The AI Glasses War is Heating Up, Awaiting Xiaomi's Move

"The AI glasses industry has been bustling for a while, but the real competition hasn't begun yet."

I. Rumors and Expectations Surrounding Xiaomi's AI Glasses

1.1 Financial Investments and Strategic Importance

• "I heard that Xiaomi paid Goer $10 million for its AI glasses project."

• "Xiaomi allocated 30 million yuan for the first phase of its AI glasses. You know, nowadays, a Huaqiangbei solution for AI glasses can be done for just 500,000 yuan."

• "Xiaomi's AI glasses are being personally overseen by Lei Jun and the head of Xiaomi's wearables division. Xiaomi attaches great importance to it."

• "Xiaomi gave us 4 million yuan to develop software for the AI glasses."

Over the past few months, discussions about Xiaomi's AI glasses have been endless. The reason why hardware practitioners are all focusing on Xiaomi is that Ray-Ban Meta has sparked the market's enthusiasm for AI glasses. However, there are almost no other purchasable products on the market at present. Although some manufacturers held press conferences half a year ago, their products are still nowhere to be found.

1.2 Industry Insights and Market Readiness

Liu Yunlong, product manager of AI glasses ODM manufacturer Yijing Technology, told Lei Feng Network, "Currently, AI glasses still need a bit of polishing in terms of function debugging, performance, audio, and photo effects. The earliest they can be launched is in Q2 2025, and some good products will come out in Q3." Yijing Technology has undertaken the ODM needs of many AI glasses companies, and its insights to some extent represent the current situation of the entire industry.

This means that it will not be until Q2 this year that there will be mature mass-produced products on the market. And the much-anticipated Xiaomi AI glasses are also expected to be launched in Q2. That is to say, all AI glasses players will have to face Xiaomi's direct impact as soon as they enter the market. How cruel and suffocating this competition will be.

1.3 Early Market Entrants and Their Challenges

Some manufacturers have tried to get a head start. In late December last year, Sharge Loomos launched the AI Paipai Mirror Co-creation Edition, priced at only 999 yuan, and announced that it would officially ship in mid-January.

At that time, some industry insiders expressed concerns, "Sharge Loomos may not have achieved good results with the AI glasses made in such a short time. If it's not good to use and cannot be shipped on time, it would be a good thing."

As feared, before shipping, Sharge Loomos' official announcement stated that there were problems with the Bluetooth call function of the product, and there were also flaws in the software. Subsequent optimization will continue through OTA (Over-the-Air Technology), which also caused a wave of user dissatisfaction.

II. The Dilemma of the AR Four Little Dragons

2.1 Path Dependence and Technological Challenges

The AR Four Little Dragons are pioneers in the smart glasses track, having delved into related technologies of smart glasses for many years and accumulated a certain degree of brand fame. In the eyes of some people, they should naturally take the lead in the AI glasses war. However, the reality is quite the opposite.

The public is always generous with praise for technological innovation, but the real business world is extremely cruel. Not all innovations can be rewarded. If technological innovation does not grasp the rhythm well, rushing too fast can easily make one a martyr, and being too slow will be abandoned by the times. Stepping on the rhythm not only requires the founder to have an extraordinary business sense, but sometimes also needs a bit of luck.

The AR Four Little Dragons are all firm optimists, aiming at the ultimate form of smart glasses - AR glasses from the very beginning. Among them, INMO Tech is particularly aggressive. It is the only one among the Four Little Dragons that insists on not making split-type BB (BirdBath) glasses and only makes integrated waveguide glasses.

However, they all seem to lack a bit of luck. Whether it is the split-type BB solution or the integrated waveguide solution, the experience is far from satisfactory due to the immaturity of the technology. The BB solution is too bulky to meet the needs of daily wear; the waveguide solution is trapped in mass production and how to integrate with myopic lenses.

2.2 Market Feedback and Strategic Choices

The market has also given an honest feedback. Lv Yifei, co-founder of INMO, told Lei Feng Network, "The users who buy AR devices are still mainly tech enthusiasts and users in vertical scenarios."

In 2024, global AR device sales reached 500,000 units, basically the same as in 2023, with the ceiling in sight.

