Global spending on wearables, smart home devices, and AR and VR headsets was tipped to reach around $525 billion by end-2025, with broader selection and lower pricing outlined by IDC as some of the key driving factors for the growth.

Out of the three categories, smart home products are expected to account for the majority of spending, reaching $400 billion by the end of 2025, up by a 10 per cent compound annual growth rate. IDC forecast the uptake of the segment to be driven by enhanced entertainment, convenience and security assurances by manufacturers.

The company expected the value of AR and VR to record the fastest growth to $18 billion, up nearly 68 per cent from an expected $2 billion in 2021, boosted by a move by enterprise users from pilot use cases to broader deployments, and growing demand for enhanced gaming offerings.

Tom Mainelli, IDC VP of device and consumer research, expected AR headsets focused on consumers to gain traction in the later years despite being focused on enterprise use cases for now.

Earwear and smartwatches are set to push spending on wearables to $106 billion in the period due to strong user demand, a replacement cycle and a broad range of devices in the category.

In total, the three categories are expected to reach $367 billion by the end of 2021.