Dialogue with Xu Chi, CEO of XREAL: ALL in lightweight AI products, this may be the key to breaking the game

Source: Titanium Media

Account: Power Plant

Author: Zhang Yongyi, Editor: Gao Yulei

Original title: "Dialogue with XREAL CEO Xu Chi: Challenge Apple in the AR "first half""

In 2017, Xu Chi, who participated in the research and development of the GPU computing platform at NVIDIA, and then joined the early MagicLeap team and became an early employee of the tracking and positioning algorithm, chose to return to China to start a business in the AR field.

Xu Chi is a technology entrepreneur with a very Silicon Valley style: Magic Leap’s entrepreneurial background gave him his own judgment and insights on the vision and planning of the AR industry, and also allowed Xu Chi to decide to be All in AR from the very beginning. Entrepreneurship, which allows XREAL to focus more on the prospects of the AR field.

In 2017, Xu Chi and the then Nreal start-up team met many investors. After understanding their background, the investors suggested that Xu Chi "do a small thing first to prove your (business) ability", and asked " Why don't you make a sweeping robot first?"

But Xu Chi finally rejected these suggestions about "making a sweeping robot": "Because your goal is to open a Michelin three-star restaurant, if you set up a barbecue stall first, then you will know that you will never be able to open a Michelin restaurant again. up."

"Outspoken" may be another label on Xu Chi: When faced with disputes among domestic manufacturers, he often directly criticizes new products of other companies in the circle of friends because of "outspoken". This has reduced the number of Xu Chi's appearances in media activities recently.

Even though XREAL was initially commercialized in 2019, it took only two years for XREAL to become a leading company in the field of AR glasses. According to the 2022 AR/VR report released by IDC, XREAL became the leading company with shipments of 98,000 units. In 2022, the brand with the largest shipments in the AR industry will have a market share of 57% in the consumer AR equipment market.

After the release of Vision Pro, as a representative brand of new forces in the global AR field, the next step of XREAL has also become a concern of many outsiders.

On the occasion of the first anniversary of the release of XREAL Air, "Power Plant" was invited to XREAL Beijing headquarters, had a direct dialogue with Xu Chi, and shared a lot of thoughts on XREAL's future development direction, new product release planning, and future developments in the AR industry .

The following is the dialogue between "The Power Plant" and Xu Chi:

"Vision Pro's cropping is the biggest failure"

Q: How do you think AR manufacturers should respond to the "cheap Vision Pro" that may appear in the future?

A: I believe that it is not only XREAL. I think that in history, many companies have faced this problem. For example, when the iPhone was first released, some investors or reporters asked Jobs, if Nokia and Motorola Double down, they think your product is right, and start to go in your direction. Your moat is where?

I believe that when Tesla first went public, some people probably asked the same question: What if Ford or an established German automaker jumped into this battlefield and started making new energy vehicles?

I think there is only one answer, which can best answer this question: if you can continue to achieve commercial success and you can continue to sell, I believe your probability of winning must be greater.

Just like when we look back today, everyone was very afraid that traditional car factories would transform into new energy vehicles, which would be very good, but the fact tells us that it is not. In fact, I always think that today (in the field of AR) subversion of Apple, there is a high probability that it is a new company, just like the subversion of Nokia is not actually another mobile phone factory, it is also some new companies that subvert these traditional car manufacturers.

I think sometimes innovation is relatively difficult in some mature large companies. So what I want to answer about this question is, for us, or for any company, if you only have a foundation, you don’t have a scale effect, and you don’t have a flywheel effect, I think the threshold will be very high.

So we hope that if XREAL develops very well, in three to five years, we will actually have more resources and more market share than today. We said that the market is still very small today, but we foresee that the AR market will grow very fast in the next few years. I hope that after the release of Apple's cheap version of Vision Pro, XREAL will still firmly occupy the top three players in the market today, so I believe that in this track, XREAL will actually have a lot of opportunities.

Q: In the current five years, what is most needed by the AR ecosystem?

A: I think this is a very important question: Today, Apple has made everyone pay attention to the field of AR. In fact, the application ecology of AR needs to be improved in a longer stage.

What really made the iPhone's explosive growth? It's actually a super app like Sliced Fruit or Angry Birds or something like that. But you will find that when these apps were created, the scale effect of the iPhone as a terminal had already formed, and the development of the ecology had a basic requirement for the number of terminals. The content of the paragraph comes out. No manufacturer is willing to create content on a very small platform.

Q: After the release of Vision Pro, what do you think will be the next "iPhone moment" in the AR field?

A: If a specific and quantitative standard is used, I think it will be a certain AR glasses that has achieved sales of 5-10 million.

If I remember correctly, the first generation of the iPhone actually sold about 6 million units. But before Apple, many manufacturers were already making mobile phones. At that time, the market share of mobile phones was already very high. So when the iPhone is released, users can actually migrate to the iPhone quickly and with low learning costs.

However, I still think that AR is a relatively early market, so its iPhone moment may be comparable to a certain product reaching one or two million: because if you have a really wonderful product, this Sales can already guarantee that you will be remembered by history.

