Qualcomm Unveils Next-Gen XR Chip, Vision Pro Launch Imminent - Can XR Industry Take Off?

In a surprising move, Qualcomm recently announced the release of its next-generation chip tailored for XR, VR, AR, and MR headsets – the Snapdragon XR2+ Gen 2. Compared to the XR2 Gen 2 chip launched four months ago, the new chip boasts improvements in performance capabilities, hardware scalability, and rendering resolution.

The sudden acceleration by Qualcomm is widely speculated to be linked to the imminent release of Apple's Vision Pro. According to industry insiders, Vision Pro is expected to officially launch on January 27th with a price tag of $3,499.

Apple Trails in XR Development

For users familiar with smartphone SoCs, the suffix "+” denotes a chip with incremental performance upgrades released around six months after its predecessor. The Snapdragon XR2+ Gen 2 follows this naming convention and is an enhancement over the XR2 Gen 2, featuring a 20% increase in CPU and 15% in GPU frequencies. This frequency boost enhances overall rendering and computing capabilities, particularly evident in the improvements in maximum supported rendering resolution, frame rates, and the number of supported cameras.

Regarding resolution, the XR2+ Gen 2 can render up to a single-eye 4.3K resolution, surpassing the previous generation's single-eye 3K resolution. Theoretically, devices equipped with this chip can achieve display precision comparable to Apple's Vision Pro (with dual 23 million pixels) while supporting a maximum refresh rate of 90Hz.

Additionally, the XR2+ Gen 2 matches Vision Pro in peripheral hardware support, utilizing an embedded XR acceleration module to process information concurrently from 12 cameras, mirroring the camera count of the Vision Pro. The inclusion of more cameras, especially for XR and MR devices, enhances the projection of surrounding real-world information onto the screen and improves the accuracy of tracking hand and leg movements.

Despite Qualcomm's chip announcement, no XR headset featuring the XR2+ Gen 2 has been released concurrently. Following the release pattern of the XR2 Gen 2 in the Meta Quest 3, it is expected that devices with the new chip will be launched and available for sale within a month.

Qualcomm has been strategically positioning itself in the XR field for nine years since the introduction of the Snapdragon 820 in XR devices. The chips have evolved from mere adaptations from mobile phones to targeted enhancements for virtual reality devices. Simultaneously, Google has incorporated support for various VR and AR display devices in Android.

Supported by chip and system integration, brands like Meta, Pico, Magic Leap, HTC, Nreal, and iQiyi have emerged in the race. Despite some facing challenges or potential market exits, the Android ecosystem, including Qualcomm, Google, and various terminal manufacturers, has paved the way for a considerable amount of time. For ordinary consumers, mature platforms like Steam VR allow a relatively low learning curve to experience XR content.

While Apple applied for relevant patents as early as 2007, it only unveiled its first product, Vision Pro, in 2022, powered by the M2 processor released in the same year. Comparing it to the Meta Quest 3, which serves similar functions, Vision Pro is anticipated to undergo extended optimization, software feature adaptation development, application scenario exploration, and market education after its release. The high price of the first-generation product is also a concern, considering the top-of-the-line Meta Quest 3 is priced at only $649.

Will XR Experience a Revival in 2024?

Despite both Apple and Qualcomm making significant investments in the virtual reality industry, the overall market demand for such emerging consumer electronics products has not reached a critical point of explosion, as indicated by the global shipment estimates for augmented reality (AR) and virtual reality (VR) headsets in 2023, projected at 8.1 million units according to IDC. This sales volume is significantly lower than mainstream consumer electronics devices like PCs, smartphones, and home appliances. To put it in perspective, the global sales volume is just slightly higher than that of digital cameras in 2022 (selling 7.3 million units).

In other words, the adoption of VR devices remains a niche interest at this stage.

Market trends do not bring good news either. Despite the introduction of flagship products like PS VR2 and Meta Quest 3 from tech giants in the past year, the overall shipment volume of virtual reality devices has been on a decline since surpassing 11 million units in 2021. IDC predicts a substantial growth in AR/VR headset shipments by 46.4% in 2024, but according to Titanium Media App analysis, the overall market performance is expected to fall short of this projection. It is challenging for the global shipment volume of XR devices to exceed the 10 million units mark in 2024.

On one hand, XR devices currently lack a high retention rate and means to deliver a highly engaging daily experience. In recent years, domestic manufacturers have experimented with various methods, attempting to cultivate users' daily engagement with XR devices, including but not limited to cashback incentives for pre-orders, daily experience tasks, and integration with fitness scenarios. Unfortunately, these efforts have largely failed, with many products accumulating seemingly growing daily activity data that eventually end up collecting dust when the incentive period concludes.

On the other hand, the price threshold for XR devices remains high at this stage. Even for VR and AR devices with a focus on display functionality and lower hardware costs, the prices are equivalent to purchasing a mid-range smartphone. Moreover, due to their positioning, these devices still struggle to meet consumer expectations in terms of display resolution, screen door effects, refresh rates, and comfort in prolonged wear.

While some high-end products may impress with their performance and visual appeal, their hefty price tags discourage many users from exploring or trying them out. Additionally, compared to relatively niche consumer electronics like cameras and projectors, XR devices lack productivity attributes and fail to appeal to larger groups. Hence, it is challenging for them to experience explosive growth in a short period.