Author|Yang Ming
Edit| Cindy
"The concept of the metaverse returns to rationality, and enterprises will inevitably adjust the layout of relevant businesses and inputs, and explore the future of the industry more rationally."
Unlike the noise of external public opinion, in the view of Andy, product technical director of an XR startup, the feedback he learned from the industry is that most of the big manufacturers have moved late to XR-related organizations and personnel adjustments.
In the past two years, the metaverse concept has caught fire around the world. Marked by the successful listing of Roblox and Facebook's renaming of "Meta", the degree of popularity far exceeds the previous wind in the mobile Internet era, only the current ChatGPT can be matched, and almost all technology giants in the world have increased their meta-universe-related industries in an attempt to seize the opportunity.
XR, known as an important entrance to the metaverse, that is, extended reality including virtual reality (VR), augmented reality (AR), mixed reality (MR), etc., has become the direction of big manufacturers and market bets. In 2021, there were 316 investment and financing events in the entire XR track around the world, and 259 in 2022.
Entering 2023, the situation is completely different, ChatGPT taking over the meta-universe has become the hottest outlet, while Meta, Microsoft, Google, Kuaishou, ByteDance, Tencent and many other technology companies have been exposed to make organizational or personnel adjustments to XR-related businesses.
The day with the biggest change occurred on February 16. On this day, Pico was exposed to a new round of layoffs, and Tencent Games officially confirmed the adjustment of XR business lines - judging from the responses of both, both said that they were normal organizational and business team adjustments.
For example, Tencent's XR business, which is the most concerned by the outside world, was only established in June 2022 and belongs to the Interactive Entertainment Division (IEG). In response to this change, people close to Tencent told Extreme Business that Tencent's XR business will change the hardware development path and the relevant business team will adjust. Affected employees will be offered a 2-month transition period, with priority transfer interviews and external referral opportunities.
Between the cold and hot of the metaverse, large manufacturers collectively contracted the XR business. Is the tone set by public opinion over, or is it as industry insiders say, entering the era of rational exploration? Why has the attitude of the big manufacturers changed completely differently in just half a year?
"Unlike the smartphone industry, the XR industry is indispensable for rich software systems, content ecology, and hardware terminals, and the combination of the three can have the basis for the outbreak of the consumer side." Many industry insiders believe that the fact that big manufacturers no longer blindly believe in hardware nuggets is the fundamental reason why Microsoft, Tencent and other big manufacturers give up hardware and change the track.
01
It is a mistake for big manufacturers to collectively rush the hardware track
"Meta lost itself in the metaverse." Forrester Research commented in the United States.
It was Meta, which was ambitious when it changed its name, that kicked off the layoffs. In November, Zuckerberg issued an all-staff letter confirming the layoffs of more than 11,000 people and apologizing: "I was wrong, and I am responsible for it." ”
After the first large-scale layoffs in history, Meta continues to be mired: in January this year, Quest Pro cut prices by nearly a third, and sales were poor; In February, VR studio Ready At Dawn announced that it was about to permanently shut down its servers. According to the latest news from the Financial Times, Meta is preparing for a new round of layoffs.
Microsoft also issued a clear withdrawal signal to the XR business, and will completely close AltSpace VR in March this year - 4 years ago, Microsoft heavily acquired the VR social platform AltSpaceVR, becoming a bridgehead for Microsoft to seize the C-end market of the metaverse. In addition, Microsoft also plans to cut employees in Surface devices, MR, HoloLens, Xbox, MRTK (mixed reality toolkit) and other departments.
Meta and Microsoft are like this, and the adjustment of domestic technology companies is also expected by the industry.
"Initially, Tencent envisaged the acquisition of Black Shark to get the hardware entrance to the metaverse, but when the news of the acquisition ran aground in October last year, the industry believed that Tencent would change the layout path of the metaverse." Andy revealed that sure enough, in January this year, Tencent's XR business line made adjustments to some projects. And Pico, whose sales are far from meeting expectations, is even less surprising to be exposed to layoffs.
Why did the domestic and foreign science and technology giants collectively "retreat"? The cooling of the metaverse concept, the poor shipment of XR hardware, the high cost of equipment, the lack of applications and explosive content, the lack of mature ecology, etc. - this has been described a lot in many media and report analysis.
The above is indeed the unsatisfactory factor of the XR business of the big manufacturers. However, according to a number of industry insiders to "Pole Business", the fundamental reason is that "big manufacturers collectively aimed at the hardware track and ran wrong from the beginning".
The XR industry chain is a huge system, which can be divided into hardware, software, services, content, and applications. Relevant data show that the hardware market accounts for about 27% of the XR industry chain, which is not large compared to the potential market such as services and content.
It is quite confusing that hardware has become the main track for the XR business layout of domestic and foreign technology giants.
Whether it is foreign Mate, Microsoft, Google, Samsung, or domestic Tencent, ByteDance, iQiyi, or other followers, they have all placed their greatest hopes on the hardware track.