In contrast, AI glasses players represented by Ray-Ban Meta are doing subtraction based on AR glasses, temporarily giving up the display function, or only doing simple monochrome information prompts. This is easier to achieve technologically. At present, the cumulative sales of Ray-Ban Meta in 2024 have already exceeded 2 million units.

2.3 Strategic Dilemmas and Industry Observations

Faced with the breakthrough of Ray-Ban Meta and others, the AR Four Little Dragons are facing a difficult choice: Should they persist in long-termism and continue to focus on AR technology, or bow to reality and first follow Ray-Ban Meta?

"Ray-Ban Meta's speed of breaking through one million shipments is faster than that of iPhone, which indicates that AI glasses will be a trillion-level consumer battlefield. This will be a war of opportunism, and long-termists who have always been technology-driven cannot grasp the 100-fold growth in the next 3 years," Li Nan, founder of Angry Miao Technology, said when communicating with Lei Feng Network. He switched from 3C accessories to the AI glasses track in 2024.

But following Ray-Ban Meta means giving up their own strengths and engaging in close-range combat with competitors, not only having no advantages, but also possibly losing the AR mentality that they have worked hard to establish in the past.

Therefore, the AR Four Little Dragons are very restrained in this wave of AI glasses craze:

• XREAL has not yet released an AI glasses product to the outside world. Its founder Xu Chi emphasized that "direction is more important than speed," and said that he is not willing to chase traffic in the AI craze. However, there are rumors that XREAL had already started research and development of AI glasses in June 2024, and even considered adding a brain-computer interface as the ultimate solution for AI glasses at that time.

• Rokid continues to stick to the display route, adding waveguide display to its new product Rokid Glasses. Its founder Misa believes that Meta AI glasses' lack of a display module is a relatively conservative performance.

• INMO Tech and Rayneo have compromised to different degrees. At the end of December last year, INMO launched the INMO GO2 with dual-eye single-green display, focusing on business scenarios. Shortly thereafter, Rayneo launched the AI glasses Rayneo V3 without display function, which is already consistent with Ray-Ban Meta in terms of functional positioning and technical route. However, it is understood that more than 60% of Rayneo's R&D resources are still devoted to AR display technology, still stuck in the ideal country of display technology.

2.4 Financial and Operational Constraints

The hesitation and entanglement of the Four Little Dragons in the face of the AI glasses craze is on the one hand due to the sunk cost formed by long-term investment in display technology, and on the other hand due to the "sword of Damocles" of high valuation on their heads.

At present, the valuations of the AR Four Little Dragons range from 450 million yuan to 1.05 billion yuan. Rokid was already shackled by many betting agreements three years ago. XR industry expert Wang Zhen said that high valuation means there is no way back, and the decision-making chain is longer than that of general startup companies, which leads to the passivity of the AR Four Little Dragons in decision-making, and they may not be able to enjoy the dividends of AI glasses.

Following Ray-Ban Meta and others means forming a separate team and renewably investing in products and R&D. At present, the cash flow of the Four Little Dragons is not abundant. High valuation leads to narrowed exit paths, which affects the confidence of new capital entering. If there is a "valuation inversion," it will fall into the game with old shareholders. In contrast, the newly emerging AI glasses startup companies can be more lightly equipped.

"Next, everyone needs to figure out how to do subtraction to get through the transition period and quickly enter the AI glasses track, which will probably take 3-5 years," Wang Zhen said. (For more inside stories about AR players' AI glasses, you are welcome to add the author Yolanda_Zuu)

III. The Difficulties of Startup Companies

3.1 Limited Resources and Market Entry Barriers

Compared with the AR Four Little Dragons, startup companies such as Yiwen Technology and Sharge Loomos are lucky enough to have raised a lot of money when the market is hottest, and can promote their products to the market for commercialization along the technical route verified by Ray-Ban Meta, in order to support the company's exploration of the next-generation products.

But that's about all their advantage.

To a certain extent, AI glasses are not suitable for startup companies to make. The latter lacks enough say in both the "body" and "soul" of AI glasses.

A practitioner bluntly told Lei Feng Network that whether the hardware of AI glasses can be done well does not depend on startup companies, but on the upstream supply chain. The most typical example is the chip.

3.2 Technological and Supply Chain Challenges

At present, there is no mature chip solution available on the market, which is a collective dilemma for AI glasses companies.

