In autumn 2024, tech giants began flexing their muscles again in batches.

Concepts like foldable tri-screen phones, AI glasses, and new Apple products triggered a wave of speculation in the secondary market. Recently, Huawei's tri-foldable phone has ignited the market with exclamations of 'wow.' The 1TB version of the Mate XT, a masterpiece, was once priced at 100,000 yuan in the spot market, transforming it into an 'electronic Moutai.' Reviews of Apple's new phones have been mixed, and with heated discussions over the 'Android-ization' of iOS 18, the tech industry remains abuzz.

Next, this fervor may pass on to the next contender – Meta plans to launch its long-rumored AR glasses Orion in September. AI glasses are not a new concept, but due to technological limitations, they have not yet matured. Precisely because they are not yet mature, there is potential for them to 'break through the sky' in the future.

AI glasses, reborn?

As early as September 2021, Meta began exploring and experimenting with AI glasses in collaboration with Ray-Ban. Shortly thereafter, the two companies jointly launched the first-generation smart glasses, Ray-Ban Stories.

Based on a simple calculation using the global population of over 2.5 billion myopic individuals in 2022, it's not difficult to imagine the vast market potential for this new hardware that combines both 'entertainment' and 'necessity' attributes.

However, constrained by AI technology at the time, as well as factors such as the hardware and software ecosystem and wearing comfort, only approximately 300,000 pairs of these first-generation smart glasses were sold globally from their launch until February last year.

In September 2023, Meta continued to accelerate R&D and iteration, launching the second co-branded product, Ray-Ban Meta. According to IDC data, sales of the second-generation product surpassed 1 million units by the second quarter of 2024.

Image source: Meta's official website

Global sales growth has also been robust. Data shows that in the first quarter of this year, global shipments of smart glasses reached 260,000 units, a year-on-year increase of 217%, while AR glasses shipments totaled 100,000 units, up 56% year-on-year.

It is foreseeable that although smart glasses are still a niche consumer electronics product with sales in the millions, far from the maturity of other smart terminals, their potential growth is undoubtedly significant.

According to Grand View Research, a global market research firm, the global smart glasses market was valued at USD 1.23 billion in 2022 and is projected to grow at a compound annual growth rate of 27% to reach USD 11.2 billion by 2030.

2024 is likely to be a turning point for this emerging product, marking its entry into a period of rapid growth. Comparing the development trajectory of TWS earbuds, it is evident that for a traditional consumer electronic product to break away from its decades-old traditional form and evolve into a new form, there is a gradual process of industrial evolution. This involves the introduction of a concept product, with many 'early adopters' participating – the emergence of a single blockbuster product shapes the initial contours of the industry trend – and finally, a consensus emerges, leading to the continuous release of blockbuster products by major manufacturers.

The AI glasses industry is clearly in the second stage of this evolution: the potential for a blockbuster product exists, and the industry trend is taking shape, but a full consensus has not yet been reached.

Condition 1: Potential for a blockbuster product

As is well known, since the beginning of the new AI industry cycle in 2023, AI's empowerment of industries has extended from initial large models, computing power, and chips to terminal hardware facilities, such as AI-powered smartphones and PCs, which have initiated a replacement cycle this year.

Similarly, smart glasses have gained more AI-driven ideas and operational space through accelerated iterations of AI technology. As a leader in smart glasses, Meta first introduced AI capabilities to Ray-Ban Meta on a large scale in April this year.

With AI empowerment, Meta Ray-Ban is no longer limited to conventional smart functions like listening to music and making phone calls but now boasts multi-modal interaction and personalized information processing capabilities. For example, users can invoke the camera through voice commands to perform various visual operations, such as virtual try-on of clothing, recognition of buildings in front of them, taking photos, recording videos, and supporting translation in five languages.

Benefiting from the value added by AI, it is reported that Meta Ray-Ban's monthly activations continued to increase by 25.2% month-on-month in July this year, even amidst persistent shortages. Industry insiders predict that annual shipments may exceed 1.5 million units. In a sense, this has already made AI glasses a blockbuster product in its category.

Shortly thereafter, Orion, Meta's first AR glasses concept verification device developed over nine years, will also be unveiled. It is reported that on September 25, founder and CEO Mark Zuckerberg will introduce Meta's first AR glasses, codenamed Orion, at the Connect conference. This marks Meta's first major new hardware product line update since 2021.

Although the Orion currently being introduced is only a prototype of AR glasses, with only 1,000 units produced for internal use and developer testing, AI glasses are essentially a transitional product on the path to AR (augmented reality) development. Meta's official foray into the next product stage undoubtedly affirms the current product strength of AI glasses and significantly strengthens market expectations and confidence in their widespread adoption.

