You're seeing like a scoreboard above the basket. It says who has the most points and then the leaderboard. One of the things that's really cool about this lens is that it's connected together. It's a really fun way to make playing basketball more fun, and soon there'll be an Augmented Reality coach as well, so you can improve your game on the court. We're finally getting a glimpse of new high-tech hardware that's been in the works for years, which tech giants say could be the next generation of computing. Give me a smoothie recipe with these ingredients, please. Meta and Snap are the first major players to unveil Augmented Reality or AR prototypes. This is Orion, our first fully functioning prototype, and if I do say so, the most advanced glasses the world has ever seen. Today we're introducing the fifth generation of

spectacles. Building high-tech features into glasses isn't a new idea. Snap and Meta have both been investing in tech-enabled smart glasses for years, but these new products make a technological leap with fully holographic overlays. With Orion, we are getting closer to achieving the dream of Reality Labs. To create the next major computing platform that delivers a deep sense of presence like you were right there with another person. This is where we are going. Meta has poured more than $63 billion over the last decade into its AR and VR division, Reality Labs, which has developed its VR headsets and metaverse experiences, along with launching Ray-Ban smart glasses that feature an AI assistant. The company says demand for the glasses has been huge. But while Snap and Meta have debuted AR prototypes, they are still years away from bringing down the costs to a point where these products could be sold to

consumers. And they're even further away from being cheap enough to go mainstream, but Meta and Snap see huge opportunity. This is a major leap forward for technology. It's a big step forward for our sort of goal to help define the next generation of computing. We think we're at a bit of a watershed moment, people are getting fed up with their screens in the way that they make them feel, and developers are feeling frustrated about developing for the smartphone platform. So I think we're at a unique moment where both consumers and developers are really ready for something new. AR and VR in inevitabilities they will happen. A precursor to AR, smart glasses have grown in popularity, led by Meta, which partnered with Ray-Ban to launch smart glasses first in 2021. These things are doing pretty well right now in the market. You can talk to them, you can ask questions

about what's happening in front of you. You can ask it to play music. You can make calls with it. They've been very popular. We've worked hard to get latency down, which is how long it takes for the assistant to respond. You want the voice interactions to be really, really close to the way you talk to somebody else. Snap has been tackling similar challenges, first introducing these spectacles in 2016. Now, by the fourth generation, it added some basic AR capabilities, but its latest pair are far more immersive. Augmented Reality glasses are a massive leap from smart glasses. They not only project images on their clear display, but they also enable users to control what they see with their eyes and hands. What's so exciting about spectacles is that it brings us closer to our vision for people using computing together, grounded in the real world with their

friends. The dream of augmented and mixed reality is something tech giants have been pursuing for years. Apple has been focusing on its Vision Pro virtual reality headset, which includes cameras to orient users in their space, but we haven't yet heard from Apple if it plans to introduce glasses. And a number of efforts in this space have struggled. Google was first to market with Google Glass back in 2013. The product was expensive and drew criticism. Now, more than a decade later this year, it teased a new pair of glasses. Microsoft has also worked on AR for well over a decade, launching its HoloLens headset for enterprise in 2016. Failing to gain traction, Microsoft discontinued it on October 1st. And an early player in AR, Magic Leap, raised more than $2.3 billion from Google, Alibaba, JPMorgan and others. Recently, it slashed its staff, pivoting

from making headsets to partnering with the likes of Google to license its technology. And with that decade of tech giant's struggles, the industry is still in the early stages. AR has been around for like 50 years, and we can ignore most of that because in the last ten, 12 years, it's the commercialized era of it. We're in our adolescence. We see a lot of potential, but we haven't quite reached that potential yet. This is so crazy. Oh. Nice shot. Meta's vision is to make its AR glasses as easy to use and as useful as a smartphone. It's the most advanced pair of glasses ever made. It's lightweight. It's got a really powerful computing in it. They project a holographic display so that you can summon a screen, or you can look at your messages, you can watch video, you can have a video chat with somebody.

