A Quiet 2024 for XR Begins to Give Way to an Active, Though Complex, 2025

After the hype around Apple’s first official Extended Reality (XR) entrance with Vision Pro died down, the XR market as a whole has been relatively quiet with both customers and operators mostly taking a “wait and see” approach to the space. This is beginning to shift, with a handful of trends and announcements combining to indicate a more active market soon. The Ray-Ban Meta glasses have proven popular, and the company is expanding its Meta AI solution to more regions as quickly as it is able to—held back primarily by regulations. Smart glass vendor Rokid is taking a similar approach, partnering with Chinese eyewear company BOLON for an Artificial Intelligence (AI)-first smart glasses solution. Samsung and Sony are working on XR headsets at varying stages of maturity, though neither has officially been announced. Smart glasses vendor Vuzix is looking to tap into the consumer market again with its Z100 smart glasses, after an enterprise focus the past few years. Amazon also recently revealed an internal smart glasses product aimed at its delivery drivers providing navigation, hands-free delivery confirmation, and voice assistant access.

And perhaps most notably, we expect Google to officialize and roll out an Android XR platform by end of year, tied to Samsung and other unannounced hardware partners. While unconfirmed as of November 2024, this will help solidify a traditionally fragmented and unpredictable market, and elucidate what may be top of mind in 2025 for both Google and its direct partners, as well as the entire XR space.

There are three main XR product categories to watch going into 2025:

1. Traditional Virtual Reality (VR) Headsets, such as the Meta Quest Line-up of Head-Mounted Displays (HMDs): These devices remain a mostly consumer play, especially in gaming and some other entertainment, though enterprises are moving toward them for training and data visualization use cases. Advancements in components and capability, such as display resolution and brightness, optical quality, tracking accuracy, and onboard compute power, will likely see gradual, but welcome improvements in new device launches. Design and form factor will be a differentiator, with comfort, lightness, and overall design being more important than component advancement.
2. Augmented Reality (AR) Glasses with Displays, such as XREAL, Rokid, Vuzix, etc.: These devices have both the most to prove and the most room to grow. These devices remain a difficult package to create at a price and design acceptable to the larger market (e.g., beyond niche or target user bases like in enterprise). Meta’s Orion prototype could be classed as a best-case smart glasses product, but it is years away and, of course, still a prototype. Current offerings are often specialized to target specific use cases—such as a virtual screen experience with XREAL or enterprise frontline worker enablement with Vuzix (this is a generalization, as both companies are broader than just these categories; however, the primary focus areas align).
3. Smart Glasses Without a Display, such as the Ray-Ban Meta glasses: These are technically the newest offering of the three form factors (monocular, binocular, and no-display glasses—these are AI-first glasses), and the one currently receiving the most interest. As AR glasses are difficult and expensive to bring to market, no-display smart glasses have become an option to deliver a limited feature set at a more attainable price point. This is exacerbated with AI capabilities driving potential value—virtual assistants or AI agents and use cases like translation are especially interesting.

Across these categories, no-display smart glasses will be the primary story for the year, at least for 1H 2025. CES 2025 will likely have dozens of new operators in the space looking to capitalize on the interest, but a handful of these, especially from recognized brands, will have staying power. While hardware remains the first point of exposure to the audience, ultimately, the software experience will differentiate for this category. Those with stronger AI capabilities, especially in general virtual assistants and existing platforms familiar to possible users, are best positioned. Some hardware differences, of course, will show up, especially around battery life and camera capabilities, but these will more be in support of AI.

There may not be one conclusive through-line for the whole market (outside of AI, which will be unavoidable), but an official Google XR portfolio will go far in solidifying the space. XR, in many ways, has mirrored the smart glasses market over the years, moving from many small vendors to a handful of larger ones. The last major shift in that direction will come with Apple and Android competing as Operating System (OS) vendors, as well as hardware vendors (Apple directly, and Google mostly through partners). This will bring some stability, or at least predictability, to the space, which will engender more development time—without a clear user base or even potential end-user hardware, it is incredibly difficult to attract and maintain developers.

Moving into the second half of the year, there is potential to revisit spatial compute and more advanced device designs. After some exposure to AI capabilities through no-display glasses, vendors will also start looking to integrate these capabilities into other form factors. Not only does AI present a compelling use case to the end user, but it is also an incredible data tool for hardware and software vendors. This is something already well known to most AI players, with larger ones like Meta acutely aware of the value of user data in a novel form factor. Considering the value proposition for AI, in theory, only increases with access to more device features, such as displays, the only thing holding it back is hardware accessibility: manufacturing feasibility, design, and price. As display-equipped XR devices mature further and present more offerings at lower starting prices, AI spreads quickly.

Prepare for hardware to dominate news cycles, but software expansion and developer support will be the quiet heroes of the market through the year. While harder to market than flashy new devices, content and experience is king and it will remain that way. Developers need to be a focus with rollouts like Google’s expected XR OS/platform. Despite years of trial and error across XR, 2025 can be viewed as a second starting point—many consumers still do not understand the potential of XR and have not been exposed to much in the way of hardware or content, and that comes down to other limiting factors that are beyond the scope of this ABI Insight. To capture that user base, the flashy devices need to be paired with compelling content, no matter the form factor—be it an XR-tailored AI agent for no-display glasses or well-known names in gaming and entertainment on the immersive side.