In a word, no. In the short term, Sony’s new Playstation VR (PSVR) headset will dominate sales in the console-based headset market, but this group is comprised of early adopters in a closed market. While significant, the gaming market is too small to be called a mass market, and PSVR sales to early adopters doesn’t even assure that VR will become a killer app in gaming (Kinect, anyone?). Overall, VR is in the early stages, and still seeking killer apps that can drive true mass-market adoption.

VR Headset Market in a Nutshell

The VR headset market breaks into three categories: phone-based, console-based, and PC-based. According to projections from researcher Strategy Analytics, phone-based headsets will account for 93% of overall sales in 2016, with console-based units at 6% and PC-based units at 1%.

So why are PC-based sales estimates so low? Because the GPU requirements are so high. Though some researchers put the number of VR-capable computers as high as 16 million by the end of 2016, all those aren’t owned by gamers. And other projections put the number as low as 3 million.

In contrast, the installed base of VR-capable PlayStation 4 consoles is projected to reach 53 million by the end of 2016, which is between 3-17 times larger. If Sony sells the 2.6 million PSVR units some analysts anticipate, it’s an attach rate of just 5%. Apply that to the most pessimistic estimate of VR-ready PCs owned by games, and that’s only 150,000 high-end units.

Even if PSVR sales smash projections, these are all sales to early adopters, which are essential to mass market success but an inaccurate predictor thereof. Beyond the console-based market, PSVR can’t trigger a mass market in PC sales because the installed base of VR-capable PCs is tiny. It will do little to impact phone-based VR headsets because the experience is so different; no one expects to get PSVR performance from a smartphone.

Hunt for the Missing Killer App

VR won’t achieve mass market success unless and until sufficient killer apps become available to stimulate broad-based use. Certainly, gaming may be one of them, but it’s only one, and its impact will be felt most in the console market.

For PC-based units like the Oculus Rift and HTC Vive, potential breakthrough applications will come in markets where users can afford the high-end computing requirements and expensive headset costs. Manufacturing is a great example. For example, a recent PWC survey found that 36% of all surveyed US manufacturers are either currently adopting VR, or plan to do so in the next three years. Over a third (37%) planned to adapt augmented reality technology in the same period. The two most promising applications were product design and development, and safety and manufacturing skills training.

A recent article in The Economist describes how real-estate companies in China use VR to show prospects apartments in London. The article reports that China has largely ignored VR-based gaming to focus on business applications like sales, design and education. Medicine is highly touted as another market that can benefit from the enhanced training that VR offers and and afford the costs.

Phone-based units are more for experiencing VR as opposed to heavy-duty gaming. Here the likely short-term applications are watching entertainment-based or utilty-based VR, interacting with social media and simple gaming. For example, the NBA just announced that they are streaming live games in VR for the 2106-2017 season, but only to the Samsung Gear VR headset. Facebook recently announced Carmel, a VR web browser that will enable simple VR experiences like putting you inside a car for a test drive, or shopping in a VR simulated store on Oculus devices, but also on some smartphone-based VR devices. Google’s new Daydream View will have more than 50 “experiences” by the end of 2016, and will also work with Google Play Movies, YouTube, StreetView, and Google has created VR tours of many historic locations. Whether any of these rises to the level of killer app remains to be seen.

What Does the Future Hold?
Everyone involved in VR, whether hardware or software developers, or industry analysts, are  drinking their own PR- and demo-fueled Kool-Aid, and will point to any success as proof of market viability. However, even a rudimentary analysis leads to the conclusion that even if PSVR sells 5 million units in 2016, it means very little for markets outside of console-based gaming.

No matter where you fit in—investor, software-developer, or potential buyer—you need to work hard to separate the signal from the noise. We’re in the early days of VR adoption, and success in any single market doesn’t portend mass market success. The best news is that the major hardware vendors; Facebook, HTC, Samsung, Google and Microsoft, can stay the course long enough for the technology to evolve and become affordable, and for those killer apps to emerge.

Jan Ozer (@janozer) is an experienced technologist and author who specializes in streaming media.