In the months since the start of the Russia-Ukraine war, supply chain disruptions, changes in demand in Eastern Europe and sanctions against Russia have hit the ICT market. Many Western technology vendors have either closed their offices or halted their operations and sales in Russia. erasing many millions in technological spending in Russia in 2022.
As the war between Russia and Ukraine leaves Russia isolated, the country will have to become independent and use domestic business or new partnerships to access technology products. On the other hand, human empowerment technologies have proven to be key to identifying individuals, visualizing conflict information, and war fact-finding programs.
This blog post analyzes the impact of the Russia-Ukraine war on the human magnification market in Europe, focusing on augmented and virtual reality (AR / VR), wearables and biometrics.
Companies withdrawing from Russia will generate $ 200 million loss in AR headphones
According to our Worldwide Black Book Live Edition, the impact on hardware will be strong, with $ 13 billion spent on common hardware lost in 2022 in Russia and Ukraine due to the conflict.
Our quarterly augmented and virtual reality headset tracking tool shows that the cost of AR headphones will generate a loss of $ 220 million in 2022, as companies withdrawing from Russia will affect technology availability by creating a void that will take several years to bridge.
While Microsoft HoloLens dominated AR’s market share in Europe, the company halted sales in Russia. This will prevent Russia’s vision of becoming a country built on smart city projects. AR headphones on the market are old and expensive; most devices are targeted at businesses, so they are less accessible to the public. The lack of consumer accessibility will lead to a gradual fading of current brands.
European countries will be affected at different levels. In Western Europe, AR will maintain momentum with brands such as Nreal launching new products. As the region is more open to new technologies, consumers will be more willing to buy.
In Central and Eastern Europe (CEE), AR is a slower and more price sensitive market. According to IDC’s quarterly extended and virtual reality headset tracking tool, AR’s growth will be half that of before, with a slow and gradual recovery from 2023.
In terms of VR, Facebook Oculus continues to occupy the lion’s share, as it is primarily a user-focused device. With higher purchasing power in Western Europe, the effect will not be noticeable.
CEE will suffer in the short term as companies such as Facebook, which accounts for 36% of the Russian market, are withdrawing from Russia. Popular products such as Quest 2 will not be available to consumers in Russia and Ukraine and this will significantly affect the market, allowing Chinese suppliers to intervene.
New VR releases such as Apple VR headphones and PSVR 2, which are expected to accelerate adoption, will also not be able to reach Russian and Ukrainian consumers due to economic sanctions and loss of consumer power.
Currency fluctuations are disrupting the wearable market in Eastern Europe
Russia is the market leader in CEE, so the impact of the war on the market is enormous. Russia has a 38% market share in CEE, and more than 70% of watches are Apple and Samsung smartwatches.
Russia will be hit hard by inflation, sanctions and the withdrawal of companies from the region, and the wearable market is expected to lose $ 1.2 billion in 2022.
Ukraine is a key bridge between Western and Eastern Europe, with many companies having distributor partners in the country. The war forced many businesses to close and many Ukrainians to seek refuge abroad.
This is expected to lead to a drop in the wearable market by more than 90% this year. The seasonal blockade of warehouses and the impact of COVID-19 will add additional uncertainty to the market, limiting growth over the next few years.
When Apple announced that it had ceased operations in Russia, the Russian smartwatch market lost its biggest player. This worsened when ApplePay was banned in Russia after some Russian banks were cut off from the payment system.
In addition, Google has stopped Russian users of smart watches from making payments through GooglePay. GPS satellite tracking features for outdoor activities are also impaired. Polar, for example, which makes computers for sports training, has trouble tracking traffic in CEE.
In addition to economic constraints and political instability, the usability of wearable devices has been compromised in Russia. Problems with accuracy and performance have affected the smartwatch market, and this has been exacerbated by Western market leaders who have withdrawn from Russia. On the other hand, it offers an opportunity for Chinese companies to fill the gap as the ruble and yuan stabilize.
From identity recognition to border surveillance, biometrics have become a new type of military weapon
Controversies over biometric data have hampered widespread adoption of the technology, raising concerns about privacy, security and bias. The war between Russia and Ukraine stimulates the “armament” of biometric solutions in Eastern European governments, which are implementing technology as a tool for self-defense against Russia and for civilian ID.
US based artificial intelligence company Clearview AI offered the Ukrainian government free access to its platform for the use of facial recognition to uncover Russian spies, fight fake news, identify the dead, and help gather lost families. The company is facing numerous lawsuits in the United States for violating privacy rights by collecting photos from the web, and its practices are considered illegal in the United Kingdom.
However, the Ukrainian defense sector is implementing this free service, creating more than 200 user accounts in five Ukrainian government agencies.
On the other side of the border, a Russian anti-war and human rights activist said the Russian government used face recognition in public squares and the subway to intercept human rights defenders and dissidents attending protests or rallies. With more than 125,000 surveillance cameras monitoring Moscow’s streets, the use of biometrics as a public safety instrument in Russia will be questioned again in the coming years.
In Western Europe, many countries are increasing their defense spending and pledging to increase investment in security and defense technology to protect borders and deal with the huge influx of refugees. Germany plans to increase its defense budget by 100 billion euros to provide better equipment and technology, including higher spending on border surveillance and security technology.
The growth of Ukrainian refugees will put European immigration authorities under pressure to collect biometric data from refugees. Adoption of biometric mobile kits and temporary biometric pop-ups will increase in Poland, Austria and Romania, where efforts to streamline the asylum process will lead to greater investment in hardware devices with biometric support.
The current crisis in Eastern Europe will not affect the cost of biometric solutions, but it raises awareness of the “pros” of the technology (not the “cons”), especially among law enforcement agencies. It also paves the way for new uses aimed at identification and misinformation when contextualized in a framework that preserves the right to privacy.
Providers of human augmentation need to focus on first-hand use cases.
Although the ICT market is experiencing turbulence in Eastern Europe, the war has shown that technologies to increase human capabilities can play a key role in war and can have a significant impact on conflict management and awareness. A Spanish television operator, for example, uses AR to simulate aspects of the war.
The military use of AR can also help the military with training both on the battlefield and in the air. Consumer VR solutions, such as Aftermath VR: Euromaidan and PrisonersVoice, recreate gamified scripts and compelling war documentaries to create empathy and draw the world’s attention to the Ukrainian situation.
Suppliers of AR / VR, wearable and biometric devices face challenges in Eastern Europe, but they need to put people first and focus on use cases that provide value to people involved in war, raise awareness of conflicts around the world and help people to be involved in the situation in Ukraine.
For more information, please contact Andrea Minon or Kayla Lamor head to https://www.idc.com/eu and drop your details in the form at the top right.