Is AI the Panacea for AR Manufacturers?

Author|Zhou Liqing

Editor|Yang Zhou

In November, Rokid, one of the "Four Little Dragons" of domestic AR, held a new product launch event, during which an inappropriate comment appeared in the live broadcast room asking, "When will last year's salary be paid?"

"The company indeed hasn't paid us the 13th-month salary and year-end bonus for 2023. The 13th-month salary is clearly stipulated in the contract signed by the company in 2023. Although the company promised to complete the payment by the end of 2024, there is still no news yet." An employee of Rokid told "Market Image." The employee also said that in the 2024 contract, the payment of the 13th-month salary has been changed to be determined based on the company's operating conditions.

As a highly anticipated unicorn enterprise in the domestic AR industry, Rokid has been popular in the capital market since its inception. Qichacha shows that as of now, Rokid has completed a total of 13 rounds of funding, attracting an astonishing amount of capital. In 2022, the year with the most intense funding, Rokid secured two rounds of funding within four days, totaling 384 million yuan.

At the new product launch event in April this year, the founder and CEO Zhu Mingming (Misa) revealed that Rokid's revenue had continued to grow by over 100% over the past three years, with a year-on-year increase of 150% in the first quarter of this year. It was also expected that the company's revenue would continue to grow by 100% year-on-year throughout the year, achieving over 20 times growth in four years.

However, as of now, Rokid has not publicly announced its profitability. As a "minor hotspot" in the investment circle, AR has always attracted capital inflows. Many technology giants are also actively deploying in this field. However, due to previous incidents of unpaid wages, layoffs, and losses in some AR companies, the profitability of the industry has raised concerns both internally and externally.

Currently, relying solely on the AR technology route is obviously difficult to support the profitability needs of enterprises. Rokid and other AR manufacturers seem to have keenly perceived this situation and have begun to focus on AI glasses, using them as a breakthrough to enter the market and exploring the integration strategy of "AR+AI," attempting to open up a feasible commercialization path for enterprises.

01 AI Heating Up

Rokid's B-end product line covers various fields such as consumer-grade AR smart glasses and professional-grade AR spatial computing suits. In November, Rokid launched Rokid Glasses at the new product launch event. Unlike previous products that focused on AR technology, Rokid Glasses emphasized the fusion concept of "AR+AI" in its promotion.

Compared to Rokid's previously launched split-type products, Rokid Glasses adopts an integrated design, looking no different from traditional glasses. This smart glasses adopts a single green Micro-LED + diffractive light waveguide solution, no longer focusing on traditional immersive entertainment experiences such as movie watching and gaming, but rather shifting to multimodal AI interactions. It adds features such as AI search and Q&A, object recognition, text translation, and math problem analysis, which are closer to everyday needs, greatly enhancing the practicality and convenience of AR glasses.

Rokid's strategic focus seems to have shifted. At the launch event, Misa also stated, "AI and AR are one and the same thing." In the AR field, Rokid is not the only company adopting an AR+AI strategy; other manufacturers are also making efforts.

The LeTV Innovations' LeTV X2 supports the multimodal large model smart assistant RayNeo AI, enabling natural conversational search and control, visual search, AI translation, brainstorming, and other AI functions. Additionally, INMO Tech's INMO Go also integrates an AI large model, providing real-time voice translation, AI encyclopedia, and foreign language practice functions.

In addition to AR manufacturers leveraging their existing AR technology accumulation and actively integrating AI technology to transition towards AR+AI, glasses as an important carrier for the commercial application of AI technology have become an industry consensus.

Internationally, Qualcomm CEO Cristiano Amon mentioned in an interview with foreign media that Qualcomm is jointly developing a mixed reality smart glasses that can connect to mobile phones with Samsung and Google. The ideal form factor is "indistinguishable from ordinary glasses or sunglasses." Amon also emphasized that "generative AI will make up for the missing pieces in promoting mixed reality technology." Apple CEO Tim Cook has also previously stated that the company is moving into the smart glasses field.

In the domestic market, Baidu recently announced the world's first native AI glasses with a built-in Chinese large model, expected to be launched in the first half of 2025. Xiaomi quickly followed suit, partnering with GoerTek to launch a new generation of AI glasses, expected to be released in the second quarter of 2025. Xiaomi founder Lei Jun expects shipments of over 300,000 units for this AI glasses. Additionally, smartphone manufacturers such as Huawei and OPPO are also actively evaluating AI glasses projects.

