AUGMENTED REALITY WILL ‘REPLACE THE SMARTPHONE’: The future of mobile technology is in augmented reality (AR) — not virtual reality (VR), according to a recent report by Citi. While much of the recent commotion surrounding wearable headset devices has been focused on VR, AR technologies will likely be the most likely to disrupt major digital markets like e-commerce and m-commerce, gaming, and even smartphone hardware.

Citi estimates that, by 2025, the combined VR/AR industry will represent $674 billion. The AR industry alone is predicted to be worth $120 billion in 2020, while VR will be worth $30 billion, according to separate predictions made by Digi-Capital. Eventually, AR technologies will replace smartphone handsets, notes Citi.

Two reasons in particular explain why AR is a much greater potential disruptor to the current mobile market than VR, according to the report:

Prospects are good for AR applications. While VR content may give users a fully immersive experience for gaming and entertainment, AR technology is better suited to integrate digitized reality into the settings of the physical world; meaning, AR systems can be used without wholly interfering with work and everyday life. This could be compared to using a smartphone to watch a movie, rather than going to the cinema.
AR will prove particularly useful in enterprise settings. Although gaming and other entertainment-oriented content may be the immediately obvious use case for AR technology, enterprise and commercial applications present a much more lucrative industry in the long term. Furthermore, they are much more suited to AR. The benefits of using AR in the workplace could include facilitating work in factories and manufacturing plants, operating machinery and electronic equipment, and in areas such as material handling in warehouses and at distribution hubs.
For the time being, AR hardware is too cost prohibitive for mass consumption. While VR headsets are slightly better, they’re still too expensive for most consumers. The average price of VR headsets will likely range between $350 and $500. This price may not include other parts or the cost of a computer powerful enough to run the headset. Meanwhile, Microsoft’s promising AR device, the HoloLens, is priced at a whopping $3,000. As the prices of these devices decline over the next several years, they’ll become more popular in the consumer market.