when we consider the number of leading AR tech companies in the US space, from Google to Microsoft.
While Europe is also poised for significant growth in the years ahead, the APAC region is expected to deliver the most potential for the AR industry, according to most industry reports. Developing countries such as Australia and Japan are investing in ever-more innovative technologies, and increasing availability of 5G connectivity is expected to help drive the AR space forward even further in the years to come.
What’s Bigger: AR Hardware or Software?
According to the reports above, all aspects of the AR industry are experiencing a rapid period of growth. However, the hardware segment may be accelerating at the fastest rate.
In 2021, AR hardware accounted for 59.8% of the market. The growing adoption of AR-powered devices, the proliferation of more advanced smartphones, and the development of AR smart glasses are all contributing to the success of this segment. In fact, head-mounted displays and smart glasses accounted for around 70.7% of the market during 2021. Since then, numerous vendors have begun to branch into this space, with various smart glasses announced at CES 2023.
While the hardware space is generating a lot of hype right now, there’s still significant scope for AR software to grow. Currently the software space for AR is growing at a rate of 41.8%, driven in large part by the discovery of new use cases for augmented apps. Evolving industrial brands are leveraging AR to deliver intelligent remote assistance to workers, while healthcare companies are experimenting with AR to assist with medical training and remote patient care.
Additionally, low-code and no-code platforms are making it easier for companies from various industries to develop their own AR experiences, without the need for extensive programming knowledge. Platforms such as Meta’s Spark AR, as well as the AR APIs, SDKs and toolkits available from leaders like Google and Apple are opening the door to more innovation in the space.
What’s Driving the Growth of AR?
So, why is AR such a big deal in the current landscape, and what’s causing it to grow so rapidly? First, AR is evolving in line with the growing adoption of new, innovative technologies in the wider world. Companies are looking for better ways to unlock immersive experiences for training, collaboration, and customer service, and vendors are producing an ever-evolving range of tools.
AR chipsets have become more common, with brands like Qualcomm developing dedicated solutions for hardware vendors producing smartphones and wearables with AR accessibility. The versatility of the AR space has led to widespread adoption too. Today’s users can leverage AR using web-based platforms, smart applications on phones, and wearables alike.
Perhaps the main factor driving the continued growth of the augmented reality space is the consistent discovery of new and valuable use cases for the technology. For instance, as the Grandview Research report notes, AR is spreading across multiple industries, including:
- Manufacturing and Construction: Companies are using AR apps in the new industrial landscape for production line management, analysis, and even to interact with digital twins. AR can assist with the creation of virtual blueprints, and even offering remote guidance.
- Advertising and marketing: AR is providing companies with opportunities to reconnect with customers, using virtual exhibitions, hosting events, and offering try-before-you-buy experiences through mobile apps.
- Healthcare: Various AR solution providers are now collaborating with healthcare institutions and offering AR tools to facilitate remote care. Many of these organisations are also experimenting with the benefits of AR for training.
- Education: In the educational space, AR technology is proving to be a valuable tool for immersive learning, assisting in the development of various crucial skillsets. Immersive technologies can improve knowledge retention and engagement.
- Navigation: AR technology has the potential to revolutionize both indoor and outdoor navigation, particularly when paired with new generations of vehicles, designed to deliver exceptional guidance to drivers without the need for handheld devices.
What’s Next for the AR Market?
Although it’s difficult to predict exactly which trends will emerge as the biggest drivers for the AR industry, we can see examples of numerous emerging technologies which could contribute to the size of the industry. For instance, the rise of the metaverse and Web 3 technologies represents excellent opportunities for the AR space. AR technologies could allow users to interact with virtual objects and NFTs from the metaverse in the real world, and create more advanced avatars using AR tech.
The evolution of artificial intelligence, and increasingly powerful algorithms for computer systems could benefit the AR space too. Generative AI solutions already have the potential to transform the way digital landscapes and 3D assets are created for the immersive industry. Additionally, AI-assisted AR solutions can allow for more powerful experiences in various industries. AI built into smart glasses and AR apps can improve user interface experiences, and deepen immersion.
Additionally, as demand for immersive experiences continues to grow, new tools for platform and content creation are emerging all the time, empowering new innovators to get involved.
Simply put, the augmented reality market is already huge, but it’s set to get a lot bigger.