New Consumer Smartglass Operators Entering a Soon-to-Be Competitive Market

In November 2020, at its second annual “Inno Day” event, Chinese smartphone manufacturer OPPO demonstrated its OPPO X 2021 rollable concept handset, as well as its OPPO AR smartglass 2021 and OPPO CybeReal AR application. The new concept device is 75% lighter than its predecessor and is equipped with birdbath-type optics to enable more immersive experiences, with a 0.71-inch OLED panel, stereo fisheye cameras that support gesture recognition, a time-of-flight sensor, and one RGB camera. Based on company demos, the OPPO AR smartglass 2021 is a consumer-oriented device suitable for immersive experiences such as gaming, entertainment (including video streaming), and AR shopping. The company also released the OPPO CybeReal AR application, which enables high-precision localization and scene recognition.

Over the last two years, partnerships to enable consumer AR have been flourishing: smartphone manufacturers including Samsung, Xiaomi, Vivo, and Huawei have collaborated with South Korean glass manufacturer Gentle Monster; LG has collaborated with NTT Docomo; and now OPPO has invested in developing AR smartglass prototypes and securing patents and collaborations. Apple is already a powerful player in the AR market due to its ARKit and is rumored to be launching its own AR device in the next 2 to 3 years. Android also has OS-level AR support in ARCore. The list of AR smartglass manufacturers is expanding, including players from different industries (such as smartphone/computer manufacturers, social media companies, and innovative startups), raising questions about the market size opportunity, content, replacement of smartphones, and which manufacturers will eventually lead in the market.    

According to ABI Research’s latest AR database, consumer AR smartglass shipments will reach almost 3 million units in 2023 and will grow to 6 million in 2025. In order to gain a competitive advantage and get established in consumer target groups and segments, AR smartglass manufacturers may invest and specialize in supporting certain types of AR apps with their first commercial device; then, as the market matures, they may expand their device portfolio with different styles, prices, and supported apps. For example, prototypes from OPPO and Samsung suggest that they are targeting mixed-reality app opportunities such as gaming, entertainment, sports, and potentially education. On the other hand, prototypes from Xiaomi and Huawei are more suitable for outdoor usage and assisted-reality apps such as navigation and accessing smartphone notification. In the early days of smartphones, we saw similar strategic approaches with devices specifically targeting music, gaming, education, photography, and professional functions.

Investment in applications that lead their class in terms of user base and usage frequency will determine revenue levels and the partner ecosystem. ABI Research expects that the primary killer apps for consumer smartglasses will include hands-free smartphone control and access to notifications (an advantage which will be a strong motivator for smartphone manufacturers to get involved); AR navigation apps; AR gaming, entertainment, sports, and education; and next-generation immersive visualizations involving holograms and volumetric capture. At the same time, in order to boost revenues and expand user base, some AR consumer-oriented devices may be used for enterprise as well, e.g., low-power apps for hands-free data visualization or employee communication.

Experience in the smartphone industry or an early device launch does not necessarily dictate the dominance of a player in the market. The smartphone industry has also shown that leading players like Apple and Samsung, who were not initially in the mobile phone industry, can launch radical and technologically capable products built on powerful platforms and operating systems which add value to users’ daily lives. Undoubtedly, criteria such as stylish design, high-quality materials, price, and technological features (such as CPU and GPU capabilities, optics, FoV, cameras) will determine leading players. However, there are some other critical strategies that have been applied in the smartphone industry which will affect manufacturer dominance in the AR consumer market, both in terms of consumer preference and margins. These include:

• Consumer education: Manufacturers that will educate consumers about AR technology and its capabilities will gain consumer interest and trust. These companies will heavily invest in marketing and communication campaigns.
• Supply chain: Mature and capable supply chains will boost revenues, drive down costs, and maintain a lead over competition. Smartphone manufacturers such as LG, Samsung, and Apple are highly likely to build in-house hardware components to rely less on external parties, as seen in the smartphone market. Also, existing players will have better established relations with suppliers and OEMs compared to startups/dedicated AR smartglass manufacturers (like nReal or Norm).
• Carrier partnerships will not only allow flexible financing capabilities and ensure product presence at physical stores, but will also assist manufacturers to get established in the 5G market. Smartphone manufacturers that will distribute AR smartglasses with partner carriers are likely to see greater distribution potential.
• M&A: Some impactful mergers and acquisitions will reshape AR smartglass manufacturers’ value proposition and assist them to gain expertise, expand in global markets, and scale production.
• Operating system and platforms: Similar to smartphones, platforms and OS will be an important competitive point. For example, platforms that will offer online services or content (such as hologram calls, AR navigation, visual search, or productivity apps) have the potential to attract and retain customers. In addition, it is highly likely that we will see new OS for AR—Facebook has already expressed interest in developing its own OS instead of relying on Android.
• Developer community: Smartglass manufacturers that employ an OS attractive to the developer community will have an advantage in content and application range.

The list of strategic approaches is not limited to the above. Consumer AR smartglasses are still nascent, but, despite the current barriers, have the potential to empower consumers’ daily life like smartphones. The consumer AR market can leverage experience from other consumer products such as smartphones and wearables (e.g., smartwatches) in order to preemptively avoid challenges and create new opportunities.