With apologies to David Letterman and Spinal Tap
Having said all this, please remember that considered as an industrial (rather than consumer) technology, VR has been a great success. You can't buy a car that wasn't designed in VR, or fill it with gas that was found without the aid of VR.In no particular order:
1) Gates envy: Everyone jumped in in the early 1990s with absurdly premature software in the hopes of being positioned as a standard bearer. VRML, for example. Utterly useless stuff. Java3D. Etc. VR software is HARD and astonishingly some of the most visible of the proposed standards were designed by people who hadn't actually completed any serious VR apps.
2) Slow computers. In fact, the ceiling for real time graphics hasn't budged in 5 years. SGI and its competitors stopped improving back then. Now that commodity cards have caught up with SGI, the new hope is building big machines out of commodity cards running in parallel.
3) Expensive data/content. You could hand enter the data to make a word processor or spreadsheet useful from the very beginning, so data wasn't a limiting factor to get pc apps primed. Useful VR needs lots of hard to get data- insides of human bodies, etc. And static data isn't enough- dynamics are at the cutting edge of viability because of computer speed and the existing body of applied math techniques.
4) Too many charlatans: $1 per minute crappy VR in malls really hurt the field in the late 1980s/early 1990s.
5) Interface components: Still need higher res screens, better optics, etc.
6) Liability problems: Can't rely on consumer market because insurers worry about VR accidents. Kids walking into hot stoves while they think they're dancing on clouds, or God knows what.
7) Because human acuity is so good that you can't get away with so-so specs as you can when the interface is less intimate, as with existing mass produced devices.
8) Because expectations are so high, it's too easy to disappoint. Some of the attempts to build VR products have stumbled on this difficulty.
9) Because the basic ideas of VR still need some more work. We still don't have a clear idea of what a truly useful general haptic interface would be like, for instance. Of course those of us who are obsessed with the problems are always working on such ideas, and I'm completely confident we'll get there, but it must be admitted that there's still work to be done.
10) Because there is still no clear sense of where VR fits into the time and space of our lives and workflows. VR setups take up space. Where would you put one? When would you use it? New interfaces usually colonize the time and space taken up by older ones. That's why the first successful consumer computer designs initially looked like typewriters, even though I think everyone involved was vaguely embarrassed by the association. Same with wireless devices in relation to phones. What exactly is VR stepping into the shoes of? It can't really step into reality, so, where? When? A lot of ideas have come up. It's the new home exercise machine, or the new game machine (warmer, perhaps), or the rainy day alternative to the bicycle, but whatever it is, there needs to be some sense of time and place for it, at least at first.
11) One movie projector can entertain hundreds of people at once. A room full of people can look at a television. A few people can look at a PC screen at the same time. But only one person at a time can fully enjoy VR, even though the equipment costs more than any of the above. That problem has confounded entertainment applications.