In this regard, its Chief Technology Officer, Andrew Bosworth, once stated, 'In consumer electronics, this may be the most advanced thing we, as a species, have ever produced.' It is reported that Meta will utilize Orion as a software foundation to pave the way for 'Artemi,' a technologically streamlined and consumer-facing AR glasses set to be released in 2027.

Condition 2: The embryonic form of a blockbuster AI glasses product will accelerate the formation of industry consensus

As one of the few AI terminal options currently available on the market, AI glasses have obviously become a must-win battleground for major technology and electronics companies. This year has seen a flurry of activity from various consumer electronics giants both domestically and internationally.

In the domestic market, in March this year, ByteDance acquired OWS company Oladance, with the potential to apply its audio technology to the smart glasses sector. Subsequently, new products such as Xiaomi MIJIA Smart Audio Glasses Enjoy Edition, Huawei Smart Glasses 2, and Hive Tech Circle AI Audio Glasses were successively launched.

Image sources: Huawei Mall, Xiaomi Mall

According to corporate news published on Tianyancha, LeTV Innovation recently announced the establishment of a joint venture with glasses retailer Dr. Glasses and plans to release the LeTV X3 AR glasses and the first AI glasses in collaboration with Dr. Glasses by the end of the year. Other manufacturers such as Inmo Tech and Meizu are also expected to launch new AR glasses products this year.

In the overseas market, it is reported that Snapchat, a global social media company that has long competed with Meta, may preemptively launch its fifth-generation Spectacles on September 17. Meanwhile, Apple is also committed to expanding its product portfolio in the emerging AR/VR market, developing augmented reality AR glasses in addition to Vision Pro.

Furthermore, tech giant Google is rumored to be reinvigorating its AR team and planning to launch smart glasses equipped with the Gemini AI model.

The market anticipates 2024 to be a critical turning point for the industry to cross the 0-1 stage. This is because one of the upcoming barrage of new products may propel AI smart glasses into becoming a true 'blockbuster' that meets the consensus needs of both the industry and consumers. In terms of sales, the emergence of the AI version of Meta Ray-Ban has shown the market the possibility, and the upcoming release of Orion has reinforced this likelihood.

It is evident that the emergence of a blockbuster product will undoubtedly ignite market sentiment, thereby accelerating the industrialization process. Now is that crucial moment in time.

What else does AI glasses, as a phenomenal product, need to consider?

As estimated by Meta CEO Mark Zuckerberg, smart glasses will become the ultimate carrier of AI. As pioneers of the new-generation 'mobile' computing platform, AI glasses offer consumers epoch-making efficiency.

While evolved AI glasses can combine multiple attributes of 'business,' 'entertainment,' and 'necessity,' these attributes have a hierarchy of importance.

AI glasses must first and foremost be a pair of glasses that meet basic requirements. As Li Hongwei, founder and CEO of LeTV Innovation, put it, 'AI glasses must first be comfortable and reliable glasses to wear, and only then can they be smart devices equipped with AI capabilities.'

He believes that unlike AR glasses, where the weights of 'glasses' and 'intelligence' may be 50-50, in AI glasses, the former weighs significantly more than the latter. It is essential to address users' needs for glasses first, and only then incorporate AI and intelligent modules.

According to the World Health Organization, over a third of the world's population of over 8 billion people are myopic, and this proportion continues to rise. Whether from a product's essential functional requirements or commercial value perspective, the primary attribute of AI glasses lies in being a 'necessity' for most people.

As is well known, necessities in commerce often create the greatest and longest-lasting value, as well as significant brand survival space, examples being Nongfu Spring, Haitian Soy Sauce, and Apple iPhones. Therefore, AI glasses have great potential to seize future opportunities for universal adoption, achieving true ascendancy.

Of course, this also means that they must address some individualized issues:

Due to the diversity of user face shapes and usage environments, glasses design must be personalized to ensure comfort, appropriate optical adjustments, and corrective effects. In the era of aesthetics, consumers have high standards for the appearance of accessories, and styles iterate rapidly. Furthermore, AI glasses must integrate many electronic components to meet usage needs in different scenarios.

These factors significantly increase the difficulty of standardized production. Moreover, the price must be affordable, not as exorbitant as current high-end glasses.

Among existing AI end-side products, AI glasses are widely recognized as the most cost-effective hardware implementation solution. However, during the current product exploration phase, balancing price and yield experience is challenging. Meta's upcoming Orion is initially producing only 1,000 units for internal testing due to cost considerations.

Regarding this, Zuckerberg stated that AI glasses priced around USD 300 could become a blockbuster, potentially attracting tens of millions or even hundreds of millions of consumers.

Converted to Chinese yuan, AI glasses are likely to perform best at a price point of around 1,000 to 2,000 yuan, with prices above 3,000 yuan posing pressure. However, referencing the development trajectories of AR glasses and VR headsets, this will undoubtedly take some time. Only when AI glasses become truly affordable will they emerge as a phenomenal demand product.

Source: Pinecone Finance