Xreal Aims to Overtake Apple in AR Glasses War After Raising $60 Million

Joseph Henry, Tech Times 29 January 2024, 01:01 pm

In a bid to stay ahead of tech giants such as Apple, Meta, and Google, augmented reality glasses manufacturer Xreal is on the verge of securing additional funding, pushing its valuation beyond the $1 billion mark.

Xreal's CEO, Chi Xu, reveals plans to raise $60 million in the upcoming funding round, supplementing the existing capital of over $300 million. This will position Xreal to lead the augmented reality market amidst increasing competition.

Scaling Manufacturing Capabilities and Research

Xreal Aims to Overtake Apple in AR Glasses War After Raising $60 Million — (Photo : Xreal)
Xreal, a known AR glasses maker in China has successfully raised $60 million to compete with Apple. The company will use the money to improve its products as it intends to go public in two years.

Xu emphasizes that the fresh funding injection will play an important part in scaling up manufacturing capabilities and advancing research and development efforts.

While the company currently possesses sufficient capacity to meet this year's demand for its augmented reality glasses, the additional capital is deemed crucial to fulfilling anticipated orders in 2025, Bloomberg reports.

Dominance in the Augmented Reality Market

Xreal has emerged as a formidable player in the augmented reality sector, commanding approximately 50% of the market share for AR-only devices in the third quarter of the previous year, as per IDC research.

While Meta leads the broader mixed reality market, which includes both virtual reality and augmented reality, Xreal holds a 4% share overall.

With the ability to manufacture between 500,000 and 1 million units in the current year, the funding is expected to boost production capabilities to 2 million devices in the following year.

Revenue projections for 2022 indicate an expected range of $100 million to $150 million, with ambitions to generate between $200 million and $300 million in 2025. Xu envisions Xreal going public in the United States within the next two years.

Xreal's Product Portfolio and Market Position

Established seven years ago and headquartered in Beijing, Xreal boasts a workforce of around 600 employees. Its airglasses offer wearers notifications, games, and video content seamlessly integrated into their field of view.

The company's affordable AR glasses, available for a few hundred dollars, have gained ground against more expensive alternatives from competitors like Magic Leap and Microsoft.

Future Focus on Air 2 Ultra

Xreal places significant emphasis on its latest offering, the Air 2 Ultra, anticipating it to be a key driver of future revenue. Chi Xu projects potential sales of 50,000 units of the Air 2 Ultra in the current year.

While the company acknowledges the appeal of cheaper models, it believes that the enhanced features of the Air 2 Ultra will resonate well with consumers.

Speaking of Air 2 Ultra, this new Xreal entry wearable could be looking forward to going toe-to-toe with Apple's Vision Pro, according to The Verge.

Aside from that, it might be a firm rival for Meta's Quest 3. Although the Vision Pro has been all over the news for the past week, Facebook's parent firm remains "optimistic" that it will get ahead of the Cupertino giant's VR headset.

Strategic Differentiation from Virtual Reality

In contrast to delving into virtual reality, Xreal remains committed to further enhancing what it can offer for its AR glasses. The company's strategic focus aligns with its belief in competing directly with major players like Apple in the years to come.

While the iPhone maker paused its work on lightweight AR-only glasses, Meta and Google have also announced plans to launch their own consumer AR glasses in the near future.