👓 Are Glasses The New Phones?
Google, Meta, and OpenAI race to augment reality
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AI is about to make a lot of wearables ‘smart.’
👓 Meta’s Ray-Bans have sold 2 million pairs since their October 2023 launch, and Zuck aims to produce 10 million per year by the end of 2026.
Competitors are taking notes — and this week, Google joined the race in earnest, unveiling a wave of AI-powered glasses and XR initiatives at its I/O developer conference.
And more AI-infused wearables are on the way:
OpenAI just spent $6.5 billion to acquire io, the secretive device startup co-founded by Jony Ive — the legendary designer behind the iPhone. Their mission? Build a new class of AI-native hardware that reduces friction and reimagines how we interact with technology. What are they cooking? We don’t know, but they aren’t thinking small.
The AI device race is heating up — and it’s no longer just about headsets.
Are glasses the new consumer tech war for multimodal AI? Let’s review.
Today at a glance:
Google I/O: The 1-minute version
Are glasses the new phones?
Meta’s Reality Labs roadmap
Apple’s next move in wearables
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1. Google I/O: The 1-minute version
CEO Sundar Pichai explained:
“This feels very far from a zero-sum moment.”
At I/O 2025, we saw that Gemini is powering everything from search and email to smart glasses and filmmaking tools. The message: AI is the new interface. It’s less about replacing search and more about expanding what people expect search to do.
🔎 Search with Gemini 2.5: Google’s most advanced AI model powers the new AI Mode in Search — now available to all US users. It replaces standard links with contextual, conversational answers, using a “Deep Think” mode for complex queries. We broke down Gemini’s search impact in our Alphabet earnings review.
🛍️ Smarter Shopping: AI Mode enables virtual try-ons, agentic checkout, and context-rich recommendations — all within search results.
🎥 Generative Creation Tools: Google introduced Veo 3 for video generation and Imagen 4 for high-quality images. A new tool called Flow lets creators storyboard and edit videos using natural language.
📞 Google Beam: The rebranded Project Starline now enables 3D video calls without a headset, designed to make virtual meetings feel lifelike.
💼 AI in Workspace: Gmail and Meet are getting smarter with AI replies and real-time translation. Google also launched new tiers: AI Pro at $20/month and AI Ultra at $250/month, offering early access to experimental tools like Project Mariner (an AI-powered browser assistant) and Deep Think.
The show closed with a preview of a new hardware line-up focused on glasses.
2. Are glasses the new phones?
Wearables got a lot of love with smart glasses powered by Gemini AI and built on Android XR. It’s taking a page from Meta’s playbook with many form factors to cater to different use cases.
Smart Glasses
Everyday eyewear with a smart twist.
These are stylish, lightweight glasses that look and feel like what you already wear, but with voice, photo, and AI capabilities baked in.
Capture a photo or video.
Voice prompts via Gemini.
Real-time translations via audio.
This is a direct answer to Meta’s Ray-Ban Smart Glasses — the ones already in the hands of millions, via EssilorLuxottica.
To make it happen, Google is teaming up with Gentle Monster and Warby Parker, the DTC eyewear brand that disrupted the optometry industry a decade ago.
Alphabet is investing up to $150 million in Warby Parker — half already committed to product development, and the rest pending key milestones. In return, Warby will help design a line of connected glasses expected to launch after 2025, blending their signature style with technology.
It’s a big deal. For perspective, Warby Parker made $224 million in revenue in Q1, and the business just turned profitable. The stock surged 16% on the news.
With the partnership, the Mountain View giant gets design credibility and retail distribution. Warby Parker gets a stake in the next computing platform. Meta might have Ray-Ban, but Alphabet’s betting it can make AI glasses look just as good.
XR Glasses
Immersive tech for a heads-up future.
Separate from the Warby Parker collaboration is Project Aura, Alphabet’s most advanced AR glasses effort yet, built in partnership with Xreal and powered by a Qualcomm Snapdragon XR chipset.
These aren’t just smart, they’re immersive:
AI-powered memory and object recognition.
Visual overlays for navigation and contextual information.
Real-time translations displayed in the user's field of vision.
This is the answer to Meta’s Project Orion, the in-development AR glasses Meta hopes to launch around 2027 under the consumer name Artemis. Think of it as the next step beyond smartphones, and a serious bet that glasses could be the future of computing. Project Aura may hit the market first, offering an open, Android-based alternative at a lower price point.
