Global shipments of Augmented Reality (AR) and Virtual Reality (VR) headsets witnessed an 8.3% YoY decline in 2023, as per IDC's recent data.
In the first three quarters of 2023, ByteDance's VR subsidiary, PICO, continued its dominance in China, capturing a commanding 58.5% market share for three consecutive quarters.
Founded in March 2015, PICO, dedicated to VR research and content creation, saw ByteDance acquire it for RMB 9 billion in August 2021. Integrated into ByteDance's VR business, PICO unveiled its inaugural product, the PICO 4 VR all-in-one device, priced from CNY 2499, in September 2022.
Insiders revealed to EqualOcean in October that ByteDance is contemplating a gradual withdrawal from its PICO business, with plans to trim short-term investments and downsize the associated team. The decision is attributed to ByteDance's acknowledgment that the hardware-focused PICO venture is outside its core competencies, coupled with underperformance over several years and a perceived lack of future prospects.
The Information reported that amidst this upheaval, more than 400 employees have been laid off, and an additional 600 have been reassigned to ByteDance's central platform. This strategic shift has led to a significant reduction in the PICO team, which, at the beginning of the year, boasted over 1800 members but has now been scaled down to just over 800.
Recent updates from The Information indicate PICO's deviation from its original PICO 5 development plans, now directing efforts towards a high-end Mixed Reality (MR) headset codenamed "Swan" to compete with Apple's Vision Pro.
China's AR market, according to available data, anticipates an impressive 133.9% YoY growth, projecting 240,000 units shipped in 2023. Integrated AR shipments are estimated at 35,000 units, while standalone AR shipments are expected to reach 205,000 units.
IDC forecasts continued momentum in AR shipments throughout 2024, with an impressive 101% growth rate, reaching a projected 60,000 units and a 68.5% increase YoY. Standalone AR devices are poised to remain the predominant force, constituting 87.6% of the total AR market. Advancements in Qualcomm's AR-dedicated chips and waveguide technology are expected to prompt major players to unveil or iterate on integrated AR glasses.
Domestically, Xreal, Leiniao, Rokid, and other key players collectively command over 70% of shipments. IDC suggests 2024 could signal a revival for the industry, with an estimated 46.4% increase in AR/VR headset shipments. Improved connectivity adapters and enhanced application adaptability are set to seamlessly integrate AR/VR devices with tablets, gaming consoles, and smart cars, delivering users a more streamlined experience across travel, productivity, and entertainment.
IDC concludes, "While AR headset sales may progress at a measured pace compared to VR counterparts, increasing product diversity will cater to a broader spectrum of consumer needs. The spotlight remains on 3D immersive and interactive augmented reality, finding favor particularly among enterprise users."