Issue: Volume: 24 Issue: 10 (October 2001)

Moving to the Mainstream

These numbers contribute to a 17 percent decline in total sales and service revenue, from $27 billion in 2000 to $22 billion in 2001. But compared to the rest of the high-tech market, this slowdown is relatively modest, and we expect VizSim/VR to surge again when the rest of the economy recovers.

One of the technologies that will drive future growth in this market, just as it has in other business sectors, is the Internet. We have surveyed users of VizSim/VR systems for the past several years about their use of the Internet. And we found that those respondents who were selling and using the least expensive systems relied the most on the Internet to distribute programs and content.

But in 2001, we see that many more of the Internet-enabled systems are in the mid- to high-price range. Given the fallout of low-budget startups in the past few years, it is not surprising to see that larger, more expensive systems, built and used by larger, more mature companies, have survived to take advantage of Internet connectivity these days.

Indeed, the VizSim/VR systems most commonly using the Internet for content delivery are in the $50,000 to $100,000 price range, while the systems using the Internet least often cost less than $10,000. What's more, we find that low-cost systems are 50 percent less likely to use the Internet in 2001 than in 2000, while VizSim/VR systems that cost between $250,000 and $500,000 are more than twice as likely to be connected to the Internet than they were last year.
Research, virtual prototyping, and higher education remain the top three uses of VizSim/VR technology, but museum, automotive, and aerospace applications have risen significantly in the rankings.

Also poised to drive the market forward in the coming years are several mainstream applications that have been gaining in popularity recently-largely, we believe, because of a reduction in system costs as well as an improvement in the ease with which users can create virtual models and worlds. In fact, VizSim/VR systems are becoming increasingly accepted for public use, with museums moving to fourth place among the most popular applications and trade show exhibits coming in as the eighth most-cited application.

We're finding a significantly smaller proportion of providers selling VizSim/VR-based systems for military research and military operations training, though these are still major applications for the technology. The drops in these areas are more indicative of the increased attention now being paid to more commercial applications, such as virtual prototyping, which remained the second most popular application in 2000 and 2001.

One disturbing trend in the market is that while costs have dropped and utility has risen, the level of user satisfaction with VizSim/VR systems has barely budged. In 1999, overall user satisfaction with VizSim/VR systems, based on averaging ratings for 18 factors, was a dismal 2.82 out of a possible 5. In 2000, the rating inched up to 2.88. And in 2001, it crawled up to 2.95.

But while these figures are rising, they mask the fact that in crucial areas satisfaction actually decreased. Factors showing declines include "System is understood by customers," which fell 15 percent from 3.16 to 2.68, and "System is well supported by manufacturer," which dropped 7 percent from 3.43 to 3.19.

Despite these trends and the dampening effects of a general economic slowdown, the VizSim/VR market is alive and well. And the technology is moving into many areas of mainstream use, where it is finally starting to fulfill the promises of a decade ago. Still, because user satisfaction is still not where it should be, manufacturers face a significant challenge, and opportunity.

Ben Delaney is president of CyberEdge Information Services. He can be reached at about the study on which this article is based is available at