Google folds headset hardware development business

Google AR glasses [Courtesy of Google]

Google LLC folded its reality (AR) hardware team as it retreats from its dual strategy of developing its own headset Iris and supplying AR software via an alliance with Samsung Electronics Co.

According to multiple sources from the global information technology (IT) industry on Sunday, Google restructured its Devices and Services division responsible for hardware, drastically reducing its AR hardware research team from about 300 members to just five and only retaining software testing personnel.

“(Google) has streamlined everything except for smartphones, tablets, watches, and smart home responsibilities,” an IT industry official said. “It particularly downsized the number of AR hardware and wearable Fitbit personnel.”

The Devices and Services division leadership will oversee the entire department, whereas each hardware unit was previously directly in charge of its respective projects.

Google will pursue AR projects moving forward by collaborating with Samsung Electronics and other partners, and the reason for Google’s focus on software is not unrelated to Apple Inc.’s rapid expansion of its ecosystem with iOS.

According to market research firm StatCounter, Google Android’s market share in the global smartphone OS market fell to 70.29 percent in 2023 from 75.45 percent in 2018. Apple’s iOS increased to 28.99 percent from 20.47 percent during the same period.

In particular, iOS (57.93 percent) significantly surpassed Android (41.64 percent) in the United States in 2023 after accounting for a mere 38.33 percent in 2011. With this trend, Apple’s iOS could become a significant threat in the headset market.

Metaverse headsets can accommodate various apps such as music and games, making it an essential market for companies developing operating systems like Google and Apple.

Industry insiders noted that instead of immediately entering the hardware market, Google should strengthen its Android ecosystem via a solid alliance with Samsung Electronics.

Apple aims to release its mixed reality (MR) headset, Vision Pro, on February 2ns, 2024, and has started pre-orders in the United States.

The high-end headset is equipped with an 8-core CPU and 10-core GPU, features a M2 chip, and has up to 1TB of integrated memory. The 1TB version is priced at a whopping $3,899, but all units for in-store pickup in the pre-order phase were sold out within the first 30 minutes.

Insiders noted that Google should seek a strategy that focuses on either hardware or software.

Google has been developing headsets directly with co-founder Sergey Brin appearing at the 2012 annual I/O event wearing the Google Glass product. Google acquired smart glass startup North in 2020, and showed a video of AR glasses at the 2022 edition of I/O.

Industry insiders noted that Google was developing the next generation metaverse headset with a team of 300 employees under the ‘Project Iris’ name.

But there have been signs of downsizing, with Clay Bavor, the vice president who led the project and declared the development of an extended reality (XR) headset with Samsung Electronics and Qualcomm Inc., leaving Google.

Google is currently allocating a significant portion of its workforce to the AI team, competing against OpenAI, and is working with Samsung Electronics and Qualcomm to address the headset issue.

To achieve this, Samsung Display Co. is developing the next-generation display called Flex Magic, and Qualcomm has released the second-generation of its Snapdragon XR2 Plus.

Meta, the top company in the industry, has partnered with LG Electronics Inc. and plans to release a high-end model as early as 2025.