Rod Hall, a Goldman Sachs analyst expressed his opinions on the future of virtual reality and augmented reality markets.

Hall believes that VR is more likely to succeed than AR due to the high number of products available in this industry and the expectations for hardware improvements in the near future.

AR solutions that meet current expectations will not be available until the next few years, because of new breakthroughs in optics technology.

“If AR products do ship in the next few years we would expect them to offer only smartwatch level utility for a much higher price with difficult channel execution issues,” said Hall in a note to clients.

On the other hand, Goldman Sachs analyst expects Meta Platforms (NASDAQ:) to launch its new version of the Cambria VR headset this fall, with Apple’s (NASDAQ:) first VR offerings anticipated to come in early 2023.

According to the bank, the most important competition in VR is currently Meta and Apple. The former is focused on increasing its user base through attractive hardware prices and engaging VR experiences while the latter is more concerned with growing its platform.

Even though that VR technology continues to see improvements, the category still hasn’t fully clicked with the broader user base, says Hall. As a result, the bank’s VR unit forecast of 19.4 million units in 2023 is more optimistic compared to the IDC estimates of 18.9 million, based on Hall’s beliefs that VR technology will improve remote collaboration.

“We believe that VR could become an important element of remote working if comfort and other issues are solved,” said Hall.

Although VR unit sales are expected to reach almost 34 million by 2025 according to Goldman’s projections, it all depends on whether VR product users recognize the utility of VR.

However, the analyst saw AR sales declining due to lack of technological advancements. AR products will not have many industrial applications, he said.

Hall projects that AR unit sales will reach just 1,000,000 in 2023, and 3,000,000 by 2025.

By Senad Karaahmetovic