You don’t have to be an analyst to realize that the entire tech industry has become obsessed with AI this year. Ironically enough, Meta had been doing foundational work in AI for many years, but until recently chose to focus on its Metaverse messaging instead—messaging that ultimately hurt the company’s stock. Even though Meta’s investments and research put it on the leading edge of AI before the rest of the industry—where it still is, in many ways—it undersold its AI capabilities until OpenAI announced ChatGPT late last year and got the whole industry talking about AI. Given all this, it wasn’t surprising that the company more recently pivoted its messaging towards AI, as it did at the Meta Connect 2023 event at the end of September.
During the event, the company still talked about the Metaverse, albeit mentioning it only a few times. There were also some passing mentions of Apple’s products and how Meta’s XR products are relatively affordable by comparison. That said, many of the Quest headset’s capabilities, especially recent improvements, have come thanks to Meta’s innovations in the AI arena. The importance of AI for these products also explains why the company has stuck with Qualcomm (the top maker of mobile AI chips) for its processing capabilities. It seems that Meta’s partnership with Qualcomm just continues to grow deeper, so much so that it could even mean the end of Meta’s internal efforts to build custom silicon.
The just-announced Quest 3 is a fantastic headset with incredible capabilities. Its mixed reality features are much improved over the Quest Pro—an evaluation that I have heard many times from developers and users. The SoC is a brand-new Snapdragon XR2 Gen 2 with roughly double the GPU horsepower and an incredible 2064 x 2208 resolution per eye—a 30% improvement in resolution over the previous generation. (For more about the XR2 Gen 2, take a look at my recent analysis.) The Quest 3 supports a 90-hertz refresh rate with an experimental 120-hertz mode and has improved optics as well as support for prescription lenses. Meta has accomplished this all while making the device 40% slimmer thanks to a pancake optical system. Unfortunately, there is no eye-tracking, which seems like a missed opportunity because Sony’s competing PlayStation VR2 headset does have it.
The default Quest 3 model comes with 128GB of storage, with an option of an upgraded 512GB model. Both have 8GB of RAM, which I believe should be higher for the 512GB model, given that it sells for $150 more. However, there are some added benefits that Meta is including with the 512GB model that partially make up for the price—for example, six months of a Meta Quest+ subscription. (More on that service below.) I also wish there were something like an elite strap bundle for the Quest 3; all the accessories are sold separately, and there are no bundles. I am excited that there will once again be an optional elite strap with battery to help counterweight the front of the headset while also providing better battery life and better ergonomics.
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One big problem with the Meta Quest 3 is that the world expects it to be as successful as the Quest 2 was—yet the Quest 3 retails at almost double the price. Selling as much as the Quest 2 isn’t going to happen, and anyone with realistic expectations will put the new model in the mid to low single-digit millions of units compared to the double-digit millions of the Quest 2 that reportedly shipped. Hopefully, the next generation will be better priced and maybe benefit from Meta’s improved headset, but it’s hard to get game and app developers to build for a higher-end headset while it’s the lower-end model that will continue to pay the most dividends for the developer. The industry needs more gaming titles with variable fidelity depending on what the headset can handle, but that’s not necessarily an easy thing for a developer to do—or a profitable one. That all said, the Quest 3 will likely function as a development platform for many developers and VR and MR enthusiasts who want access to the latest and greatest hardware.
I want the Quest 3 to be successful, but at $499—and with the macroeconomic environment as uncertain as it is—I can’t really see it shipping in wildly high numbers, at least not this year. At this writing, more than a week after the announcement of the Quest 3 and practically on the eve of launch day (October 10), you can still order an entry-level Quest 3 with 128GB for next-day delivery. Either it’s a case of great manufacturing capacity and planning . . . or there really isn’t as much demand for the Quest 3 as there was for the Quest 2.
Ray-Ban Meta Smart Glasses
I was too hard on the first-generation Meta Ray-Ban glasses, which were dubbed Ray-Ban Stories. The glasses hadn’t felt really useful for me, especially considering the state of public events during COVID lockdowns—and recording my daily life at home isn’t that exciting. However, over the last year they have grown on me and held up to my usage tests. There have been some stories about the lack of usage by users, but I am happy to see that Meta continues to plug away at making the Ray-Ban glasses platform better. That includes slightly new branding. Now, the product line is called the Meta Ray-Ban Collection, which I guess is a decent name when you consider how many new designs, colors and shapes they come in today.
Additionally, Meta has finally moved on from using a modified chip designed for wearables to shipping the latest and greatest in AR chip technology. This includes the use of Qualcomm’s brand-new AR1 Gen 1 platform, which was designed in partnership with Meta. This improved chipset brings better AI capabilities, including a much more capable AI assistant and support for better imaging so that 1080P video, live-streaming and 12 MP HDR images are all possible now. Meta has also included five microphones for improved noise cancelling on video recording and phone calls, as well as improved speakers that deliver better bass for music and phone calls. These glasses now sport a four-hour battery life, extendable up to 36 hours using the newly redesigned and slimmer charging case.
Meta has addressed many of the complaints I had about the first-generation glasses, and I’m happy to see the company improving capabilities incrementally without driving up the price. Additionally, these glasses give the company an entry into the market for AI-driven AR devices in a way that is still accessible—and that may offer a better video-capture experience for many a user. With the added IPX4 water-resistance rating, I think these could now be used in most scenarios without concern—you know, short of swimming.
