The news: Google and Samsung revealed Android XR, an extended-reality OS, and Samsung’s Project Moohan headset, challenging Meta’s Quest and Apple’s Vision Pro in the VR/AR market.

• Android XR is an open platform and would give third-party manufacturers like Sony and Lynx the option to create devices using Google’s platform, a move that aims to replicate the success of Android smartphones.
• Samsung’s headset is slated for release in 2025 and is likely the reference design for future Android XR wearable devices. The company plans to undercut the Vision Pro’s $3,500 price.

The challengers: Google and Samsung are entering the XR space at an interesting time, when other XR ventures have fallen flat. 

• Apple’s Vision Pro has been regarded as an expensive flop. It reportedly cut the headset’s shipment forecast due to slow sales, per supply chain analyst Ming-Chi Kuo.
• Meta’s Reality Labs has been a loss leader. The division cost Meta about $16.12 billion last year, and its Q3 losses reached $686 million, up 18% YoY.

However, there was increased buzz surrounding Meta’s aspirational Orion prototype, revealing that consumers are more interested in smart glasses than they are in clunky, expensive VR headsets. 

Return of the metaverse? Competition in the XR segment could rekindle interest in metaverse applications and technologies. Global metaverse revenues from gaming, services, ecommerce, and advertising are projected to hit $54.50 billion by 2028, per S&P Global.

Our take: Unlike Apple’s and Meta’s closed ecosystems, democratized XR and VR spreads hardware and software development—and ecosystem expansion costs—across various partners.

• Google is creating XR versions of its apps including Maps, Photos, and YouTube and enabling Chrome to run in mixed reality.
• It’s also integrating Gemini AI into Android XR, with voice interactions as the key way to interact with apps and services. 

Google and Samsung will need to rely on third-party apps and content providers to build compelling experiences, a challenge considering XR’s lackluster past.

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