The resources freed up from Alibaba's intense foray into instant retail are now being channeled into Kuake and Qianwen, as the company sets its sights on the fiercely competitive AI landscape.

Written by | Landong Business Zhao Weiwei

"When consumers opt for Kuake AI Glasses, they're essentially embracing Alibaba's Qianwen large model and the entire Alibaba ecosystem," remarked Wu Jia, Vice President of Alibaba Group.

This statement underscores Kuake AI Glasses' strategic positioning within the current AI smart hardware market.

At the official launch event for Kuake AI Glasses, despite their initial reveal at the World Artificial Intelligence Conference (WAIC) in July and the commencement of pre-sales during Double 11, expectations remain high. This sentiment is further fueled by the public beta launch of Alibaba's Qianwen App, which amassed over 10 million downloads in its first week, sparking curiosity about Alibaba's future AI innovations.

Both the Qianwen App and Kuake AI Glasses are products of Alibaba's Smart Information Business Group, led by Wu Jia. "We firmly believe that in the future, every pair of glasses will be AI-enabled, and every user will desire a pair. This is the vision and mission driving our entire team," Wu Jia stated.

Unlike AI glasses currently offered by brands such as Baidu and Xiaomi, which lack display capabilities, the Kuake AI Glasses S1 series marks the first AI hardware product from a major internet company to feature binocular displays. Priced at 3,999 yuan, it targets the premium market segment, while the G1 series, starting at 1,999 yuan, omits the display but maintains alignment with the S1 in terms of chips, acoustics, and photography.

More significantly, both series of Kuake AI Glasses are equipped with Alibaba's latest Qianwen AI assistant, sharing the same core functionalities.

The primary distinction between AI glasses developed by major internet companies and those by startups may lie in whether they prioritize "soul" (AI capabilities) or "shell" (hardware design). Non-internet company AI hardware often relies on API calls to access capabilities from various large models, whereas internet company AI hardware typically serves as a physical extension of their large model capabilities—prioritizing the soul before determining the shell.

"We officially initiated the AI glasses project at the beginning of this year. Key differentiators from other products on the market include replaceable batteries for extended use, superior night photography, and 3K video recording capabilities," a product manager for Kuake AI Glasses told Landong Business.

In terms of applications, leveraging the Qianwen AI assistant, Kuake AI Glasses can seamlessly integrate with Alibaba's ecosystem, enabling navigation via Gaode Maps, payments via Alipay, and product recognition and price comparison via Taobao's Pailitao. External collaborations include QQ Music, NetEase Cloud Music, and Flight Manager.

Applications are crucial for AI implementation. The resources saved from Alibaba's instant retail battles are now being directed towards Kuake and Qianwen, as the company targets the high-stakes AI battlefield. Next, Alibaba plans to "let those on the front lines call for support."

As Kuake gains vision and Qianwen illuminates the soul, who will be Alibaba's next target?

Qianwen: The Soul of Kuake, But Not the Only Solution

From an aesthetic standpoint, the most striking feature of Kuake AI Glasses is their ultra-thin temples.

Currently, the industry's mainstream approach involves placing core components such as the motherboard, processor, speaker, and battery within the temples. However, Kuake AI Glasses' ultra-thin temples, resembling those of ordinary glasses, are claimed to be the narrowest globally at just 7.5mm, approximately 25% thinner than the industry average. This achievement is attributed to innovative designs such as custom-developed compact speakers and ultra-narrow integrated FPCs.

In terms of battery life, the standout feature of Kuake AI Glasses is their replaceable battery design. By utilizing a dual-chip setup with a Qualcomm flagship chip and a low-power coprocessor, along with dual systems (Android and RTOS), the glasses reduce energy consumption. The innovative battery swap design allows users to easily replace batteries, supporting all-day use.

Regarding photography, Kuake AI Glasses excel in night photography, thanks to their independently developed Super Raw low-light enhancement technology. They also feature precise optimizations in video clarity and anti-shake performance, deploying AI super-resolution and frame interpolation algorithms in the cloud to support 3K recording and output professional 4K/60fps video footage.

Given the relatively mature supply chain in the current AI glasses industry, Kuake AI Glasses' hardware configuration places them among the top tier.

However, a more pertinent question arises: What is the differentiated core competitiveness of Kuake AI Glasses? Since hardware issues can be gradually addressed through updates, the real challenge lies in applications—what do users actually do with AI glasses?

In July, Song Gang, head of intelligent terminal business at Alibaba's Smart Information Business Group, addressed this issue. He envisioned users wearing Kuake AI Glasses to navigate with Gaode Maps, compare prices on Taobao, receive itinerary reminders from Fliggy while traveling, and make payments directly via Alipay. "These are high-frequency, essential applications for users, not just features added for the sake of having glasses," he said.

Four months later, a more refined answer emerged with the recent upgrade of the Qianwen App, whose logo was displayed alongside Kuake AI Glasses at the launch event. "Qianwen," upgraded from "Tongyi," has become Alibaba's most powerful official large model assistant, marking the company's full-scale entry into the AI-to-Consumer (AI to C) market. The upgraded app surpassed 10 million downloads in its first week.

This signifies that the fundamental difference between Kuake AI Glasses and other AI glasses on the market is that Kuake follows a "soul first, shell later" approach.

"Shell first, soul later" implies starting with hardware and then integrating capabilities from various large models via APIs—the logic of AI glasses integrators. In contrast, the logic of native AI glasses developers is "soul first, shell later," finding use cases for mature cloud-based models and equipping them with an "eye" that is always online in the physical world.