Q: To sum up the answers to the first three questions, XREAL believes that the AR ecosystem should increase its volume first, attract more developers to join, and form a cycle?

A: I think consumer electronics has always been divided into two halves. The first half is more electronic, and the second half is more consumption.

When you are partial to electronics, you actually need to rely on the differentiated experience of hardware to quickly occupy this market and maintain your market size. Then slowly the hardware will lose a lot of differentiation, including today’s Apple, everyone will converge, because the supply chain matures, and the solutions given to everyone by the supply chain will become more and more consistent. At that time, you will have to rely on your ecology The application in the Internet, your brand, and some other differentiations. At that time, we entered the post-consumption era, which is what we call the second half.

Today you can see that new energy vehicles have reached the second half, and computers and mobile phones may have reached the second half, and they have become extraordinarily cumbersome. But today everyone is very excited about the AR track, because we are still in the first half or even the first half. Why do you say that? Because the supply chain has not yet matured at this time.

I have been talking about one thing: if anyone saves an AR glasses today by relying on the technology of the supply chain, it will fail. But today, if you rely on the supply chain, for example, if you use a complete set of solutions from Qualcomm and Android to build a mobile phone, you will find that the mobile phone can already achieve 80 points. This is the difference between the different stages of the industry today.

Today, back to 2009 when the mobile phone market was in the first half, if you want to create a mobile phone with an experience similar to that of the iPhone, you need a company with research and development capabilities, and become the first eater in this industry chain like Apple. Crab people, to drive the industry chain to innovate and push in the direction of the technology you think is right. However, many Chinese companies do little in this part, so Chinese companies are often born in the second half of consumer electronics.

Q: The release of Vision Pro demonstrates the giant's ability to control the hardware supply chain. As a relatively "small factory", how should it gain a competitive advantage at the product level?

A: Hardware is a complex system engineering that spans many disciplines. There are many core components in Vision Pro that require upstream suppliers to deeply bind and collaborate with you.

In fact, we can actually be quite proud to say that XREAL has come this way, we have also accumulated some first-mover advantages in the AR track, and some suppliers quite recognize us and have formed some deep bonds with us. . Among them, it can be said that Sony, including our current machine assembly plant Luxshare, and these two happen to be suppliers of Apple.

The idea of these suppliers is also very simple: in fact, when we are optimistic about a new track, I will not put all my eggs in one basket, and I will work hard to contact and support the companies they think are good on this track.

XREAL has a logic: always study with good students. Because on the new track, everyone needs to have continuous innovation. If you are surrounded by good students, then everyone's mutual improvement and mutual support will be very fast.

Speaking of products, we actually think that AR will have two product forms for a long time in the future: one is very heavy, similar to Vision Pro, and the other is lightweight split glasses. This stage is actually very similar to Early logic for headphones.

Some users will say, I don't mind it being very bulky, but I want to pursue better immersive sound effects, or better audio-visual effects. But if you talk about the absolute quantity, I think the lightweight one must be more universal and suitable for the public. This ratio may be, for example, a ratio of 1:10. Then you will find that these two categories will coexist for a very long time, just like the mainstream form of earphones has become wireless in the end, but you can still see large earphones and lightweight earphones.

From the perspective of the supply chain today, Apple has actually made a heavyweight product that is considered to be a performance monster in terms of performance. We also believe that the market actually has a demand for a lighter product. equipment needs. So how does the market require you to tailor this product to meet the needs of users today or in the future? To solve this problem, we must be able to realize a rapid growth of the market in our opinion.

All in lightweight AR

Q: The XREAL Air product has become a hit, what is the biggest factor in the internal opinion?

A: First of all, I would like to emphasize a premise. We feel that AR is a typical new technology and new market. In a new market, tearing apart a scene that we think has been verified, and then proving that the product can be sold, this matter is actually It is very difficult.

Even XREAL may be the first AR glasses manufacturer to sell more than 200,000 single products and the first to reach this milestone. If we look back today, why did XREAL succeed in its products? I really think this is related to extreme product tailoring and challenging the boundaries of technology in some core technologies.

At this point, we might think about the difference between us and the Vision Pro, because we feel that the Vision Pro is like a muscle car; How is the effect. And XREAL thinks that for a better AR product, the cutting and selection of hardware should start from the user's perspective.

I can understand why Apple needs to pile up materials for this Vision Pro product, because this is not a product for ordinary consumers. Vision Pro is essentially a development machine, hoping to use all the technologies in the arsenal. Users Choose which one you think works best. But today XREAL has actually passed this stage. We hope to make some judgments through the market insight of real consumers and some of our previous commercialization experience, which will eventually be reflected in the product.

Q: What important hardware technology breakthroughs has XREAL made in the AR field in the past?

A: I think this XREAL has really attracted the attention of this industry throughout history. If we slowly win respect and recognition, it actually originated from our first generation of products at that time.

