• Apple Vision Pro’s weaker-than-expected sales cast a shadow on the broader XR market; concurrent emergence of GenAI diverted attention away from XR.

• AI may catalyse XR growth by solving many of the problems that have been plaguing its hardware, software as well as content.

• XR will benefit from AI with AI assistants already creating a surge in consumer interest.

• AI can also automate XR content creation and help with headset performance optimization, accelerating sales and investment growth.

When Apple’s highly anticipated entry into the extended reality (XR) segment with the Apple Vision Pro (AVP) failed to be the watershed moment it was expected to be, the last major hope of XR reaching new heights was lost. Facebook’s rebranding as Meta in 2021, a year after the launch of its best-selling Quest 2 headset, failed to be succeeded by the rise in XR, which would have otherwise made it the next big thing in tech since smartphones. GenAI, on the other hand, gained both user interest and investor trust with markets rewarding Microsoft and NVIDIA. These players continue challenging Apple in terms of market capitalization while Google and Meta have been left far behind and are playing catch-up.

Source: Counterpoint Research

While AI may be seen as having stolen XR’s thunder, it can actually stimulate growth in the segment. Major XR players such as Meta, Apple and Samsung continue to show faith in the long-term prospects of the technology. Meta has incorporated AI into its smart glasses and Samsung will likely follow suit with its upcoming headset. Apple Intelligence will eventually also be made available on the AVP.

Besides just AI assistants, the true potential of XR can be unleashed with AI-assisted content creation and AI-supported performance optimization that improves user experience while simultaneously increasing efficiency through optimized power management, network performance optimization, and consequently user comfort can unleash the true potential of XR to gain mass adoption.

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