Virtual reality and augmented reality are about to become explosive growth markets. Within the last few years, we’ve seen a range of exciting prototypes, and significant investment from tech heavyweights like Microsoft and Google. And recently, a report by the digital M&A firm Digi-Capital predicted that the combined AR and VR industries could be worth $150 billion by 2020.

That’s a big number. To put in perspective, the entire global video game industry is worth just $93 billion. Given the hype around VR and AR, it’s easy to be skeptical of that prediction. But there are real fundamentals at play that could make $150 billion seem like a conservative estimate.

Let’s begin by addressing the driver of this disruption. The next era of computing is not about the digital world, but about how the digital and analog worlds intersect, placing the user at the center of that intersection.

VR provides a real-life, immersive experience of a digital world. In its classical embodiment, it creates a purely virtual experience for the subject; think “Star Trek’s” Holodeck, or wraparound headsets like the Oculus Rift.

AR technologies place digital objects directly in the real world, augmenting analog objects using virtual information or graphics. To get an idea of how that could work, check out this video from Magic Leap, or this one from HoloLens.

According to Digi-Capital, the market potential for augmented reality is much greater; they predict it will reach $120 billion by 2020. This comes from several major segments, including commerce, data and enterprise. However, the breakdown of the VR market is far less diversified. Except for the tiny slice labeled “niche markets,” they predict that the entire VR industry will be devoted to gaming and entertainment.

I believe this analysis seriously undervalues the VR market, because it overlooks two key fundamentals. First, it assumes that VR hardware will generally resemble the Oculus Rift — a fully immersive, wraparound headset. And second, it doesn’t really consider the enterprise market. For many professionals, the ability to visually demonstrate concepts and create situational awareness from a distance will be huge drivers of VR adoption.

Most of the VR prototypes we’ve seen so far use a wraparound headset. But this “shut out everything” hardware paradigm could seriously limit adoption, especially in consumer markets. There’s actually an emerging category of virtual experiences that allow a user to experience digital objects as if they were real, without the need for a wraparound headset. There hasn’t been as much chatter about it, but “non-enveloping” VR could be one of the biggest, most important parts of this new wave of digital-analog world interfaces.

What does non-enveloping VR look like? This video from zSpace shows an example, where students can collaborate around a virtual experience — separate from the real world, but not totally isolated from it. Unlike wraparound experiences, non-enveloping VR can be fully collaborative, allowing multiple people to view the same images at the same time.

zSpace’s display uses a hardware set and stereoscopic 3-D glasses. But soon, we’ll see next-generation displays built right into consumer electronics. Imagine that your tablet or smartphone could project a virtual world right on top of its screen. This isn’t science fiction; companies like Ostendo and Leia Inc. are already developing such prototypes.

And we’ve even seen reports that Apple is experimenting with 3-D displays for its next generation of phones. When users are given the power of seamlessly experiencing digital objects, on any 3-D space emanating from a display screen, a fundamentally new set of rules apply.

Yes, game and entertainment developers will continue to jump on these technologies; who wouldn’t want to play Angry Birds in 3-D in the space above their smartphone?

But there’s also a substantial, perhaps much larger, enterprise VR market emerging. In terms of immediate uses, zSpace sees a strong potential for non-immersive VR in education. At my company, EchoPixel, we’re anticipating a big impact in the medical space. Today, many surgeons and radiologists are needlessly struggling through flat images of patient anatomy, when they could be working with a realistic digital 3-D representation.

In the near future, other industries will follow. From orthodontics to interior design, professionals will jump at the chance to launch, edit, and demonstrate their designs with 3-D imagery — especially if they can use widely-available phones and tablets.

Consider another set of applications: Anywhere that a professional has to examine or control something from a distance. Say there is a large earthquake in a remote developing country. Instead of sending someone out to look for and treat survivors, you could just dispatch a drone with video cameras, ultrasound probes and light field sensors to survey the area. By converting those images and data into VR, world-leading doctors could quickly identify victims, closely examine a patient, and deliver world class care to injured victims, from the other side of the world. If the technology is good enough, looking at a 3-D image would be just as good as examining the real thing.

That’s not a big leap from 3-D film technology that companies like Jaunt are developing, and could be presented in an enveloping or non-enveloping format.

The market potential here is truly enormous — a whole range of jobs that currently require physical presence (inspecting infrastructure or managing construction, for example) may eventually switch to VR. To an extent, we can already perform this kind of remote video surveillance. But flat video images are a poor substitute for real life; they simply don’t provide as much information or situational awareness.

VR is different. Even today, 3-D images can create a remarkably accurate representation of a real object. And this technology is getting better all the time. It’s far too early to predict exactly where this market is headed. But I can say this with confidence: The future of VR goes far beyond fun and games.

Sergio Aguirre is founder and CTO of EchoPixel, a startup whose True3D viewer converts patient anatomy into interactive virtual reality as a tool for doctors, medical students, and patients. Prior to forming EchoPixel, Aguirre developed one of the first stereoscopic 3-D video systems.