Google's AndroidXR OS: Can it Save the Smart Headset Industry?

Google's AndroidXR OS: Can it Save the Smart Headset Industry?As 2024 draws to a close, the tech world is buzzing with activity, a flurry of new product launches seemingly intent on thawing the chill of the recent market slowdown. Overseas tech giants are making their moves: OpenAI has held a twelve-day-long product launch spree, Amazon Web Services has unveiled six new AI models, and Google, a close competitor to Apple in the operating system arena, has launched its own new operating system AndroidXR aiming squarely at the smart headset market and reigniting its competition with Apple

Google's AndroidXR OS: Can it Save the Smart Headset Industry?

As 2024 draws to a close, the tech world is buzzing with activity, a flurry of new product launches seemingly intent on thawing the chill of the recent market slowdown. Overseas tech giants are making their moves: OpenAI has held a twelve-day-long product launch spree, Amazon Web Services has unveiled six new AI models, and Google, a close competitor to Apple in the operating system arena, has launched its own new operating system AndroidXR aiming squarely at the smart headset market and reigniting its competition with Apple.

Similar to its approach in the mobile phone market, Google, while possessing its own smart headset devices, won't exclusively tie AndroidXR to its own products. Samsung will be the launch partner, with its first AndroidXR-powered headset, codenamed "Project Moohan," expected to be released next year. Featuring a built-in battery and supporting both VR and AR modes, its price point is expected to be a key selling point. The "XR" in the name signifies AndroidXRs ambition to encompass all types of smart headsets: virtual reality (VR), augmented reality (AR), and mixed reality (MR). However, despite a market already flooded with VR, AR, and MR products from giants like Apple, Samsung, and Meta, none have managed to create a significant market wave. AndroidXR's success hinges on its ability to address the industry's pain points a question that remains unanswered. The failure of Apple's Vision Pro offers valuable lessons.

Apple Vision Pro: High-End Positioning and the Lack of Killer Apps

While opinions might differ on the best smart headset experience in recent years, there's little debate about the most famous and hyped headset: Apple's Vision Pro. Yet, despite Apple's powerful brand influence, sales have fallen far short of expectations since its February launch, reaching less than 500,000 units a significant gap from the predicted 900,000 to 1,000,000 annual sales. In October, Luxshare Precision, a company in Apple's supply chain, even reported that Vision Pro production would cease in 2024. Recently, Qiu Yubin, senior research vice president at TrendForce, revealed that Apple's next-generation smart headset, slated for 2026, will include both high-end and lower-priced models targeting a broader market. This leaves 2025 as a potential "vacuum year" for Apple's smart headset offerings.

Vision Pro's failure boils down to two main factors: firstly, a lack of killer apps. Despite its high specifications, the actual user experience doesn't significantly surpass other headsets. The touted 2,000+ apps haven't delivered a revolutionary improvement, leaving it feeling more like an expensive toy; secondly, the exorbitant price. The starting price of 29,999 (approximately $4,000 USD) puts it out of reach for most consumers, relegating it to a luxury item for the affluent few.

While more affordable headsets exist, such as Meta's Meta Quest 3, priced at $299.99, Meta, having positioned the Quest 3 as an MR device, still primarily functions within the VR domain. Google's Daydream and Samsung's Gear VR were also relatively inexpensive, but aside from the Meta Quest series, few smart headsets have maintained substantial sales.

The Chinese Market: Low Prices Aren't a Magic Bullet

China, as the global manufacturing hub, boasts numerous affordable, high-quality smart headsets from brands like Nreal, XREAL, and PICO, covering almost every price range. However, these haven't managed to ignite the domestic market. IDC's "AR/VR Headset Market Quarterly Tracking Report" shows that Chinese AR/VR headset shipments in the first half of 2024 reached only 233,000 units, a year-on-year decline of 29.1%. This demonstrates that price isn't the most crucial factor; killer apps are the deciding element.