XR Headsets
Alphabet is also collaborating with Samsung on a separate mixed reality headset initiative (more similar to Apple Vision Pro), known as Project Moohan, adding another front in its XR platform strategy.
Many form factors. One goal
Whether it’s stylish everyday glasses or immersive AR hardware, Big Tech wants to own the interface between your eyes and the digital world. And if it works? The next big thing in AI might not live in your pocket, but right on your face.
3. Meta’s Reality Labs roadmap
Still burning billions — and still playing the long game.
Reality Labs has become a permanent fixture in Meta’s earnings reports because it reliably loses roughly $4 billion per quarter. Since 2020, Meta has poured $50+ billion into building the hardware and software that could power the next wave of computing.
📉 The financial reality: As shown below, the division has operated at a steep loss every quarter, while the company’s core Family of Apps keeps footing the bill. Even after a year focused on efficiency, Reality Labs closed Q1 2025 with a $4.2 billion operating loss.
🧪 What’s being built: Meta is building the OS, chips, and AI models for an entirely new category of devices. The goal? Avoid another era of control by Apple and iOS. From wrist-based neural input (via the CTRL-Labs acquisition) to onboard multimodal assistants, Zuck wants to rethink human-computer interaction from the ground up.
🛠️ What’s next: Behind closed doors, Meta continues to work on Project Orion, but it may not be the first to market after all. It will take several iterations, but Zuck believes Orion could eventually become the primary way we interact with technology.
Meta isn’t waiting for a perfect product to start scaling. It's betting that AI-enhanced glasses, even in simpler forms, will prime users for what comes next — and ensure Meta controls both the hardware and the assistant. The real battle is to gain control of the interface that powers your prompts, requests, and payments.
While Reality Labs is still deep in the red, Meta’s core apps business continues to generate massive profits, giving the company room to play the long game.
Worst-case scenario: Meta’s hardware strategy comes short. But you can afford to swing for the fences when your core business generates nearly $100 billion in operating profit annually.
4. Apple’s next move in wearables
AI, Antitrust, and the race for the next interface
Apple's financial engine runs on the iPhone, with high-margin Services like the App Store and Google Search deals boosting its bottom line. But the rise of AI assistants and smart glasses presents both risk and opportunity.
⚖️ The Antitrust Angle: Alphabet's annual TAC payments to Apple, estimated at over $20 billion, are under scrutiny in ongoing antitrust investigations. A ruling against this arrangement could significantly impact Apple's Services revenue, which has become increasingly vital to its bottom line. While Services were only 26% of the company’s revenue in FY24, they made up 42% of gross profit.
🕶️ The Smart Glasses Frontier: While competitors like Meta and Alphabet have made significant strides in smart glasses, Apple's approach has been more cautious. Recent reports from Bloomberg indicate that Apple is developing specialized chips for smart glasses, with potential releases as early as 2027. These glasses may initially focus on features like photography, audio, and voice interaction, rather than full-fledged AR capabilities.
However, Apple has faced setbacks. The company reportedly canceled its N107 AR glasses project due to technical challenges and cost concerns. Despite these hurdles, Apple continues to explore the smart glasses space, conducting internal studies to assess market potential. Vision Pro sales have underwhelmed, and reports suggest the company is considering a lighter, cheaper version of the XR headset.
🧠 The AI Imperative: As AI becomes the new interface, Apple's Siri faces stiff competition from more advanced assistants like Gemini and Meta AI. Apple's integration of AI into its ecosystem, including the development of AI servers and on-device intelligence, will be crucial in maintaining its competitive edge. For now, the company has yet to deliver several Apple Intelligence features teased a year ago.
With WWDC on June 9, Apple’s next big move may finally come into focus. But the pressure is mounting. The OpenAI–Ive partnership is a symbolic challenge to Apple’s dominance, led by the man who once designed its crown jewels.
Sam Altman and Jony Ive aim to build AI-native hardware that reduces friction between people and technology — echoing Steve Jobs’s obsession with simplicity, but with AI at the center instead of apps.
If Apple keeps dragging its feet, others won’t hesitate to fill the void.
That’s it for today.
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Disclosure: I own AAPL, GOOG, and META in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.