“You Can Wear Them Anywhere!”
Buying a pair of glasses can be a traumatic experience. For many, they are going to be wearing those glasses for most of the day, every day, for years, and a wrong choice can be devastating. Now choosing glasses has become even more complicated as the glasses you choose that will help you read and keep you from stepping into traffic are not the only ones you need. Not only do you need those prescription glasses (and maybe prescription sunglasses) but you also need a pair of AI glasses, now the hottest thing in China, where brands large and small are competing to grab consumer attention in this relatively new category.
In fact, similar glasses have been around for a while, but those were AR glasses that allowed you to overlay digital objects or text over what you see through ‘regular’ lenses. Those are still a thing, typically dominated by Metsa’s (FB) Ray-Ban glasses, but as Ai becomes more embedded in our society, the drift is toward AI over AR, and in some cases both.
So what are AI glasses? Typically they look like slightly bulky sunglasses but have an integrated voice assistant that can understand what you want, similar to Siri, Alexa, or Google (GOOG) Assistant. The voice assistant hears your commands through a number of microphones embedded in the frame and passes it to an LLM that parses speech the same way it parses text queries (actually not the same way, but similar). The response can either be an answer or an action, typically responding through speakers also embedded in the frame or bone conduction modules that are touching your ear. Most have some sort of image/video camera that can be activated to record an event or conversation, with some allowing direct livestreams to social media.
Of course, there are the applications that are usually on your phone, which is a necessary part of many AI/AR glasses, that communicate with the glasses, either by wire or wirelessly (typical) and allow the glasses to make calls, receive messages, and give you notifications, but when it really gets down to it, the applications available to each brand of glasses, whether AI or AR or both, are what makes them useful.
The most common application, aside from the basic messaging and notifications, is translation, which can be as complex as sentence by sentence instant translation that appears before your eyes (AR), or voice translation through the speakers. This is not just for when you are traveling to another country, as anyone living in a metropolitan area is likely to face a few foreign speaking people each day. They might not be talking to you (think nail salon, bodega, hospital, bus terminal) but it sure is nice to know what people around you are saying. Existing aural applications like Spotify (SPOT), Apple (AAPL) Music, Amazon (AMZN) Music, or Deezer (DEEZR.FR) can be easily piped to your glasses, so no headphones or earbuds needed if you have glasses, but in the race to outdo other AI/AR glasses brands, there are lots of other applications that are finding their way into said glasses.
Object and scene recognition is one application that garners attention as it can be used for shopping (You see that person’s shoes? Find them for me”) or for navigation (“Tell me where I am -based on these buildings”), and while the navigation application seems to us to be the more important of the two, it is probably the other way around. There are also health applications, with sensors that measure heart rate or oxygen levels and even some that are set up as hearing aids that use the embedded microphones and conduction systems to avoid having to stick obtrusive devices in your ears to hear. There is even a set of glasses that can change their tint electronically and some that can read head or hand gestures, making it unnecessary to give a voice command unless a question needs to be answered..
As it is still very early in the ‘smart glasses’ game each new application or feature pushes that device forward into the public eye, only to be surpassed in days, weeks, or months by new features that catch the eye of consumers on another device. Unlike smartphones however, which typically cost between $500 and $1000, smart glasses are less expensive and there are rumors that Chinese smartphone brand Xiaomi (1810.HK) is going to release their own branded smart glasses this year for just a bit over $200, making it difficult for smaller brands to compete. While that might limit innovation a bit, it is certainly good for consumers who will benefit from low prices and feature competition similar to the smartphone space.
All in, we expect the smart (AI) glasses segment and the AR/XR segment to merge over the next two years and for new applications and features to drive expansion in the space. But we also believe that in a relatively short period of time, most smart glasses sales will be based on large CE brands that exist today, with those brands focused on high unit volumes that will augment smartphone sales. That said, it will be a delicate balance to keep smart glasses from eating into smartphone sales as some of that smartphone functionality shifts to the glasses. We can also see a scenario where small inexpensive pocket computers, designed specifically for branded smart glasses, could replace smartphones altogether, but it is too early to make that call as consumers are just beginning to see the utility that smart glasses provide and designers are still trying to figure out the best ways to integrate AI functions. It’s just the beginning of the cycle.