The live-streaming capability is somewhat controversial because of the implications of recording people everywhere you go, but I believe that this is really Meta’s way of involving celebrities and streamers in its new AR platform. I don’t expect many normal users to use this device to live-stream, especially considering how strongly some people feel about privacy and recording others in public. That said, I definitely look forward to wearing the next-generation glasses, especially with their clear frames that show off all of the cool chips, sensors, batteries and other components inside. It will be especially fun recording myself playing with my dog in the park completely hands-free.
Making More Money Off Services
Meta also quietly announced a massive price cut—of at least 50%—for Supernatural, the VR fitness service it acquired earlier this year, reducing it to $99 a year or $9.99 a month from $20 a month. This marks an attempt by Meta to expand the user base for Supernatural with the Quest 3. And, honestly, if you use a Quest 3 as a workout machine, it is considerably cheaper than almost any other digital workout platform, especially if you compare it to something like Peloton, Tonal or Mirror. I believe that Meta wants to continue to grow this subscriber base to expand the Quest 3 audience while also showing good recurring revenue from apps.
As touched on above, Meta has also introduced a bundle of six months of Meta Quest+, a service for accessing a library of Quest apps, with the 512GB model. I think this is a mistake, and that Meta should instead bundle this service with the base-model headset, whose users are more like to be sensitive to the cost of apps and could embrace the “game pass” model as they get hooked on multiple apps after trying them for free. The 512GB model, by contrast, is for enthusiasts and people who care about storage capacity. These are the power users, and I believe they won’t care as much about the Quest+ service. In addition to the bundle, Meta is also offering a Meta Warranty Plus service starting at $40, which adds accidental damage coverage and one more year of warranty (for two years total). I believe that this would be a great fit for any user who expects to use this headset often, especially if they use it daily.
Meta Quest For Business And Enterprise Apps
At Meta Connect 2023, Meta continued to promote the productivity and enterprise applications of the Quest 3 with the introduction of the new Meta Quest for Business program. This is the program that it relaunched from the Oculus Quest for Business program, which in my opinion failed to properly address the needs of businesses with the Quest 2. The Meta Quest for Business program includes user, device and app management capabilities and also works with most major mobile device management systems, as I understand it. There are no details on pricing yet, but Meta says that the program, which launches this month, allows for users to use their own headsets. Meta also announced a partnership with TD Synnex for exclusive distribution in North America, which ensures that a reliable world-class distributor is responsible for the logistics of getting headsets into large enterprises’ hands.
The clear commercial and enterprise push from Meta is especially evident in its relationship with Microsoft, which is coming to fruition now that Microsoft 365 is finally coming to Quest. While this partnership has been almost a year coming, there is already another extension of this relationship with the announcement that Xbox Cloud Gaming with Game Pass will be coming to the Quest Platform, making it possible and more enjoyable to use virtual big-screen gaming rather than a monitor or small TV in many scenarios. While this is a gaming-specific application, it does show the closeness between Meta with Microsoft in developing new offerings. Meta and Microsoft need to deliver the Microsoft 365 platform to Quest this year or else people will start to question the validity of the two companies’ joint announcements.
Besides Microsoft, enterprise holographic collaboration platform Campfire has also announced support for the new Quest 3 in mixed reality. This is a great win for Meta because it needs more real enterprise applications, especially ones that use mixed reality to increase the opportunities for Meta with the Quest platform.
Leaning Into AI
While Meta Connect is primarily for XR announcements, Meta did also talk a lot about AI and how its definition of the metaverse now incorporates VR, AR and AI. As discussed at the beginning of this piece, Meta previously didn’t talk much about how its metaverse vision incorporated AI, even though it absolutely did. In previous articles, I have talked about how the Quest platform continues to improve after launch, with new features constantly being added. Most of those new features such as hand-tracking have been possible thanks to the many ML and AI algorithms that Meta is using to improve the user experience.
At Meta Connect 2023, Meta also announced that it would be building AI assistants into its apps and the Meta Ray-Ban Collection. Meta recruited many celebrities to be the faces of these different AI assistants across its apps; I think it brought the celebrities in to drum up coverage around its AI efforts and maybe stem the tide of other companies jumping on the AI trend in the tech industry. Meta also announced an AI Studio for developers to help build apps that make the most of these AI assistants.
The Quest 3 and the Meta Ray-Ban Collection are both impressive pieces of hardware with incredible specs. I believe that the Quest 3 would benefit greatly from a lower price; however, I am not sure that a $299 price would be achievable today without Meta taking a loss on the product. With Meta suffering major personnel losses due to its false start around the metaverse push last year, the company is now far more focused on delivering products at a profit, and that’s why it must unfortunately sell the Quest 3 at a challenging starting price of $499. This is still vastly lower than what Apple plans to launch early next year with the Apple Vision Pro at $3,499, but that headset exists in an entirely different market bracket and is in truth a glorified development platform.
The Quest 3 should out-ship the AVP, but I also believe that Meta has a higher bar to clear with this being the company’s fifth standalone VR headset and second MR headset. I believe that Quest 3 will also impress many new VR and MR users and will deliver a considerably better experience than the Quest 2 ever did. Meta’s messaging around XR has evolved to meet market demands; in fact, I believe that the company hasn’t really changed its product direction in XR—only how it communicates its technological advancements.