Currently, smart headsets primarily serve as gaming and video-watching devices. However, consumers are reluctant to pay hundreds or even thousands of dollars for a device that essentially functions as a large, personal screen, making the value proposition questionable.

AndroidXR's Opportunities and Challenges: The Power of AI and an Open System

Whether AndroidXR can revitalize the industry hinges on its ability to deliver killer apps, enhancing the practical value of smart headsets and moving beyond their current limitations as gaming and video-watching devices.

Google's AndroidXR leverages two key strengths: AI and an open system. Similar to Meta Quest, Google emphasizes the seamless transition between the virtual and real worlds, redefining how we watch, work, and explore. Google highlights AndroidXR's support for Google Maps, Google Photos, Translate, Chrome, and its image search functionality, along with its AI model, Gemini.

Maps and photo applications are common features in current headsets and are fundamental to AR technology, but they are not killer applications and offer limited improvements in user experience. The real game-changer is the Gemini AI model.

AI is rapidly sweeping the globe, with major mobile phone manufacturers integrating it into the underlying architecture of Android. This has enabled features like summarizing documents, cross-app operations, image creation, and intelligent device management based on user habits, with many actions controlled through voice commands to AI assistants.

AI models embedded in smart headsets will significantly enhance the user experience. Users won't need to navigate menus, instead using voice commands to instruct Gemini to launch apps and switch scenes. Combined with eye-tracking technology, headsets can more accurately identify elements in both the real and virtual world, improving interaction efficiency and accuracy. For instance, users could ask Gemini about plot points in a movie; in real life, Gemini could use headset sensors to identify the surroundings and offer guidance based on user needs; in creative processes, AI combined with AR and VR could simplify 3D modeling and enhance photos into 3D images, facilitating creative expression.

Unlike Apple's closed Vision Pro system, AndroidXR's greatest advantage lies in its openness. The system acts like a shelf, and apps are the products on that shelf. Apple's closed system and high Vision Pro price limit its appeal to a small user base, reducing the potential profits for developers.

AndroidXR's open design will attract a larger number of headset manufacturers. Combined with a thriving upstream supply chain, it significantly lowers the barrier to entry. Even less technologically advanced companies could readily source hardware from suppliers and install the AndroidXR system to become new players in the market.

A large consumer base is crucial for developers to see the potential profitability of AndroidXR, motivating them to develop applications. While Apple is powerful, developers primarily care about profits. Without a substantial user base, there is less incentive to develop native apps for Vision Pro. In the mobile OS space, Google benefited immensely from the open nature of Android and has accumulated extensive experience in developing open systems.

Google's partnership with Samsung for the AndroidXR launch likely aims to leverage Samsung's influence, enabling quicker consumer access to AndroidXR and accelerating the establishment of industry standards, ultimately enhancing Google's position.

Growing the Pie, Sharing the Profits

Unlike Vision Pro's high-end approach, Google and Samsung's Project Moohan targets all consumers. While Apple plans a lower-priced headset, its delivery in 2026 remains uncertain given Apple's usual pace. Even then, Apple's low-end headset is still expected to cost over $1,000 USD, making it inaccessible to most consumers. Products from Samsung, Google, and other headset makers might better fit the needs of the average consumer.

Google has learned from Vision Pro's mistakes, understanding that killer apps are key, and AndroidXRs killer app is the Gemini AI model. AI's new interaction experiences and features prevent smart headsets from becoming just expensive, personal screens. The open system attracts more companies, helping AndroidXR establish a similar position in the smart headset market as Android in mobile.

Google's AndroidXR OS, with its AI technology and open system, will be a catalyst for the industry's activation, injecting vitality into the smart headset market and pushing it into a period of golden development. By growing the pie, every participant benefits. Recognizing this, Google may be poised to create another miracle in the smart headset market.

January 7th, 2025, marks the opening of CES 2025. We eagerly anticipate AndroidXR's debut.