Qualcomm has voiced increasing optimism in the extended reality (XR) market, the tech giant revealed in a third quarter (Q3) earnings call on Wednesday.
The call featured Qualcomm executives such as Cristiano Amon, President and Chief Executive, Mauricio Lopez-Hodoyan, Vice President, Investor Relations, and Akash Palkhiwala, Chief Financial Officer.
Speaking on Qualcomm’s Internet of Things (IoT) operations, Amon noted his company’s work on the Meta Quest 3. In it, the collaboration aimed to boost specifications for Meta’s upcoming mixed reality (MR) headset ahead of the Connect 2023 event in September.
He continued,
[The] Meta Quest 3 is the first virtual and mixed reality headset to be powered by a next-generation Snapdragon XR platform developed in collaboration with Meta — the Quest 3 features two times the graphical performance, higher resolution, and a slimmer, more comfortable form factor than the Quest 2″
Mark Zuckerberg, Chief Executive and Founder, Meta, revealed in late June the head-mounted display’s specifications. These include a 40 percent slimmer form factor, improved displays and resolution, and Qualcomm’s cutting-edge Snapdragon XR2+.
Zuckerberg stated in a social media post at the time that “[The Meta Quest 3 is] our most powerful headset yet.” The chipset would also provide “[twice] the graphics performance” as the Quest 2, he added.
Furthermore, Qualcomm’s work with Meta involve collaboration on Llama-2 use cases for smartphones and PCs. This aims “create new and exciting [Generative AI] applications,” leveraging Snapdragon capabilities from 2024, the executive noted.
It has also launched similar projects for enterprise, consumer, and industrial devices with Microsoft. The company featured a Stable Diffusion-linked use case on a Windows Snapdragon-powered laptop, among others.
Qualcomm-Oppo MR Glass Collaboration
Additionally, the company aims to “drive the growing ecosystem of VR and MR developers in China.” Currently, the Oppo MR Glass Developer Edition will feature Qualcomm’s most powerful XR chipset, the Snapdragon XR2+.
Yi Xu, Director of XR Technology, OPPO, unveiled at the Augmented World Expo (AWE) 2023 on 1 June. In his speech, he explained the device would feature Qualcomm’s next-generation Snapdragon XR2+.
Additional features include OPPO’s in-house SUPERVOOCTM fast-charging technologies, heart rate detection, and other functionality. Specifications would also include binocular video passthrough, dual forward-facing RGB cameras, a 120Hz refresh rate, and pancake lenses.
The latest MR Glass headset comes after subsequent iterations, including a proof of concept (PoC) and OPPO AR Glass in 2019 and 2021, respectively. OPPO also launched two OPPO Air Glass products in recent years.
19/ Yi Xu talk about OPPO MR Glass Developer Edition. pic.twitter.com/7py0IPN6Xk
— Kent Bye (Voices of VR) (@kentbye) May 31, 2023
Currently, the OPPO MR Glass will open in the second half (H2) of 2023 as a Snapdragon Spaces developer kit in China via EnlightXR. Developers and coders will receive access to Qualcomm’s Snapdragon Spaces, allowing them to develop for the massive ecosystem of applications, games, and content.
Said Bakadir, Senior Director, XR Product Management, at Qualcomm Technologies, Inc, said at the time his enterprise recognised OPPO’s “long-standing efforts in exploring technologies, products, content, and services for XR.” This allowed OPPO to become an ideal partner for collaboration in XR, he added.
The executive continued,
“Through potential solutions improving productivity, creativity, and gaming experiences on OPPO MR Glass, we are glad to see growing vitality among developer groups and hope to find more MR content to enliven the platform, which is significant for creating innovative experience and bringing breakthroughs for the industry. In the future, we look forward to deepening our collaboration with OPPO to stimulate more innovations in the MR ecosystem”
The news comes ahead of the firm’s Snapdragon Summit on 24 – 26 October in Maui, Hawaii. The massive event will detail further plans for the Santa Clara-based firm’s operations and upcoming products.
