Outside of trade shows, there is limited consumer interest in VR, according to Windsor. Among several reasons for the pushback on VR devices, foremost among is cost, he said. VR headsets can run several hundreds of dollars, they also require an expensive personal computer to function.

The devices tend to be large, clunky and uncomfortable to wear," Windsor wrote, and "in many cases they also make the user feel foolish when wearing one.

VR in cuts the user off from almost all sensory inputs from his immediate environment severely limiting the situations in which the user would feel comfortable using one, Windsor said. Several VR devices also require an HDMI cable, which prevents the user from moving freely and increases the risk of a fall.

Windsor pointed out that many users describe feelings of nausea associated with VRs imperfect replication of the real world compared to what the brain is expecting.

In some stores entire days have gone by without a single demo being given, Windsor said of Oculus. Best Buy will continue to range the Oculus Rift but the real estate given up will be re-used for products that produce better sales per square foot.

While VR may have a limited future with consumers, Windsor believes that augmented reality (AR) holds massive appeal for enterprise customers. Unlike virtual reality, which is total immersion in a computer generated world, AR is the blending of virtual reality and the real world, allowing users to add virtual overlays to glasses conjuring about something like the visuals in the sci-fi movies Minority Report or Iron Man.

Augmented reality has uses in areas like e-commerce, browsing, streaming, advertising, consumer apps, games and theme park rides. Companies to watch in the space include ODG, Microsoft HoloLens, Meta, Atheer Labs and Magic Leap, according to Windsors report.

The AR user experience is still miles from where it needs to be but critically it does offer productivity improvements that have led to many companies trialling it particularly for employees in the field, Windsor wrote. Hence AR in the enterprise should see both unit shipment growth as well as good growth in revenues from software and services in 2017.

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Why this analyst is warning investors to steer clear of virtual reality in 2017 - L.A. Biz