In fact, similar glasses have been around for a while, but those were AR glasses that allowed you to overlay digital objects or text over what you see through ‘regular’ lenses. Those are still a thing, typically dominated by Metsa’s (FB) Ray-Ban glasses, but as Ai becomes more embedded in our society, the drift is toward AI over AR, and in some cases both.
So what are AI glasses? Typically they look like slightly bulky sunglasses but have an integrated voice assistant that can understand what you want, similar to Siri, Alexa, or Google (GOOG) Assistant. The voice assistant hears your commands through a number of microphones embedded in the frame and passes it to an LLM that parses speech the same way it parses text queries (actually not the same way, but similar). The response can either be an answer or an action, typically responding through speakers also embedded in the frame or bone conduction modules that are touching your ear. Most have some sort of image/video camera that can be activated to record an event or conversation, with some allowing direct livestreams to social media.
Of course, there are the applications that are usually on your phone, which is a necessary part of many AI/AR glasses, that communicate with the glasses, either by wire or wirelessly (typical) and allow the glasses to make calls, receive messages, and give you notifications, but when it really gets down to it, the applications available to each brand of glasses, whether AI or AR or both, are what makes them useful.
The most common application, aside from the basic messaging and notifications, is translation, which can be as complex as sentence by sentence instant translation that appears before your eyes (AR), or voice translation through the speakers. This is not just for when you are traveling to another country, as anyone living in a metropolitan area is likely to face a few foreign speaking people each day. They might not be talking to you (think nail salon, bodega, hospital, bus terminal) but it sure is nice to know what people around you are saying. Existing aural applications like Spotify (SPOT), Apple (AAPL) Music, Amazon (AMZN) Music, or Deezer (DEEZR.FR) can be easily piped to your glasses, so no headphones or earbuds needed if you have glasses, but in the race to outdo other AI/AR glasses brands, there are lots of other applications that are finding their way into said glasses.
Object and scene recognition is one application that garners attention as it can be used for shopping (You see that person’s shoes? Find them for me”) or for navigation (“Tell me where I am -based on these buildings”), and while the navigation application seems to us to be the more important of the two, it is probably the other way around. There are also health applications, with sensors that measure heart rate or oxygen levels and even some that are set up as hearing aids that use the embedded microphones and conduction systems to avoid having to stick obtrusive devices in your ears to hear. There is even a set of glasses that can change their tint electronically and some that can read head or hand gestures, making it unnecessary to give a voice command unless a question needs to be answered..
As it is still very early in the ‘smart glasses’ game each new application or feature pushes that device forward into the public eye, only to be surpassed in days, weeks, or months by new features that catch the eye of consumers on another device. Unlike smartphones however, which typically cost between $500 and $1000, smart glasses are less expensive and there are rumors that Chinese smartphone brand Xiaomi (1810.HK) is going to release their own branded smart glasses this year for just a bit over $200, making it difficult for smaller brands to compete. While that might limit innovation a bit, it is certainly good for consumers who will benefit from low prices and feature competition similar to the smartphone space.
All in, we expect the smart (AI) glasses segment and the AR/XR segment to merge over the next two years and for new applications and features to drive expansion in the space. But we also believe that in a relatively short period of time, most smart glasses sales will be based on large CE brands that exist today, with those brands focused on high unit volumes that will augment smartphone sales. That said, it will be a delicate balance to keep smart glasses from eating into smartphone sales as some of that smartphone functionality shifts to the glasses. We can also see a scenario where small inexpensive pocket computers, designed specifically for branded smart glasses, could replace smartphones altogether, but it is too early to make that call as consumers are just beginning to see the utility that smart glasses provide and designers are still trying to figure out the best ways to integrate AI functions. It’s just the beginning of the cycle.
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