Under the trend of terminal innovation, the large shipment of mature hardware will bring better user experience, promote the outbreak of the industrial chain, and even open an era - for example, after the iPhone drove Nokia off the throne, it successfully opened the era of smartphones.
Under the fire of the meta-universe concept, this is the common purpose of the big manufacturers who previously chose the hardware track: to seize the entrance to the meta-universe with XR hardware sales, cultivate mature user groups, and build content and ecosystems.
The problem is that the meta-universe ecology created by Microsoft, Mate, Pico, etc., including content, does not have many results, and the revenue almost comes from the sales of XR hardware - the bad thing is that although XR has experienced three waves of boom, hardware products are still immature, and most of them have "image quality loss, dizziness, eye fatigue, heaviness" and other poor experience problems.
The user experience is completely different, and the iPhone has successfully created a new era, but the XR hardware has been criticized for the biggest gap. Taking Microsoft as an example, relying on HoloLens 1 and others to become the XR hardware market pioneer, but there has never been a hot product, and has not been able to meet the technical requirements of its largest buyer, the US Army, more than 80% of soldiers have varying degrees of nausea, headaches, glasses fatigue and other phenomena when testing HoloLens 2.
In addition, the application scenarios are not rich and the portability is poor, which will seriously inhibit the user's desire to buy. According to IDC data, global shipments of AR/VR headsets exceeded 11 million in 2021 and fell to 9.7 million units in 2022. If you calculate the domestic, then the data is even more bleak - according to the West China Securities report, domestic VR shipments in 2020 will be 1.9 million units, and 2.1 million units will be predicted in 2022, an increase of 200,000 units in two years, which is almost equal to no growth.
In the end, poor sales and bottomless burning of money led to the failure of the plan of large manufacturers to seize the market with losses. Reality Labs, which lost $13.7 billion last year, not only did not become a new pillar of Meta's revenue, but triggered a major layoff and a plummeting stock price, allegedly because the cost of Quest 2 headset hardware was much higher than the selling price - Meta was losing money for every Quest 2 sold.
The fierce competition between systems and chips is also at the most basic stage. "Regardless of the form of XR devices, headsets or glasses, the current supply chain, underlying technical capabilities are far from mature, or even in the initial stage of chaos." Some insiders believe that the previous rush of big manufacturers to seize the XR hardware track is actually a dead end.
02
Don't be blindly superstitious about hardware, but rational choice
After the concept of metaverse fell into the limelight, technology giants affected by the macroeconomic recession could not bear the huge losses and waited for XR hardware to become a "next-generation computing platform".
More importantly, XR hardware is not the only entrance in the metaverse concept. A domestic enterprise leader in the field of digital humans believes that the brain-computer interface that Musk has been advocating in recent years is actually the ultimate entrance to the next generation of the Internet. The digital human image created through blockchain technology is also regarded as the landing of the metaverse in the real world.
These are enough to prove that the core of the meta-universe landing lies in the underlying technology and commercial applications, rather than the hardware devices with poor experience.
Various factors have led to the overall layout of XR hardware of global technology giants not meeting expectations - especially hardware mass production and listers, which either have serious losses or are full of chaos, and are finally forced to retreat and contract.
This has also made more and more large manufacturers realize that it is a wrong choice to give up their own advantages and focus on hardware in the XR business.
The first to recognize this was Microsoft. "For the metaverse, Microsoft has chosen to take a software-led approach." In July last year, Microsoft CEO Nadella signaled that hardware development was not the focus.
Although Microsoft has a hardware obsession, it has never been a hardware company, and its core business is operating systems and enterprise software - in 2014, it led Microsoft to move to cross-platform enterprise cloud services.
Starting with Nadella's signal, Microsoft began to "vigorously" go to XR hardware adjustments. According to Microsoft's announcement, after shutting down Altspace VR, which provides social services, it will focus on Microsoft Mesh, a metaverse platform for companies that want to collaborate remotely, providing virtual 3D space for enterprises, and mail, calendar, Word, Excel and other functions can also transition to the virtual world. XR headsets are not required for Microsoft Mesh.
A series of changes show that Microsoft is equivalent to abandoning XR hardware, but betting on the software and enterprise-level market in the XR industry chain - according to the survey, the hybrid work model has become a permanent feature of the office scene, and in China, some companies have also launched XR remote work without wearing a headset.
Undoubtedly, this is a very pragmatic and rational choice. Including Tencent's XR business change hardware development path may also be the same - Tencent, like Microsoft, lacks hardware genes, and is better at social, software, system, and AI underlying technologies.
This is because, with the maturity of Pancake optical solution technology and production process, and more products such as Apple and Samsung entering the market, more technologies will be applied to XR devices in 2023, and XR basic hardware will eventually be like smartphones, hardware upgrades will be very fast, and even relatively unified in form. At that time, Tencent will make hardware, and the difficulty will be much less than today's self-research.
