After Decades of Promise, the Virtual Reality Era Has Finally Arrived

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The virtual reality industry got a much-needed jolt when Apple finally joined the fray with its first VR headset. If any company can bring face-worn devices to an audience beyond gamers, it’s the tech giant that introduced the world to the smartphone. “Apple is focused on the mass market,” says Jitesh Ubrani, research manager at IDC. “Apple is doing a great job introducing the technology to many people.”

It's still early days. But there’s huge long-term potential. Here’s an outlook for VR and the many ways it will be used. 

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Vast improvements in tech components make amazing VR possible today. Headsets run on energy-efficient yet powerful mobile chips, and are packed with components: A memory chip, fast Wi-Fi, a slew of cameras, high-end eye displays, microphones, speakers, laser-scanning sensors, motion sensors, tiny cooling fans. (But batteries, on board or in a connected pack, are still heavy, yet last just 2-3 hours.) Users can fully immerse in a virtual world for calls, gaming, entertainment, etc. Or the front-facing cameras make a live video stream and 3D scan of the room so users can see their real environment populated by virtual screens or holograms. 

Today’s models will seem clunky in 5 to 10 years, as big improvements occur to shrink the size and weight, without hindering performance. Costs will fall, too.

The leaders are Apple and Meta. Meta has about 60% of global headset sales, focusing on lower-cost models ($500 or less) for gaming and social virtual worlds. Apple’s $3,500 Vision Pro has a dazzling display and dozens of high-end components, plus a new VR operating system that takes familiar apps and puts them into VR. Plus, Apple built two new chips: One for computing and one for eye/hand tracking. The device is controlled by incredibly precise eye and hand tracking. A simple glance at a digital icon and a subtle tap of two fingers will select it, with no noticeable lag.

There are plenty of other players, too. HTC, DPVR, Valve, Varjo, HP and China’s ByteDance make high-quality headsets. Alphabet, Samsung and Huawei are among the tech giants expected to launch a device. Augmented-reality glasses, a related category, are not full VR and use transparent lenses to overlay digital info onto the real world. Top vendors include Xreal, Vuzix, Magic Leap and Microsoft.

The possibilities are nearly endless when it comes to specific VR uses. But Apple shows how VR can eventually be a general computing device. Think of Apple’s breakthrough VR operating system, visionOS, as Windows for VR, a new way to access web browsers, e-mails, documents, photos and all other apps. A crisp PC monitor, any size, can float in a fixed position in the room in front of you. Other apps, such as photos or a calendar, can open to the sides or hang on a wall. You can put these holographic monitors in the actual room or turn your workspace into any setting, such as a rocky coast in Washington, a tranquil lake in Maine or a beach in Italy. Early businesses testing Apple VR include Walmart, Vanguard, SAP and Stryker. 

On-the-go workers can set up a virtual office anywhere, such as on a plane, in a crowded bus or in a hotel room. Even in a cramped taxi, users can multitask with huge displays and multiple windows open. Open a spreadsheet on one side, e-mail in the center and a web browser to the right. Receiving a call? A video chat will open in front of you, either in 2D or as a 3D avatar. Talking about a new product or design? A 3D hologram will appear on the desk and colleagues can collaborate to spin the object around, test updates and take notes on a virtual whiteboard.

VR will remain a niche market in the near term, hindered by high costs and a lack of VR content. But content is coming, as developers build VR apps, and Hollywood and others shift production to VR videos. Still, expect strong headset sales in coming years. By 2028, global yearly shipments of VR/AR headsets will hit 35 million, up from nearly 10 million this year, according to market research firm IDC. Apple’s device will sell at least 400,000 units in 2024. Expect Apple’s VR business to grow significantly, to about 10% of revenue, about the same share as iPad. Daily usage will rise steadily, too, a key metric.

There’s a rapidly growing list of uses for VR, including many practical ones. Today’s office apps are being optimized for VR. From collaboration tools such as Microsoft Teams and Slack, and web-based storage services such as Box, to project management tools such as OmniPlan, and video chats with life-size screens.

Some of the specific areas that are promising: 

• Sales. You can show products, such as heating systems, medical equipment, tools and more as 3D holograms at trade shows. Present large luxury goods that are tough to stock, such as yachts, RVs and private jets in a small showroom or on the road. Try on clothes or see new furniture at home.
• Design and prototyping. Bring designers together in a virtual room to jointly see a digital version of a product, such as high-end cars. Reduce the need for physical models and in-person reviews, plus make product tweaks easier. Models can also be brought anywhere. A prototype virtual truck can be placed on a real street, for example.
• Health care. Train doctors, nurses, surgeons, physical therapists, etc. Nurses can dissect cadavers or conduct a series of patient assessments on an avatar. Medical students can learn how to place electrodes for an electrocardiogram. Dental students can examine digital mouths and extract teeth. In real-life situations, surgeons can get patient info or share live video to get a consult with a remote expert.
• Real estate. Immersive tours of homes for buyers, sellers and agents to take 3D walk-throughs and overlay digital info, such as floor plans and room size. Avoid the wasted time of an in-person visit to a property a buyer wouldn’t like, and boost the odds of prospective buyers making a trip to a promising property.
• First response. Train police, firefighters and other emergency personnel in dangerous situations, such as unruly protesters, active shooters or a fiery car crash, with VR videos that track performance, offer new scenarios and speed up training.
• Mechanical fields, such as engineering, manufacturing, construction and more. Train welders, home builders, aviation mechanics, truck drivers, electricians, etc. Assemble and disassemble complex machines. Practice maintenance and new builds.
• Plus, entertainment, including concerts, video games, TV, theater and virtual worlds. Watch live sports — a baseball game from the dugout or a basketball game courtside.

VR has the potential to cannibalize other tech segments, including PC monitors, big-screen TVs, game consoles and smartphones. Movies are stunning in VR and will give theaters competition. Still, the apps that will harness VR the best have yet to be built. But they are coming soon and will start winning over new users. Start-ups and tech giants alike will find moneymaking opportunities in VR. To get there, expect even bigger investment from companies and venture capitalists.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.