Virtual reality meets commercial reality as headset sales plunge

By now, a headline like the one above, which I nicked from The Reg, should not be a surprise. The article that accompanied it, however, was much more optimistic:

Shipments of virtual reality kit have plunged, but growth is just around the corner.

So said analyst firm IDC’s Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, which found “shipments of augmented reality (AR) and virtual reality (VR) headsets were down 30.5 per cent year over year, totalling 1.2 million units in the first quarter of 2018.”

But IDC also predicts a rebound, for a couple of reasons.

One is that 2017 saw lots of headsets bundled with smartphones as the likes of Samsung and HTC sought to stoke the VR market. They’ve since stopped doing that, so this year’s scary shipment figures reflect the end of giveaways rather than a dip in real demand.

Another is that new products like the Oculus Go are both superior to their predecessors and nicely-priced, so their arrival in stores should spur demand.

A third is that the VR/AR ecosystem has matured and it’s therefore becoming easier to create content, which will see business adopt VR. IDC said it “believes the commercial market to be equally important and predicts it will grow from 24 per cent of VR headset shipments in 2018 to 44.6 per cent by 2022.”

How long, exactly, has a VR breakout been "right around the corner?" It seems like forever, but it can't have been more than two years.

Dispensing with that bit of ridiculous boosterism, though, we can move on to the rest of IDC's case here, which is even weaker.

• Samsung and HTC were not giving away their smartphone-based VR offerings, at least initially. They only switched to giving them away partway through last year, and only after failing to sell them. And they're shipping fewer VR headsets this year because (a) they took a bath on the things last year, and (b) their attempts to stoke VR demand have failed.

• Oculus Go isn't leaping off store shelves, either, or showing any sign of having spurred VR demand more broadly. The reason is simple: Oculus Go appeals to exactly the same customers that Samsung and HTC had been appealing to, and all of them as were interested got VR headsets for free, just last year. Not that many of them were interested.

• The VR ecosystem is not "mature." The PC and smartphone markets are mature, because pretty much everybody has PCs and/or smartphones, and selling new ones is thus very difficult. Nobody has VR headsets, and selling new ones should be easy, but nobody is biting; that's not a mature market, that's one which isn't resonating with consumers.

• Business VR isn't going to be a thing, either, for the same reason that non-business VR isn't a thing: VR does not enable any quantitatively new activity which they see as valuable, and isn't worth its cost for the relatively few activities that it can qualitatively enhance. There's still just too much that VR can't do.

The idea that clueless businesses will still buy into VR's hype, even though that hype has entirely died down, just doesn't make any sense. IDC's insistence that their own dataset should be ignored, even as their contradictory projections are taken seriously, manages to make even less sense.

The VR market is stagnating, not maturing, and reducing the cost of VR content creation by standardizing some of the tools and practices doesn't alter the fact that nobody is making money from VR content creation. IDC clearly doesn't want to believe that, but their own data clearly tells the story. Consumers didn't bite, businesses aren't biting, VR headset makers are making fewer headsets, and the whole sorry enterprise is only being propped up by deep-pocketed  players like Facebook, who are apparently willing and able to lose money on VR for years.

VR is not a thing, anyone who says differently is lying... if only to themselves.