The adjustment in strategic direction of AR manufacturers and the rush of technology giants into the AI glasses field may be due to the popularity of Ray-Ban Meta after its launch. Amon also mentioned that the success of Ray-Ban Meta gave him great confidence.

In September 2023, Meta collaborated with Ray-Ban to launch the second-generation smart glasses Ray-Ban Meta, which exceeded market expectations upon launch. IDC data shows that in the fourth quarter of the year of its launch and the first quarter of 2024, Ray-Ban Meta's shipments reached 360,000 and 100,000 units, respectively. As of the end of the second quarter of 2024, the cumulative shipments of these smart glasses have surpassed the one million mark.

Obviously, the exceeding-expectation sales of Ray-Ban Meta mean that the current product logic of focusing on AI for smart glasses has been validated by the market, providing a direction for domestic AR manufacturers to develop smart glasses—rather than stubbornly pursuing immature technologies and stacking various technologies into devices with a somewhat awkward appearance, it is better to return to the glasses themselves and iteratively upgrade their functionality.

LeiTV Innovations' founder and CEO Li Hongwei also pointed out, "Currently, a large number of AR companies in the market have invested 90% of their R&D efforts into 9% of user usage scenarios, which is actually far from user needs."

When AR manufacturers no longer overly pursue AR but instead start from the basic attributes of glasses, first developing smart glasses and then adding AI functions and AR displays, the products may have broader imagination space and a future closer to user needs.

02 Cooling of AR

According to IDC data, global sales of AR glasses in 2023 were only 480,000 units. Although the AR field is hot in the capital market, its commercialization process appears challenging, and AR manufacturers face severe challenges.

In August 2022, smart glasses manufacturer Inmax Technology was exposed for unpaid wages. Inmax Technology CEO Sun Li also admitted that due to the impact of the pandemic, the company had indeed suspended the payment of some employees' performance bonuses for certain months.

Meta's Reality Labs, the division responsible for AR (Augmented Reality) and VR (Virtual Reality) businesses, has accumulated losses exceeding 50 billion dollars since 2020.

Vision Pro has also encountered production cuts. According to The Information, multiple sources directly involved in the manufacturing of device components revealed that Apple has significantly reduced Vision Pro production since early summer this year and may cease production of the current version of the device entirely by the end of the year. The current status of Vision Pro has cast a shadow over the entire AR industry.

The main reasons for AR manufacturers' difficulty in achieving profitability can be attributed to two aspects:

On the one hand, AR glasses have not yet effectively attracted ordinary consumers. Although AR technology has huge potential, current AR glasses still have obvious shortcomings in terms of functional practicality, ease of use, and affordability, making it difficult to effectively stimulate consumers' purchasing enthusiasm.

Taking Meta's first AR glasses, Meta Orion, showcased at the Connect conference as an example. This product, called "the best AR glasses in the world" by Zuckerberg, integrates almost all currently available advanced technologies. However, its slightly strange appearance, high cost of up to 10,000 dollars, and battery life of only about two hours clearly indicate that there is still a way to go for true consumer-grade AR glasses. Currently, only 1,000 pairs of Meta Orion have been produced for internal research use, and its commercialization will take some time.

On the other hand, although AR manufacturers have launched many AR products based on scenarios such as movie watching, gaming, and office work, "niche" remains a pain point that the AR industry cannot avoid.

According to IDC data, global sales of smart glasses in 2023 were 1.01 million units, while sales of AR glasses were only 480,000 units. Compared to the widespread adoption of smartphones and PCs, this number is insignificant. AR manufacturers are facing a severe problem: the awareness and acceptance of AR glasses in the market are still limited, and market education and promotion efforts are urgently needed.

In this context, AI glasses, as a transitional product before the final form of AR glasses, appear particularly important. They can undertake the task of educating users and expanding the market under the current conditions of limited technology and immature ecosystems.

AI glasses differ from AR glasses. While AR glasses provide an augmented reality experience by overlaying virtual information on the real world, AI glasses add some intelligent interactive functions to ordinary glasses without deliberately pursuing a highly integrated visual effect of virtual and real worlds, instead focusing on practicality and convenience.

