Recently, XREAL's new generation of consumer-grade AR glasses is open for pre-order in overseas markets. The two glasses, the XREAL Air 2 and Air 2 Pro, will be released in November in the US, UK, Germany, France and Italy for $399 and $449, respectively, and are expected to ship in the US and UK in mid-to-late November.

According to market research firm IDC, in the past three years, VR/AR products have shipped about 5.8 million units, 11.2 million units, and 8.8 million units, respectively, less than one percent of mobile phone shipments.

The overall market declined, and XREAL grew against the trend. It is reported that XREAL's annual shipments in 2022 will reach 98,000 units, a year-on-year increase of 717%, with a global market share of 37% and a consumer AR market share of 57%. In addition, XREAL's previous flagship XREAL Air has sold more than 200,000 units worldwide since its release.

The Meta Quest 3, which emphasizes augmented reality (AR), has just been released, and Apple's Vision Pro, which is known as the "space computer", is coming. The choice of the future in front of AR glasses manufacturers is: as a computer or as an expansion screen.

Mainly lightweight, still need to connect to a mobile phone/PC

XREAL, formerly known as NREAL, was founded by Xu Chi in January 2017 and renamed XREAL in May 2023.

The biggest difference with Apple's and Meta's slightly bulky AR/VR headsets is that AR glasses are mainly lightweight, like sunglasses, natural to wear, and portable to store. It is reported that the weight of the XREAL Air 2 and XREAL Air 2 Pro glasses is only 72 grams, which is equivalent to the weight of two pairs of myopic glasses. The biggest benefit of this is that it improves wearing comfort and reduces the presence of the device.

XREAL unveils a new generation of AR glasses

Secondly, consumer-grade AR glasses are known as the "last screen" in the information age, and the traditional screen is no longer the only terminal for receiving content. As long as you wear AR glasses, whether you are in the bedroom or in the subway, you can browse the content on your phone, tablet, and computer as you like. The application scenario of XREAL is mainly for movie viewing, followed by office, the former is "mobile theater", and the latter is "invisible computer".

XREAL is lightweight and portable, but it also sacrifices the freedom of interaction of AR glasses to a certain extent. Today, when six-degree-of-freedom interaction technology is gradually moving towards mainstream XR hardware, XREAL's AR glasses still maintain three-degree-of-freedom interaction.

Six degrees of freedom, also known as 6DoF, simply put, three degrees of freedom products can only sense the rotation of your head, and you can't use natural body movements to change the perspective or interact with the outside world; Six-degree-of-freedom spatial positioning means that you can move freely in the virtual reality world, such as dodging oncoming objects in the picture, standing up, crouching, moving back and forth, observing objects from any angle, and even walking in the virtual reality space.

The "space" constraints greatly compress the use cases of XREAL Air 2. Like most current consumer AR products, XREAL Air 2 needs to be connected to the host computer (mobile phone, computer, etc.), and its main function is to expand the screen, and it cannot turn the device itself into an electronic terminal for life or work like Apple's Vision Pro showcase.

For example, Apple's Vision Pro shows a gesture control function, which allows users to operate the system functions of the headset without the need for external devices such as controllers, keyboards, and mice. XREAL Air 2 also needs to be linked to a mobile phone and computer, which makes it not like a terminal in itself, but instead becomes an external device on the mobile terminal or PC side.

Without a mobile phone and computer, the XREAL Air 2 glasses are limited in their functionality. Fortunately, mobile phones are still portable terminals that people can't live without, and XREAL Air 2 has a high degree of adaptability to mobile phones. The glasses also have a built-in Snapdragon XR2 chip, as well as a large storage space, and an increased battery capacity. Judging from these performance configurations, it wants to develop in the direction of being able to use independently from mobile phones/computers.

How can the sales myth continue as the competition intensifies on the track?

It can be seen that XREAL Air 2 has made a compromise in order to solve the contradiction between function and volume, focusing on light application scenarios and sacrificing more complex use needs. Although it has improved performance, it is still limited to an "extended screen" application scenario.

People can't help but wonder, how is the overseas sales of this domestic AR product with limited functional scenarios?

In fact, from the very beginning, XREAL has set its sights on overseas countries where the XR market is more mature, and has established operations in Japan, the United States, and South Korea.

XREAL was the first to choose South Korea to test the waters, and cooperated with LGU+, one of the three major operators in South Korea, to launch the Nreal Light series products, and at the same time bundled sales with 5G mobile phones such as Samsung Note20 and LG Velvet. After the success of this strategy in South Korea, XREAL joined forces with operators in the United States, Japan, Switzerland, Germany and other countries to cut into the local market, and occupied the market high ground in the United States and Japan, winning the first place in many lists such as Amazon.

In the context of the overall decline in VR/AR product shipments in the past three years, XREAL's annual shipments in 2022 will reach 98,000 units, a year-on-year increase of 717%, with a global market share of 37% and a market share of 57% in the consumer AR market. In addition, XREAL's previous flagship, the XREAL Air, has also sold more than 200,000 units worldwide since its release. According to Semrush data, XREAL's current main users are still concentrated in overseas markets such as the United States and Japan.

Before the Apple Vision Pro, the XREAL Air 2 took the lead, and in addition to the advantage of time to enter the market, there is also a price advantage. How long can this advantage be maintained in the market?

According to data released by the Debang Research Institute, one of the main reasons for users to choose AR glasses is for entertainment use, accounting for 43.4%. Video and gamers are the main consumer groups of AR, and their purchase motivation is mainly to get more diverse and interesting entertainment experiences. Work, study and use are also a major reason for users to choose AR glasses, accounting for 29.2%.

From the perspective of usage scenarios, the mainstream devices in the current market can realize games, videos, and office scenarios, but from the price point of view, the Meta Quest 3, which emphasizes augmented reality and can be used independently, costs $499, and XREAL Air 2 costs $399. Under the premise that the latter has a large gap between functions and scenarios compared with the former, the price is not much cheaper.

iResearch data shows that in the domestic consumer-grade AR glasses market, Thunderbird Innovation, XREAL, Rokid, Huawei and INMO are the top five in terms of sales, and XREAL, which focuses on overseas markets, still won 22.9% of the market share, ranking second. Compared to these market competitors, XREAL also doesn't have much price advantage.

At the same time, since 2023, the market competition for consumer-grade AR glasses has also intensified, and more hardware manufacturers have emerged among the competitors. Xiaomi has released an exploration version of wireless AR glasses, OPPO exhibited a new generation of smart glasses OPPO Air Glass 2, ZTE Nubia launched AR smart glasses Neovision Glass, Lenovo has a new generation of lightweight AR glasses Morningstar G2 light, etc., AR glasses track, there are a lot of new products or conceptual devices on the road.

When mobile phone/PC manufacturers produce AR glasses, it is likely that they should adapt to their own products. As AR glasses become more and more abundant, the story of "pocket giant screen" is not enough, and in the future, XREAL will really compete for the high ground: a glasses computer that is separated from mobile phones/PCs. For that high ground, the strongest opponent, the Apple Vision Pro, is charging.

Will you buy AR glasses or a VR headset? **