Smart glasses as a replacement for smartphones

March 23, 2016 //By Jessica Lipsky
While still at the stage of prototypes and developer kits, the nascent market for virtual and augmented reality headsets will explode by 2018, according to a panel of proponents at the recent Game Developers Conference in San Francisco.

“In the long run, we think virtual reality will have hundreds of millions of users and end up eating into the mobile market,” said Tim Merel, founder and chief executive at Eyetouch Reality and Digi-Capital, an investment baking firm for virtual reality (VR) and augmented reality (AR).

Merel and his fellow panelists defined virtual reality devices as those with “presence” that provide an immersive experience, such as the Daqri smart helmet . Augmented reality fuses overlays digital images on the physical world with products such as Microsoft’s HoloLens or Meta glasses .

The first two months of 2016 showed a $1.1 billion investment in AR and VR, according to Digi-Capital – the first time that AR/VR investment has topped a billion dollars in any year. Nearly $800 million went into display startup Magic Leap, which developed a retinal display for AR that superimposes computer generated imagery over real-world objects.

Digi-Capital forecasts $120 billion in revenue from AR/VR by 2020. While the success of VR is mostly consmer related, AR poses an opportunity for revenue from myriad vertical markets. Mobile operators could potentially charge customers for the data used to drive higher frame rates and stereo images, Merel noted.

The tipping point for AR passing VR will be between 2018 and 2019. Source Digi-Capital.

“Everybody from big players at the top to a million startups is working on this,” Merel said, adding that the domestic Chinese market is growing rapidly.

VR will come online first, because the technology is driven by the gaming industry, and will eventually turn into a $30 billion market. Augmented reality systems – driven by smartphone-like use cases that include online commerce and heads-up displays for vehicles – will eventually take up a larger piece of the pie at $120 billion, according to Digi-Capital.

Merel said the price of hardware will decrease by 2018-2019, when many problems around battery life, field of view, and cellular communication will

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