By providing a series of intelligent services such as real-time translation, voice assistants, and information push notifications, AI glasses can gradually establish users' dependence on and trust in wearable smart devices. Once this dependence and trust are established, it will lay a solid cognitive foundation for users to accept more advanced and complex AR glasses products in the future.

Meta founder and CEO Mark Zuckerberg also believes that smart glasses will be an important trend in future development and predicts that AI glasses priced around 300 dollars will become a "hit" product in the future.

03 Can AR+AI Break the Deadlock?

The success of Ray-Ban Meta has created enormous imagination for AI glasses. Can AR+AI glasses replicate the exceeding-expectation shipments of Ray-Ban Meta?

In introductions or analyses of Rokid's new products, much focus is placed on the hardware and functions of the products from an external perspective. However, as smart devices that are glasses first and foremost, the core issue of prescription lens fitting has been overlooked.

Rokid Glasses are available in two versions: with and without a display. The version with a display uses a waveguide lens, meaning that users who need vision correction must additionally attach clip-on lenses. The weight of Rokid Glasses itself is already 49 grams, and it will further increase with the clip-on lenses. In comparison, a pair of ordinary plastic frame glasses weighs about 20 grams, while lighter TR-90 frame glasses and titanium frame glasses weigh between 12-14 grams.

Some Ray-Ban Meta users have expressed that they have a myopia of 500 degrees and astigmatism of 200 degrees. After fitting the glasses with prescription lenses, the overall weight is around 70 grams, causing them to need to adjust the glasses every few minutes.

For users who need vision correction, the weight of Rokid Glasses, which can support 4 hours of daily use on a full charge, will undoubtedly become a burden when the battery runs out, which may directly reduce consumers' willingness to purchase. Although Rokid Glasses support fast charging and can be charged to 90% in ten minutes, for users with refractive errors, they obviously cannot take off the glasses to charge them at any time in all-day usage scenarios.

For users who do not need vision correction, the weight of 49 grams seems acceptable. Misa even said that the final product will adopt the design mold of the Bolon shown at the launch event, reducing the weight by about 8 grams, with a total weight controlled at around 41 grams. However, how to convince people who do not need to wear glasses to purchase this smart glasses is another issue.

Misa also said, "Actually, we don't need to force people without myopia to wear glasses. I believe that just getting myopic people to replace their existing glasses is already a great achievement."

Not only Rokid but also Meizu's StarV Air2, released in September, requires external clip-on lenses to meet vision correction needs and has relatively poor battery life.

Judging from the current market situation, Rokid and Meizu's products already represent the best forms of the industry under current technological conditions. Basic issues of weight and battery life remain prevalent challenges for current products.

For people who need vision correction, the weight issue may reduce their willingness to purchase, while those who do not need to wear glasses may not have a strong willingness to buy such products or may end up letting them collect dust in a corner due to the lack of practical usage scenarios. This is the reality currently faced by lightweight AR+AI glasses.

In contrast, the display-free version of Rokid Glasses, the "AI-only Enjoyment Version," allows users to fit the glasses with prescription lenses according to their needs without adding extra weight. Under the premise of similar functional experiences, the lighter and less expensive version is more likely to become the main sales force for the new product.

Is AI+AR a necessary innovation that meets consumers' actual needs, or just a "demand hotspot" forcibly created by technological drivers?

From this perspective, achieving true profitability may still rely on more "pure" AI smart glasses. The launch of Rokid Glasses with a display at this time may be more to emphasize Rokid's leading position in the AR technology field and its determination to continue innovating.

It is worth noting that Misa mentioned at the launch event that the new product is expected to be launched in the second quarter of 2025. Regarding the product's completion, in the video by tech blogger Dianwan Technology, Misa said that Rokid's style is usually to release products only after they are more than 85% complete. However, in an interview with 36Kr, this figure changed to "roughly 60% hardware completion and 50% software completion."

Li Hongwei said, "Actually, everyone is clear that current AR glasses are not yet mature enough to completely replace smartphones and still have a way to go before truly becoming mainstream smart terminals."

Misa also admitted at the Rokid AR Lite spatial computing suit launch event in mid-April this year, "There are still three years before AR manufacturers truly experience their 'iPhone moment.'"

Title image source: Rokid official website