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Facebook Luxottica Deal to Bring AR Glasses Mainstream

Chandrima Sanyal

The wearable tech space, which includes products like smartwatches, earwear and wristbands, is witnessing rapid adoption in a number of sectors like fitness, healthcare, medical, industrials and military.

A number of technology giants like Alphabet’s GOOGL Google, Microsoft MSFT, Snap SNAP and Apple AAPL are betting high on this market’s potential. Per IDC, wearable devices global shipment is estimated to hit 222.9 million units in 2019. This is expected to grow to 302.3 million units in 2023 at a CAGR of 7.9%.

AR-based smart glasses are the latest addition to the wearable tech space. Facebook FB is the latest to jump into the fray. The social media giant is reportedly teaming up with Ray-Ban creator Luxottica to jointly develop AR glasses.

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Facebook AR Glasses to Replace Smartphones?

Codenamed Orion, Facebook’s smart glasses are reportedly being designed to disrupt the smartphones market when it hits the shelves anywhere between 2023 and 2025.

Last month, the company announced that its Oculus Insight camera and tracking technologies will be used in future AR glasses, but didn’t reveal much about the hardware’s functionality.

Reportedly, the hardware is now designed to allow users of the smart glasses to take calls, livestream on social media and many other such features that are intended to replace smartphones.

Notably, for the past couple of years, Facebook has been working on AR glasses out of its lab in Washington. However, limited capabilities of current generation hardware and other issues led the company to seek Luxottica’s expertise to help it materialize the project.

AR Glass Shipment Expected to Rise

AR is expected to have 1 billion users by 2023. Digi-Capital forecasts AR to generate $85 billion to $90 billion revenues, and VR to report $10 billion to $15 billion by 2022. Worldwide shipment of smart AR glasses is projected to reach around 5.4 million units by 2020.

Further, per a report from Mordor Intelligence, the global Extended Reality (XR) market is expected to witness a CAGR of 65% between 2019 and 2024. The firm also noted that the integration of smartphone, mobile VR headset and AR glasses into a single XR wearable gadget could replace all the other screens like smartphones and smart TV screens.

Apparently, mobile XR can potentially become the most widespread and disruptive computing platforms.

The aforesaid projection encourages us about the prospects of Facebook’s Orion project.

Upping the Ante Against Contenders

Though we do not have much information about Facebook’s AR glasses yet, we believe that the company is raising its efforts to withstand the intense competition in the next-generation glasses space from Snap, Google, Microsoft and Apple.

Apple has been speculated for a long time to foray into the wearable AR glasses space. The company's acquisition of Akonia Holographics, a manufacturer of lenses for AR glasses, strengthened this belief. Also, the iOS 13 beta reportedly gave some hints recently that a pair of smart glasses, currently codenamed Project Garta, might be launched soon.

Furthermore, Microsoft believes that growing clout of hologram technology among enterprises and in workplaces favors the prospects of the latest headset HoloLens 2.

Snap launched a new version of Spectacles smart glasses — which allows users to record photos and video in 3D — in August this year. The company expects the new glasses to gain significant customer traction.

Moreover, in May this year, Google rolled out an advanced version of Google Glass called Google Glass Enterprise Edition 2. The new smart glasses sport features that are likely to aid its adoption rate and strengthen Google’s market share in the AR space.

Facebook Faces a Number of Roadblocks

Apart from technical and engineering challenges, Facebook’s history of data breaches is likely to be an obstacle behind the company’s efforts to sell camera-equipped glasses.

This is a challenge that even Google had to face. Notably, the company had come up with its first AR device, Google Glass, in 2013, which was consumer-oriented but withdrew the product in 2015. This withdrawal was primarily due to privacy issues owing to a built-in camera in the device.

However, working with Luxottica is a big positive for Facebook. Acquisitions have brought several of the world’s top eyewear brands, including Ray-Ban, Oakley, and licensed labels like Armani, Burberry, Coach and Polo Ralph Lauren under Luxottica’s umbrella. Moreover, its experience on Google Glass AR headset is pretty valuable for Facebook.

Reportedly, the AR-based smart glasses, which is at the top of Facebook CEO Mark Zuckerberg’s bucket list of projects, can be a hit or a miss launch. With numerous tech biggies engaging in trial and error with smart glass launches, it is difficult to say at this point how Facebook’s technology, which is still few years away, will fare.

Zacks Rank

Facebook, along with Apple, Microsoft and Snap, currently carries a Zacks Rank #3 (Hold). Google’s parent Alphabet carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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