The bulk of 2016 shipments are basic VR headsets that rely on other devices, generally being tethered by cable to a desktop PC.

Shipments of smart VR headsets, which can function independently, will only be 100,000 units.

These estimates only include VR headsets with integrated displays and exclude viewers, such as Samsung's Gear VR and Google's Daydream View. These are shipping in the millions.

Sony is the VR market leader, with its affordable PlayStation VR catering to the vast PlayStation 4 installed base. Canalys expects over 800,000 shipments in less than three months on the market.

HTC will ship around half a million units in 2016, putting the Vive in second place. Facebook's Oculus Rift, meanwhile which has been boosted from its long-awaited Touch motion controllers and will reach almost 400,000 shipments in 2016.

More than 300,000 VR headsets are estimated to ship in Greater China in 2016, with HTC leading the charge, while local vendors, such as Deepoon, Idealens, 3Glasses and ANTVR, have provided their own unique innovations and localization efforts that are vital for the massive China market, Canalys said.