Liu Yunlong, product manager of Yijing Technology, told Lei Feng Network that the Qualcomm AR1 is the chip solution recognized by the industry for AI glasses' performance, with mobile-level ISP, capable of achieving mobile-like shooting quality, and has been verified by the market. Ray-Ban Meta uses this chip.

Yijing, which has been cooperating with Qualcomm since 2017, naturally chose to develop a full-chain solution for AI glasses based on AR1.

However, for startup companies, the disadvantages of AR1 are also obvious. First, it is expensive, with a unit price as high as $70-80, almost half of the cost of the entire solution. Second, even if small and medium-sized factories are willing to invest heavily in AR1, they can't get the goods.

"We want to launch AI glasses as soon as possible. We also considered Qualcomm AR1. At the time of the project initiation, AR1 was still in Meta's exclusive supply period. We chose Unisoc W517 because they were willing to support us. On the other hand, W517 has been verified on Xiaotian Talent watches before, and we evaluated that it is more suitable for AI glasses. There are no other solutions that have been shipped yet, and problems have not yet emerged. Everyone may face greater uncertainty than Sharge Loomos," said Zhang Bo, CEO of Sharge Loomos.

3.3 Industry Observations and Future Prospects

Lei Feng Network learned that in addition to Qualcomm AR1 and Unisoc W517, the solutions adopted more are the MCU plus MTK or ISP represented by Hengxuan. The Qualcomm 5100 plus audio chip is also considered an option. Angry Miao Technology and Zhijing unknown both adopted this solution. Among them, Angry Miao Technology's AI glasses, which were originally planned to be released at the end of November last year, have been postponed until now. Jiannan Technology adopted the chip solution of Innoceana, held a press conference at the end of December, and is still in the process of upgrading and iterating debugging, and has not been shipped yet.

If small and medium-sized players are willing to wait, they can also wait for a more mature chip solution by the end of this year.

A familiar investor in the upstream and downstream of the industry chain, Li Wei, revealed that it is expected that Hengxuan will launch a main control chip plus ISP integrated SoC by the end of this year. This solution is cheaper in price and can better control power consumption, which will be more suitable for AI glasses than AR1. Huawei is waiting for this solution.

As for the software level, the large models that sparked this wave of AI glasses craze are the games of giants. AI glasses startup companies can at most choose which large model to access. In the end, the points where everyone can compete differently are only product definition and interaction design, but this cannot form a core barrier.

3.4 Market Dynamics and Strategic Considerations

Compared with big companies with more chips in hand, the later small and medium-sized players get to the table, the fewer opportunities they have. The key is to stay at the table in time. This has led to a strange phenomenon that various manufacturers are competing to hold press conferences, making the scene lively, but there are no mass-produced products available on the market.

Many people will compare the war of AI glasses with the smart speaker war 8 years ago. Alibaba and Baidu entered the market with price for market share, which almost "wiped out" the small and medium-sized companies that had just started making smart speakers.

As a participant in the smart speaker war, Li Yong, CEO of Yue Rang Innovation, determined from the beginning that AI glasses will be a track where big factories will collectively enter the market. To avoid head-on collision with big factories, Li Yong did not consider making AI glasses when starting his business, but turned to making AI toys that big factories don't pay much attention to. (Lei Feng Network will subsequently launch the "Tmall Genie Revelation" to review the smart speaker war. Welcome industry participants to add the author's WeChat: Yolanda_Zuu)

However, unlike smart speakers, the AI glasses market is a more discrete market. Since glasses have a certain fashion and trend attribute, and everyone's face shape is different, there are countless frame shapes of traditional glasses on the market. AI glasses will eventually also show a similar pattern, which means that no single manufacturer can "dominate." Small and medium-sized startup companies may not be able to lead the market, but as long as they do a good job in product definition and interaction design, they should be able to get a share of the market.

An investor told Lei Feng Network that the glasses category has a strong mergers and acquisitions logic. "Essilor and Zeiss acquired more than 50% of the companies in China's glasses fitting channels. If we consider the perspective of investment exit, investing in a team, waiting for it to build a brand, and start selling in volume, and then being acquired by the channel is also a good choice."

IV. Why is Xiaomi the "Chosen One" for AI Glasses?

4.1 Industry Advantages and Strategic Positioning

Considering all kinds of restrictions, a senior industry insider told Lei Feng Network that AI glasses are more of an opportunity for mobile phone manufacturers, large-model manufacturers, and national-level APP manufacturers.

