China’s AR Industry Development – 2021 Update – 1 September 2021

Magic Leap, a high-profile AR (augmented reality) company, has been plagued by problems such as lay offs, the resignation of senior executives and the assignment of its patents as collateral for a loan. It rolled out Magic Leap One, a consumer AR product, in 2018 but did not receive positive market feedback. It is said that Magic Leap has shifted its focus to the enterprise AR market and will launch its next-generation product in Q4 this year. Daqri is a well-known industrial wearable AR device developer, but its products have never been applied on a large scale. It has declared bankruptcy and some of its assets and employees have been acquired by Snap. While many companies have failed in the AR industry, a lot of other leading companies are still seeking to enter the industry. What do you think of the lacklustre performance of leading AR start-ups over the past few years? This year, with all the buzz about metaverse, AR and VR (virtual reality) have attracted wide attention again. At this point, what are the opportunities and challenges in consumer and enterprise AR markets?

Do you think AR is a pseudo-proposition? Or do you think the AR industry will register robust growth in the medium and long term once technological barriers are removed?

Can you talk more about the technological barriers to the development of wearable AR devices geared towards individual consumers? How much progress have major players made in overcoming these barriers? Can you give us a timeline for the advances in technologies needed to improve wearable AR devices’ steadiness and avoid dizziness?

Microsoft HoloLens seems to be the best AR device available on the market. What do you think of its technology level and solution? Do you think Microsoft is leading the AR industry?

How long does it take for Microsoft to upgrade its technologies and launch decent consumer AR devices?

What are the major application scenarios for enterprise AR products across industries? As you said earlier, there is no rigid demand for AR products at the moment. Are there any scenarios where the products have already been used? What pain points can the products solve for enterprises? How much can they help with cost reduction and efficiency improvement?

In its AR Insight and Application Practice White Paper released in June 2021, Huawei noted that its AR head-mounted displays (HMDs) were intended primarily for the enterprise market, with prices high yet their sales volume small. The AR HMD market has grown fast over the past few years but its base number or the starting point of growth is rather low. Data published by Strategy Analytics showed that in 2020 the global shipment volume in terms of this industry was fewer than 115,000 units and the total revenue was USD 166m, with 81% of the shipment volume oriented to enterprises. What was the annual growth rate in 2015-20? What was the contribution of the Chinese market to the shipment volume of the global market? Did AR HMDs oriented to enterprises take up about 80% in the Chinese market?

You mentioned that enterprises had the innovation willingness. What about their payment willingness? How do their innovation departments decide to try AR products? Could you elaborate on their procurement volume and price sensitivity? If enterprises find the bottleneck of AR technology or are not satisfied with the effect, will they reduce the demand for future purchases? What do you think of the market growth drivers and potential?

In addition to domestic AR start-ups such as Nreal, Hiscene, LLVision, Shadow Creator, Rokid, Seeya Technology, North Ocean Photonics and Pico, Huawei and many other mobile phone manufacturers such as Vivo and Oppo also show interest in this field. Besides, Alibaba, Tencent and Baidu also have plans for AR applications on some software platforms or in business ecosystems. Could you introduce the AR business ecosystem in the domestic market? What are the differences between the focuses of players in the market? Which part of the industry chain will have greater market potential?

Many AR start-ups claim on their official websites that they offer AR products integrating software and hardware or offer integrated AR platforms. Are such products and platforms the same as the software platforms and ecosystems you just introduced? Or are they just small closed-loop ecosystems that these start ups developed to support their own products?

Could you brief us on the competitive landscape among domestic players including Hiscene, LLVision, Nreal, Shadow Creator and Rokid? How do they differ in terms of market positioning and technical schemes?

What are the core competencies and technical barriers of AR glasses manufacturers? As you said some OEMs also design the glasses and different brands’ glasses are similar to each other. How can we differentiate them?

What are the core competencies of Hiscene in the current stage? What progress and development has Hiscene achieved in hardware and software over the past few years?

Could you comment on Nreal and Shadow Creator?

What are those leading players’ cooperation models with enterprise clients and their charging models? What is their deployment, charging and cooperation period in typical application scenarios?