Recently, the new generation of consumer-grade AR glasses from XREAL is now available for pre-order in the overseas market. The two models, XREAL Air 2 and Air 2 Pro, will be released in the United States, United Kingdom, Germany, France, and Italy in November, with prices of $399 and $449 respectively. It is expected that they will be shipped in mid to late November in the United States and the United Kingdom.

According to the market research firm IDC, the shipment volume of VR/AR products in the past three years was approximately 5.8 million units, 11.2 million units, and 8.8 million units, which is less than one percent of the shipment volume of smartphones.

Despite the overall market decline, XREAL is growing against the trend. It is reported that XREAL's annual shipment volume in 2022 reached 98,000 units, a year-on-year increase of 717%, with a global market share of 37% and a consumer-grade AR market share of 57%. In addition, the previous flagship XREAL Air has also exceeded 200,000 units in global sales since its release.

With the recent release of Meta Quest 3 emphasizing augmented reality (AR) and the upcoming "spatial computer" known as Apple Vision Pro, how much longer can the story of XREAL AR glasses' "pocket giant screen" continue? The future choice facing AR glasses manufacturers is whether to be a computer or an extended screen.

Main Focus on Portability, Still Requires Connection to Phone/PC

XREAL, originally named NREAL, was founded by Xu Chi in January 2017 and was renamed XREAL in May 2023. The original intention of founding XREAL was to create "a pocket giant screen that can be used anytime, anywhere," providing the public with consumer-grade AR products truly suitable for daily entertainment and work.

The biggest difference between AR glasses and the slightly cumbersome AR/VR headsets from Apple and Meta is that AR glasses focus on portability, resembling sunglasses, and are naturally worn and easily stored. It is reported that the weight of the XREAL Air 2 and XREAL Air 2 Pro glasses is only 72 grams, equivalent to the weight of two pairs of myopic glasses. The greatest benefit of this is the improved comfort of wearing and reduced device presence.

XREAL releases the new generation of AR glasses

Furthermore, consumer-grade AR glasses are hailed as the "last screen of the information age," where traditional screens are no longer the sole terminal for receiving content. As long as you wear AR glasses, whether in the bedroom or on the subway, you can freely browse the content on your phone, tablet, or computer. XREAL's application scenarios are mainly focused on watching movies, followed by office use, with the former being a "mobile cinema" and the latter being an "invisible computer."

XREAL achieves lightweight and portability, but to a certain extent, it also sacrifices the freedom of interaction for AR glasses. In a time when six degrees of freedom (6DoF) interaction technology is gradually becoming mainstream in XR hardware, XREAL's AR glasses still maintain three degrees of freedom interaction.

6DoF, or six degrees of freedom, means that you can move freely within the virtual reality world without constraints, such as dodging objects flying towards you in the scene, standing up, crouching, moving back and forth, observing objects from any angle, or even walking within the virtual reality space.

The "spatial" limitations greatly restrict the application scenarios of XREAL Air 2. Like the vast majority of current consumer-grade AR products, XREAL Air 2 needs to be connected to a host device (such as a phone or computer) for use, mainly functioning as an extended screen, and cannot transform the device itself into an electronic terminal for life or work like Apple Vision Pro does.

For example, Apple Vision Pro features gesture control, allowing users to operate the headset's system functions without the need for external devices such as controllers, keyboards, or mice, while XREAL Air 2 still needs to be connected to a phone or computer, making it not a terminal itself but rather an external device for mobile or PC. Without a phone or computer, the functionality of XREAL Air 2 glasses is limited. Fortunately, the compatibility of this glasses with phones is still high. This glasses also has a built-in Snapdragon XR2 chip and large storage space, and has increased battery capacity. From these performance configurations, it aims to develop towards being able to be used independently without a phone/computer.

Intensifying Competition in the Race, How Will the Sales Myth Continue?

It can be seen that XREAL Air 2 has made compromises to solve the contradiction between functionality and size, focusing mainly on light application scenarios and sacrificing more complex usage requirements. Despite some performance improvements, it is still limited to an "extended screen" application scenario.

One cannot help but wonder, how will the sales of this domestically produced AR product with limited application scenarios fare in the overseas market?

In fact, from the beginning, XREAL has set its sights on the more mature XR market overseas, conducting business in Japan, the United States, and South Korea.

XREAL first chose to test the waters in South Korea, collaborating with LGU+, one of the three major carriers in South Korea, to launch the Nreal Light series products, and also bundling sales with 5G phones such as Samsung Note20 and LG Velvet. After this successful strategy in South Korea, XREAL then joined forces with carriers in the United States, Japan, Switzerland, Germany, and other countries to enter the local markets, and has secured a strong position in the markets of the United States and Japan, achieving top rankings on multiple lists including Amazon.

Against the backdrop of the overall decline in VR/AR product shipments over the past three years, XREAL achieved an annual shipment volume of 98,000 units in 2022, a year-on-year increase of 717%, with a global market share of 37% and a consumer-grade AR market share of 57%. In addition, the previous flagship XREAL Air has also exceeded 200,000 units in global sales since its release. According to Semrush data, XREAL's main users are still concentrated in overseas markets such as the United States and Japan.

By launching the XREAL Air 2 ahead of the Apple Vision Pro, XREAL not only has the advantage of entering the market first, but also has a price advantage. How long can this advantage be maintained in the market?

According to data released by Deloitte Research Institute, a major reason for users to choose AR glasses is for entertainment use, accounting for as much as 43.4%. Video and game players are the main consumer groups for AR, and their main purchasing motivation is to obtain a more diverse and interesting entertainment experience. Work and study use is also a major reason for users to choose AR glasses, accounting for 29.2%.

In terms of usage scenarios, the mainstream devices in the current market can all achieve gaming, video, and office scenarios. However, in terms of price, the Meta Quest 3, which emphasizes augmented reality and independent use, is priced at $499, while the XREAL Air 2 is priced at $399. Despite the significant differences in functionality and scenarios, the latter is not much cheaper.

According to iResearch data, in the domestic consumer-grade AR glasses market, the top five in sales are Thunderbird Innovation, XREAL, Rokid, Huawei, and INMO, with XREAL, which focuses on overseas markets, still holding a 22.9% market share, ranking second. Compared to these competitive products in the market, XREAL does not have much of a price advantage.

At the same time, since 2023, the market competition for consumer-grade AR glasses has intensified, with more hardware giants entering the competition. Xiaomi has released the wireless AR glasses Explorer Edition, OPPO has showcased the new generation of smart glasses OPPO Air Glass 2, ZTE Nubia has launched the AR smart glasses Neovision Glass, and Lenovo has the new lightweight AR glasses Morningstar G2 light, among others. There are indeed many new products or conceptual devices on the road in the AR glasses race.

It is highly probable that phone/PC manufacturers produce AR glasses to adapt to their own products. As AR glasses become more diverse, the story of the "pocket giant screen" is no longer enough. In the future, what XREAL and others truly need to compete for is a pair of glasses-style computers independent of phones/PCs. Apple Vision Pro, the strongest competitor for that high ground, is currently charging forward.

Would you buy AR glasses or VR headsets?

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