If the XR industry wants to achieve mass popularization like mobile phones, the key will become software and ecology - like the iPhone, the core of its ultimate success is the iOS system and App Store application ecology.
It has been clear that although the hardware side is the entrance to the ecosystem, software and content are the keys to building XR competitiveness. Not only Microsoft, Tencent, including Samsung, Apple and other mobile phone giants, all believe that the core of XR development is the ecosystem.
"We believe that the XR ecosystem needs to be in place for product launch and product success. So far, other companies have tried a lot, but they have not been as successful as they thought, and they are not ready for the ecosystem. In early February, Lu Taiwen, president of Samsung's mobile communications business, said that Samsung does not plan to go it alone to prepare the essential ecosystem first, and will choose Google as a software partner to build this ecological platform.
03
Walking on multiple legs, ecology and content have a broader market
Compared with the basic hardware that has been iterated for decades, tens of millions of shipments, the software system and content ecology of the XR industry have just begun.
A simple and easy-to-use interaction design is the key to the rapid promotion of computing platforms. For example, devices need to accurately capture users' subtle movements, perceive the external environment in time, and allow users to interact with gestures, eye movements, expressions, and immersive 3D content naturally and in a timely manner.
At present, XR interaction is still in a very early stage - although the current mainstream VR hardware devices basically integrate controller interaction and gesture interaction into the interaction system, but none of them can meet the needs of all scenarios and switch seamlessly, and the industry lacks consensus, it is difficult for developers to develop more content according to the interaction mode and ecology, and it is also necessary to design a complete set of interaction logic.
For example, XR content should be three-dimensional immersive, at present, some domestic companies have tried in the content ecology, focusing on games, film and television entertainment, manufacturing, retail, medical care, education and other scenarios, such as the well-known XR house viewing, but mostly as an auxiliary means - both lack of explosive breakthroughs, commercialization is also difficult, is the metaverse concept manufacturers are now difficult to get capital recognition important reasons.
From the perspective of long-term planning, most of the big technology factories have been involved. At the beginning of the establishment of the XR team, Tencent said that it would actively pay attention to various fields such as content, systems, and tool SDKs.
After Microsoft and Tencent change the XR track, how likely is it to change the embarrassing status quo of the two important dimensions of software system and content ecology?
The key to solving the problem of interactive software is the technical capabilities of artificial intelligence and blockchain big data, involving a series of upstream and downstream industry chain technologies such as visual SLAM, map building, object recognition, gesture tracking, eye tracking, and expression tracking.
In this regard, the gap between domestic technology manufacturers and Microsoft is not large. For example, Tencent Games has invested in XR chips, AR glasses, content developers and gesture interaction manufacturers, accumulating in the supply chain.
From the perspective of AI precipitation, domestic technology giants rank in the forefront of the world. As of 2021, Tencent and Baidu are among the top two in the world in terms of the number of AI patents, each with more than 9,000 cases, far exceeding foreign technology giants such as IBM, Google, Microsoft, and Meta.
Based on this speculation, designing an interactive software that can seamlessly switch between various scenarios, multi-mode integration, and users can freely decide to switch, may be one of the core focuses of Tencent's XR business in the future.
In terms of XR content, C-end content such as games, film and television entertainment is naturally the focus of Tencent and Microsoft. For example, with the help of VST technology, making games closer to XR experience, and at the same time expanding XR products from the game field to all scenarios, and lowering the production threshold of content developers, will become the direction of industry attention.
However, in the view of "Extreme Business", the content ecological exploration and commercialization space that is more important than games and entertainment will come from the B side.
"Gaming, film and television application scenarios can drive the consumer market, but they cannot really enable XR to deliver on its promise of a next-generation computing platform." An industry insider pointed out that after the deep integration of AI and XR scenarios, it is possible to develop more application fields in traditional fields such as education, industry, manufacturing, medical care, and aerospace.
Similar ideas have had initial applications in the industry. For example, Tencent Games, Baosteel and Tencent Cloud have joined forces to help patrol inspections, fault detection and maintenance, and remote expert guidance around the 1580 hot rolling mill of Baosteel's Baoshan base.
In the aerospace field, Tencent Games has reached a cooperation with Zhuhai Xiangyi Aviation Technology Co., Ltd., a wholly-owned subsidiary of China Southern Airlines Group, to jointly develop a fully automatic flight simulator vision software system.
Although compared with the concept of meta-universe, Tencent Games is more from the perspective of the true Internet to carry out XR technology layout and scene landing - the ultimate direction and purpose are obviously the same as Microsoft.
"However, how XR technology spills over to other industry scenarios is still difficult to land." Some insiders pointed out that under the background of the general trend of the industrial Internet and the rise of the industrial Internet as a national strategy, it is necessary to break through to the B side, which is more operable and has more room for imagination - the strategic value of XR as one of the seven key industries in the development of the digital economy is expected to be truly reflected.
Until then, it may not matter whether to continue to add XR hardware devices.