Analysis of Qualcomm’s XR Ambitions
Demond Cureton, Senior Journalist, XR Today, analysing the latest on Qualcomm’s Q3 results. As of late, Qualcomm’s Q3 earnings have revealed that its smartphone sales have plummeted around 8.2 percent.
This is due to weakening demand for smartphones in the Chinese market in what is seen as the worst-performing period of sales in recent history.
Ongoing market volatility, semiconductor shortages, and a huge drop in smartphone orders will see companies face massive headwinds until the end of the year.
The company’s current restructuring efforts, totalling around $285 million USD, have resulted in a series of redundancies. Additional layoffs are set to take place in the near future.
Amon said in the call,
“We are taking a conservative view of the market and will be proactively taking additional cost actions to ensure Qualcomm is well-positioned to deliver maximum value for stockholders in an uncertain environment”
China and the Global Smartphone Slump
According to reports, China consists of 60 percent of total global market sales. The current slump has severely impacted this for the chipmaker and components manufacturer.
Despite this, it seems that XR could pose a breakthrough for device manufacturers as they struggle to find inroads for their family of products.
Amon’s commentary indicates optimism for its XR operations with Meta Platforms and OPPO. Both companies are massive powerhouses in the tech industry. The latter rose to global prominence along with Xiaomi following Huawei’s component trade restrictions in 2019.
Currently, due to US government trade restrictions, Qualcomm cannot sell its 5G components to Huawei for its smartphone sales.
In 2019, prior to the ban, the Shenzhen-based firm was the largest manufacturer of smartphones. Huawei outperformed Samsung, Apple, and Xiaomi in Q2 2020, amid the coronavirus pandemic.
The loss has created severe market share losses for Huawei, which has since fallen from the top five smartphone vendors. This has also hit Qualcomm component sales, leading to a decrease in revenues for the US firm.
Apple Jumps the Snapdragon Ship
Additionally, Apple has begun pivoting away from Qualcomm device components. This comes after stating in recent years it would launch its own in-house chips to replace Snapdragon components.
This will include the Cupertino-based firm’s upcoming Vision Pro headset, which features Apple’s M2 processor and R1 graphics chipset.
A Bloomberg report in January found that Apple would start replacing Qualcomm 5G modem chips as early as 2024, creating further headaches.
Ming-Chi Kuo, Veteran Apple Analyst, explained in late 2022 that Apple would continue using Qualcomm products up to 2023. However, Apple plans to shift its 5G chipsets when it debuts its 2023 lineup of iPhones.
According to the report, Apple’s transition from Qualcomm will take up to three years.
Growing Pains for Tech Giants
Despite this, Amon’s commentary indicates renewed interest in Chinese markets with mixed reality technologies. As the world shifts to spatial computing, OPPO’s MR Glass headset, Meta’s Quest 3, and, indirectly, Apple’s Vision Pro’s debut next year, are set to increase competition among rival headset makers.
Qualcomm will undoubtedly watch this space to see if the Snapdragon accomplishes several goals.
These include boosting revenue streams from upcoming XR devices, recouping research and development (R&D) capital expenses (CAPEX), and incubating the global XR ecosystem on Snapdragon Spaces, leading to further projected profits.
Qualcomm is the latest tech giant to begin scaling up its XR ambitions, with Meta, Microsoft, Apple, and Google currently in the ring to compete for top spaces in the growing industry.
This will incur billions in costs for many companies in the XR space race. However, due to projections that the XR industry will reach $345 billion USD by 2030, these companies are taking the long approach to profitability.
Meta Platforms has faced significant capex costs due to R&D for its Quest 3 headset, green capex costs, and restructuring expenses. Qualcomm faces similar issues as it recovers from a difficult 2022 following severe market turmoil and overinvestment in XR, prompting its conservative approach.
The views in this analysis piece are solely those of the author and do not reflect the XR Today brand, its partners, or affiliates.
