Summary of Key Points
AI glasses represent the most polarizing category in the technology consumer market: on one hand, users are highly dissatisfied with the product (return rates range from 30% to 60%, with less than 6% of features being used regularly); on the other hand, capital is pouring into the industry (over $30 billion in funding, and the valuations of leading companies have soared). Investors are betting that AI glasses could become the next "entry-level computing platform" following smartphones. However, users' real experiences are hindered by three major issues: hardware, use cases, and privacy. This industry is highly competitive, and only two or three companies may survive in the end. Most players will not make it until the technology matures, which could take until around 2030.
1. Why Does Capital Dare to Bet? — The Bet on the “Next Smartphone” Entrance
The essence of internet competition is to control the "user attention entrance": in the PC era, it was the operating system; in the mobile era, it was the smartphone. The AI era requires a device that can remain online continuously, respond instantly, and perceive the surroundings. Glasses have a natural advantage in this regard—since they are worn on the face, there's no need to take them out to unlock them, making the interaction more seamless compared to smartphones (for example, you don't have to take out your phone to check messages). Additionally, 2 billion people worldwide wear glasses, so there's no need to educate them about why to wear them; you just need to show them what they can do with them.
Investors are betting that if AI glasses indeed become the next major platform, the winner will dominate the market (similar to how Android and iOS dominated profits in the smartphone era), with potential returns being hundreds or even thousands of times the investment. Even if most companies fail, one successful investment could be extremely profitable.
2. Why Do Users Return the Products? — Three Major Issues Hitting Pain Points
Users return the products not because they dislike the concept of AI glasses, but because the actual experience is too poor:
- Uncomfortable to Wear: Weight, battery life, and performance form a "impossible triangle." The lightest AI glasses currently weigh 34 grams, while regular glasses are almost weightless. The extra weight and heat can be uncomfortable, especially when worn for long periods. Half of the returns are due to these issues.
- Lack of Essential Features: Functions like translation, navigation, and photography can be performed with smartphones and headphones. AI glasses offer over 200 features, but less than 6% are used regularly. Before buying, users often ask, "What can I really use this for?" Moreover, products are highly homogenized, with Xiaomi and Xiaodu having over 80% of their features in common, making it hard for users to choose.
- Privacy Concerns: AI glasses with cameras look similar to regular glasses, and users are concerned about being used for covert filming. This year, the use of such glasses was banned during the college entrance exams, leading to a surge in sales of "light-blocking stickers" on e-commerce platforms to cover the camera indicators. Both industry standards and laws have not kept up with these concerns.
3. How Competitive Is This Industry? — Nine Out of Ten Companies Fail, and Most Don’t Survive
Entry-level industries always see a winner taking all the market share. In the smartphone era, there were hundreds of brands, but only a few survived. The same is likely to happen with AI glasses:
- High Capital Requirements: XREAL lost $2 billion in three years, with sales of its main product dropping from 130,000 to 20,000 units, and its cash reserves barely lasted half a year. More funding is needed to sustain continuous losses.
- Low Odds of Success: Out of the dozens of companies investing, only 2-3 may succeed. While investors hope for a big hit, most will run out of resources before the technology matures.
- Even Giants Hesitate: Vivo stopped developing AI glasses after half a year due to a lack of differentiation. Xiaomi also reduced its production forecast for the second-generation glasses from 300,000 to 120,000 units, indicating that the market is not yet ready.
4. How to Break the Pattern? — Three Approaches, Each with Risks
There are three approaches being tried in the industry, but all have their challenges:
- Focusing on Improving the Experience: LeiNiao V4 eliminated unnecessary features and reduced the weight to 38 grams while improving battery life. The risk is that if a new, essential use case emerges next year, the company may not be prepared.
- Using Traditional Channels to Lower Barriers: Alibaba's Qianwen AI glasses, in collaboration with Wu Liangcai, have reduced return rates by providing fitting services. However, this only solves the problem of purchase; users still don't know how to use the glasses.
- Betting on AR Display Technology: XREAL is focusing on AR glasses with displays, hoping to create a new ecosystem. However, sales are declining, and losses are significant. Whether they can sustain the investment until the technology matures is uncertain.
In the short term, focusing on basic improvements (such as reducing weight and improving battery life) seems the most practical approach. Waiting for the emergence of a critical use case is a more reliable strategy than betting on uncertain technological timelines.
5. Where Is the Future Turning Point? — Another Five Years to Determine the Winners
According to experts, the direction in which capital is investing is correct (the shift to new entry-level platforms is a trend), but perhaps the timing is five years too early. Smartphone technology (chips, batteries, displays) took ten years to mature. For AI glasses to become a viable platform, they need to meet the following criteria: weight under 30 grams, battery life for a full day, and usable displays. The turning point may not come until around 2030.
In the next five years, most companies will fail. Those that survive will have healthy cash flows, solid products that address user needs, and a proven presence in specific vertical markets (such as industry or education). They will need to use their current revenue to wait for the "iPhone moment" — when a truly groundbreaking product emerges. Only then will they be in a position to seize the opportunity.
In summary: First, solve the problems that make wearing AI glasses uncomfortable (such as pressure on the nose), and then consider replacing smartphones.
(The entire analysis is written in plain language, without using technical jargon, to help readers understand the current state and future of AI glasses.)