In other words, while other manufacturers seek a brain for their glasses, Kuake AI Glasses represent a physical extension of Alibaba's Qianwen large model, serving as the first eye reaching into the physical world.

However, does "soul first, shell later" guarantee success? Not necessarily. It is merely one approach in the current competitive landscape.

Rokid founder Zhu Mingming once noted that Rokid Glasses' success in overseas markets, surpassing Meta AI Glasses, stemmed from offering users flexible choices among multiple AI options, including ChatGPT, whereas Meta AI Glasses users were limited to the LLaMA large model.

For internet giants like Meta and Alibaba, choosing the AI glasses path means endorsing their AI capabilities through hardware products. With multimodal AI capabilities, service ecosystems, and system integration, they can infuse these technologies into real-world scenarios, allowing users to experience the seamless integration of soul and body in a closed loop.

Whether following a "soul first, shell later" or "shell first, soul later" approach, the AI glasses industry is still in its early stages of user base cultivation. User preferences will gradually become clear over time, and the answer may not be unique.

Flash Sales Give Way to AI, and Firepower Secures Market Share

Starting in May, Alibaba's Taobao Flash Sales made a strong entry into the instant retail sector, sparking a subsidy war in the food delivery business. Since then, Alibaba's presence has been continuously felt.

In August, Taobao Flash Sales reached a daily order peak of 120 million, driving a 25% increase in Monthly Active Consumers (MAC) for e-commerce. In September, Gaode Maps launched the "Street Scanning Rankings," surpassing 400 million users just 23 days after its debut. In November, the Qianwen App was launched, marking Alibaba's full-scale entry into the AI-to-Consumer (AI to C) market with over 10 million downloads in its first week.

The firepower directed at instant retail targeted e-commerce synergy, while the AI investment firepower aimed at cloud market growth. Both strategies essentially involve strategic investments to capture market share.

After six months of sustained firepower, Alibaba began scaling back its instant retail operations. During its Q3 earnings call, Alibaba clarified that its investment in Taobao Flash Sales peaked in the September quarter. With improving efficiency, significantly enhanced unit economic benefits, and stable scale, "investment is expected to contract significantly next quarter."

Following Alibaba's earnings call, Meituan's stock price surged.

The reasons are not hard to understand. Driving retail through food delivery subsidies essentially involves leveraging high-frequency interactions to drive low-frequency ones. Alibaba's revenue in Q3 of this year soared by 60% year-on-year to 22.9 billion yuan. However, simultaneously, the profit of Alibaba's e-commerce group plummeted by 76% year-on-year to 10.497 billion yuan, with the primary loss stemming from the Flash Sales business. Alibaba CFO Xu Hong stated that excluding Flash Sales losses, e-commerce business profit achieved single-digit year-on-year growth.

Alibaba's Flash Sales battle will continue, albeit in a more refined and meticulous manner.

"Our goal is to achieve trillion-yuan transactions on the platform, driving an overall market share increase in related categories," said Jiang Fan, CEO of Alibaba's e-commerce business group. He believes that Taobao Flash Sales has completed its initial phase of rapid scale expansion, with the second phase of Unit Economy (UE) optimization progressing as expected. Since October, the goal of halving per-order losses compared to July and August has been achieved.

Compared to e-commerce's strategy of financing growth through battles, will Alibaba Cloud face a more certain future?

In Q3, Alibaba Cloud achieved its best-ever revenue performance, with 39.824 billion yuan in revenue, a 34% increase, and 3.6 billion yuan in profit, a 35% year-on-year increase. This performance is on par with major international cloud providers like Microsoft, Google, and Amazon. Alibaba Cloud's success owes much to external customer expansion, with a 29% revenue increase primarily driven by public cloud services and AI products.

Against this backdrop, Alibaba's AI strategy becomes clear. The Qianwen App serves as a conversational AI assistant and is a focal point for Alibaba's large model development, aiming to become the unified AI interaction interface for all Alibaba businesses and services.

Kuake, on the other hand, functions as an AI search engine and browser, occupying a more vertical position. This resembles the relationship between Google's conversational assistant Gemini and Google Search, where the group's most powerful general model upgrades its core vertical products—a product strategy widely recognized by global tech giants.

Today, both Kuake and Qianwen bear the mission of achieving consumer-end profitability through subscription models or traffic entry points, driving user reach and conversion through a "model + application" dual-drive approach. AI glasses serve as pioneers in this scenario expansion.

After all, "what you see is what you get" search defines AI-era search.

More importantly, the organizational approach behind this series of strategic moves is noteworthy. Qianwen, Kuake, and Kuake AI Glasses all originate from Alibaba's Smart Information Business Group, with joint development involving Alibaba Cloud, Tongyi Laboratory, and multiple Taobao and Tmall departments. This concentration of resources under unified group command ensures higher certainty and precision in executing strategies.

After the Qianwen App and Kuake AI Glasses, where will Alibaba's next AI firepower be directed?

A significant direction will likely involve advancing AI into the physical world. Previously, Lin Junyang, the person in charge of Alibaba's Qianwen large model, revealed that Alibaba has established a small team focused on robotics and embodied AI. He noted that multimodal foundational models are transitioning into foundational agents capable of utilizing tools and memory for long-term reasoning through reinforcement learning. "They absolutely should move from the virtual world to the physical world," he said.

Considering scenarios ranging from retail warehousing to food delivery, with Kuake AI Glasses already here, how far can Alibaba's robots go?