At present, AI glasses are naturally accessories of mobile phones, relying on mobile phones to provide sufficient computing power, so it is natural for mobile phone manufacturers to make AI glasses. At the same time, AI glasses also need the support of large models, and large-model manufacturers naturally have core competitiveness. In addition, national-level APP manufacturers also have a certain opportunity. They have a large number of users, low promotion costs, and can customize suitable products according to users.

Among them, mobile phone manufacturers undoubtedly have the greatest chance of winning:

• First, mobile phone manufacturers have more advantages in supply chain management and have more bargaining power when facing suppliers.

• Second, the market education of AI glasses in the early stage depends on offline experience. Mobile phone manufacturers already have a complete offline channel, which can take care of both experience and after-sales service.

• Third, AI glasses will compete in image quality in the future, which is also a strong point of mobile phone manufacturers. They have image algorithm teams with hundreds or even thousands of people and rich experience.

4.2 Xiaomi's Strategic Advantages and Market Potential

Looking at the layout of domestic mobile phone manufacturers in AI glasses: OPPO and vivo are still re-organizing the XR teams that were previously disbanded, Huawei is still waiting for a mature chip solution because it cannot use Qualcomm AR1 due to US sanctions, and only Xiaomi has the greatest determination and the fastest progress.

According to the product configuration information that has been leaked, Xiaomi's first-generation AI glasses have considerable competitiveness. According to the Wellsenn XR Xiaomi AI Glasses BOM (Bill of Materials) disassembly and prediction report, Xiaomi uses Snapdragon AR1 dual-ISP, Sony IMX681, 12-megapixel, battery capacity of about 160 milliampere-hours, equipped with 2+32GB memory, and the estimated comprehensive cost of each pair of glasses is about 1,281 yuan.

Given Xiaomi's usual style, this AI glasses will probably give the industry a great shock in terms of price after its launch.

4.3 Technological and Market Strategy

In addition to the hardware itself, Xiaomi also has some layout in large models. In June last year, Xiaomi's large-language model MiLM was officially filed, and the related models will gradually be applied to Xiaomi's cars, mobile phones, smart homes and other products. According to insiders close to Xiaomi, thanks to the large shipment of Xiaomi speakers and Xiaomi TVs, the number of users of Xiaomi's large-language model has already exceeded 10 million.

In addition to Xiaomi, ByteDance is another active super player in the AI glasses market. It is reported that ByteDance is letting the three teams of PICO, Oladance, and education hardware compete internally to make AI glasses.

ByteDance's decision-making logic for making AI glasses is still to find a traffic entrance for its own large-model application DouBao. In addition to internal competition, ByteDance is also widely seeking cooperation externally. It is said that the projects on the crowdfunding platform Kickstarter have basically been swept by ByteDance.

4.4 Industry Observations and Future Prospects

Many people are not optimistic about ByteDance's hardware-making. "Internet companies lack enough reverence for hardware products. They want to make hardware a traffic entrance, but compared with the expansion speed of Internet users and traffic growth, they will belittle the growth speed of hardware, and finally do nothing," said an AI hardware entrepreneur.

From mobile phones to learning lamps and then to VR headsets, ByteDance's repeated failures and attempts in hardware products have somewhat proved this point. Including the once-popular AI headset OlaFriend, which has now seemingly returned to calm after making a splash.

The craze of AI glasses is still constantly stimulating the nerves of more big factories. With the decline in sales of Xiaodu speakers and Tmall Genie, Baidu and Alibaba have transferred members of the original smart speaker team to make AI glasses. Home appliance manufacturer Skyworth's subsidiary Coolpad established a separate AI hardware business division at the end of last year and considered whether to make AI glasses. After researching the upstream and downstream of the industry chain, it was suspended because there was no high-cost-performance mature solution, and it is still unknown whether it will be restarted in the future.

Among the many players that have emerged, Xiaomi is undoubtedly the strongest in comprehensive strength. But business competition is never a simple comparison of book strength. Countless cases in business history have repeatedly proved that organizational agility is more valuable for survival than asset thickness.

Although most AI glasses startup companies may eventually be reduced to "accompanying runners" for big factories, there are always some who are unwilling, and there are always some who create miracles. This is the greatest charm of the business world.