What has been your intention when working on these Augmented Reality glasses on this prototype? What are you driving for? If you think about the history of computing in general, we started with computers in basements. They gradually made their way onto our desktops, and then they've made their way into our pockets and our purses with smartphones. We've been thinking for a while about what's the next thing after the phone. It's probably going to look like a lightweight, attractive, comfortable pair of glasses. With these AR devices just like with smart glasses, AI is center stage. How important is AI in building this hardware, and how important is AI in terms of the user interface? It's essential. I mean, every single piece of what we just talked about requires AI; computer vision, understanding the world in front of you, speech and natural interface, that's difficult and requires AI. As Meta continues investing in Orion hardware, its

developers are working on creating software and apps to run on it. We are going to use Orion as a dev kit. We are going to use it mostly internally to build out the software that we need to, but we're also going to work with a handful of partners externally to make sure that we get a diversity of content, so that way when we have the next version of this hardware, it is going to be ready to be our first consumer, full holographic AR glasses. Meanwhile, Snap wants an ecosystem of experiences and games for its new hardware and operating system. So it's renting glasses to developers for $99 a month. We've initially focused on our developer community. So there are hundreds of thousands of developers who are already using Lens Studio to build millions of lenses. We've tried to really lower the barrier to folks getting started with this new technology, so they'll get Spectacles and Snap support to bring their

imagination to life. Niantic, creator of Pokémon Go, the viral AR smartphone game, has brought a few of its apps over to spectacles. We chose to work with Snap because they're one of the first companies actually, you know, getting these glasses working. Snap, their view is more focused, based on their DNA about the social and the communication aspects of it. You can argue that Meta and Facebook are very similar, but they've started looking broader. AR technology has made huge leaps in the past decade. Meta's earlier prototypes required backpacks and fans to hold and cool computing components. The technical challenges to make them are insane. You know, they need to be glasses, they're not a headset, no wires, less than 100g. It is an absolutely incredible amount of technology to be able to miniaturize and fit into a pair of glasses and a small puck that goes with it to

help power the whole thing. But for all of that progress, there are still myriad obstacles to building the AR ecosystem to make it worth buying these devices. There are three issues: content, convenience, and control. Content. What am I going to do with this? Convenience. Is it easy for me to get? Is it easy for me to set up? How am I going to interact with this? Right? Am I touching things? Am I doing pinch, swipe? zoom? You need all of those things to make it come together. So with years before these products are sold to consumers, the question is how to justify the massive R&D cost, especially for Snap. We have yet to see Augmented Reality go mainstream. Why does it make sense to invest so much in this at a time when your stock is down? I think the reason why we're so convinced that AR glasses

are the path forward is because people are getting tired of screens. Glasses are a way to use computing that actually brings us together and keeps us connected with the real world. And while Meta's stock has been on a tear, investors are still curious about the payoff of its R&D. Why are you investing so much in this technology, and how will it eventually tie into your business? We wanted to show the demo to people just to show what we've been working on. We've been investing for this for a long time just because we are asking the question sort of what comes after the smartphone. The key to commercializing these new devices is bringing down costs. Meta says it aims to sell its glasses at the price point of a high-end smartphone. I want to keep working on the design to make it smaller and a bit more fashionable. We need to keep working on the manufacturing to make it

a lot more affordable too. With these prototypes, you got to start with something that is the North Star. Orion is that, and then you find ways to optimize, bring down cost, bring up performance. The price point depends on the value it delivers. If it can do everything and anything, I would say the price point has to be around the range of a smartphone. If it's a single-purpose, you know, very purpose-built device that can do kind of one thing, it needs to be much cheaper. I don't think mass-market, head-mounted display use adoption will happen in the next 15 years. And there will surely be new players in this space, such as Google and Apple. The tech giants are rumored to be working on their own AR glasses. Glasses form factor is the mainstream future device that we see, you know, sitting alongside and maybe someday replacing the cell phone.

I don't think that's true for these, you know, MR Devices like Vision Pro. Apple would probably say it's a stepping stone, that it's a way for them to work on some of this technology and get developers to start building with some of their APIs before the glasses, but I'm ready to get to the real thing. Apple's Vision Pro is far from mass adoption, with the company reportedly cutting its forecast for shipments and the IDC saying Apple has sold less than 100,000 units each quarter since launch. So, there are big questions about the market for both Virtual and Augmented Reality. In the meantime, while we wait to see if AR glasses attract developers and useful new experiences, and then eventually customers, Meta is taking what it's learned from Orion R&D, such as how to shrink components and minimize cost and heat to improve its quest VR headsets and its Ray-Ban Meta smart glasses.

And at the same time, it's leveraging its advances in AR and AI and its other divisions to accelerate the development of Orion. For now, I think the right way to look at Orion is as a time machine. These glasses exist. They are awesome, and they are a glimpse of a future that I think is going to be pretty exciting.

Why Meta And Snap Are Betting Big On AR Glasses

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