Innovative new applications using virtual reality headsets are seemingly popping up everywhere these days, especially in the gaming, education, and entertainment arenas. While we will likely look back at 2016 as the year of VR, many industry observers believe augmented reality (AR) glasses may actually rule the day in a few short years.

According to a recent report from Digi-Capital, the combined AR/VR market is projected to reach $120 billion in total revenue by 2020. However, the analyst firm believes AR will grab the lion’s share of the market at $90 billion compared to VR’s $30 billion.

Why the huge projected revenue chasm between the two technologies? How will AR eventually dominate the category?

This wide discrepancy in adoption over the coming years is likely due to the fundamental difference between VR and AR. Virtual reality offers a closed, stationary and fully immersive experience, shutting the user off from the outside world by submerging them in a virtual 3D world. The power of VR isn’t easily portable — most VR devices are connected to a high-powered PC to run their graphic-intensive realities. And, of course, VR experiences are, by definition limited to controlled environments; they don’t extend into the real world.

AR, on the other hand, lets users view 3D imagery superimposed onto their real-world environment, offering contextual data and graphics in their field of vision. The user is generally not tethered to a computer, with the processing power stored either in the glasses or a small controller. The key takeaway is that AR systems can be productively used anywhere.
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