I think we actually made a lot of innovations in the first generation of products. We were the first full-featured AR device in the form of glasses at that time. Before that, more forms of AR glasses may be similar to Hololens, regardless of AR/VR is a bulky helmet design.

Q: In the process of declining overall market volume, how can AR get more attention than existing mobile phones and other products? Allow consumers to accept and approve product forms faster?

A: I think consumers will vote with their feet and money in the end.

Q: In the process of declining overall market volume, how can AR get more attention than existing mobile phones and other products? Allow consumers to accept and approve product forms faster?

A: I think consumers will vote with their feet and money in the end.

Just like we said that the market of traditional car companies is actually shrinking, but new energy vehicles can provide a better comprehensive experience. It represents a new species and a wave of new productivity. To be recognized and embraced by more users.

As far as we are concerned, we only have one measurement indicator, which is the feedback from market sales, which is the most authentic feedback. If everyone really thinks your product is good, everyone will spread the word of mouth, and you can see a rapid increase in the market size. In fact, we are indeed witnessing a rapid change in this aspect.

Q: What is XREAL's plan for future products and the transition from physical screens to virtual screens?

A: From the first generation, I think it gave us a lot of confidence, because in fact, we only started to really test the water on a large scale last year, including sales, and the results from all levels actually far exceeded our expectations.

What we really realized last year was a portable screen to replace some traditional physical screens. When users have used this form of product for a long time, we found that users will have some deep-seated needs. For example, can the picture displayed by AR be fixed in space? Not moving with the head while pinning more footage in AR space?

These requirements drive our subsequent product iterations. So this year our bigger focus is on the number of screens, and this matter actually requires the optimization and opening up of the entire link at the software level. For example, I have 3D perception, and then I have the rendering link The delay on the screen and various dynamic compensations of head movement allow users to feel that the picture is stable in the environment while casting in the process of fast movement.

Of course, we are also very grateful to Apple for starting this "stacking" trend this year. We have cut from 6DOF (six degrees of freedom) to the current 3DOF (three degrees of freedom) experience on the previous hardware, but in fact, we also hope that there will be more in the future. A product that returns to 6DOF, for some geeks who are more willing to try new technologies, they can develop and play with a more powerful device.

Q: Will XREAL release some AR glasses with stronger performance and more extreme hardware specifications?

A: Yes, this year we will definitely have a series of products that will satisfy everyone's needs at different levels. As I said just now, there must be some products that are specifically for developers, and there are products that are specifically for ordinary users, and we will separate them.

Q: Can it be understood as "XREAL will be All in the product form of lightweight AR glasses in the future"?

A: You can say that.

Because we really feel that this track is the most exciting for us. In fact, Sony and Luxshare just mentioned are our in-depth cooperation partners. In fact, many things are also customized by everyone. But similar to the display module, we do it ourselves inhouse. So in fact, you can see a fully automated optical production line we built in Wuxi, the entire optical module production line, so the core display module is actually made by ourselves.

Chinese manufacturers enter the "first half"

Q: What are the main differences between the overseas AR/VR market and the domestic market?

A: Because if you look overseas today, the VR market is basically dominated by Quest. After all, Quest has been cultivating for many years, and it has a relatively mature game ecosystem that we think. However, if you look at domestic XR today, even though Pico is showing a crushing trend in sales, we regret that we have not seen too much game content. We think that domestic players are actually different from overseas players in terms of game payment habits. There is a big gap. This is one of the reasons for the ecology or content ecology of AR/VR games at home and abroad.

Then I think it is the entire AR/VR market, the level of education in different regional markets, and the user’s acceptance of this matter. In fact, it is obviously higher in foreign countries today, especially in the United States and Japan, because users may already be familiar with related products. I have a relatively deeper understanding of some VR hardware, which is why I think the Chinese market is very large and has great potential.

Q: In the face of these differences, has XREAL made strategic adjustments?

A: For XREAL, such a difference has an advantage. We have different markets, and we can try some differentiated styles of play. But what we are pursuing is a high degree of unity in product definition, that is, for the same product, we need to use different sales strategies to make it sell well in different countries.

We also found some interesting things. For example, in the United States, people are willing to use XREAL to connect various devices including notebooks, game consoles, and Switches; in the Japanese market, the proportion of iPhone users is particularly high, and users also like it. Shop offline. Therefore, we have also made some innovations in channels. Our sales in Japan have cooperated with the three major local operators, so the penetration rate of XREAL offline in Japan is the best.

Back in China, we may still mainly focus on online channels such as JD.com and Tmall. We also do in-depth co-creation with some good scene partners. For example, our cooperation with Weilai is to get through The connection between the glasses and the sensors in the car is not simply a matter of putting the glasses in the car and calling them in-vehicle AR glasses.

But today I think that both AR and VR are still in a very early stage, so everyone may have more patience and wait until the explosive point arrives.

We believe that it is very likely that the overseas market will mature and scale faster in the early stage, but at a certain point, the Chinese market will keep up, and even have a faster momentum to grow, and then slowly catch up. Probably this logic.