Who Will Lead The Race of XR Ecosystem Harmonization?

Recent years have seen remarkable progress in XR hardware, particularly in display technologies, camera-enabled pass-through, and lightweight form factors. Micro-OLED and Micro-LED displays from Sony, eMagin, Kopin, BOE Technology, and JDC are pushing the boundaries of visual fidelity, offering higher pixel densities and improved energy efficiency crucial for compact XR devices. Advancements in optics and spatial imaging have expanded fields of view while reducing distortion, significantly enhancing immersion. Advanced XR chipsets, with distributed computing capabilities and rendering capabilities, from the likes of Qualcomm and Apple are currently pushing motion-to-photon latency lower than 20ms to enable smooth, comfortable, and immersive XR experiences. They also have the potential to enable lightweight headsets with much longer battery life in the future.

The integration of sophisticated eye-tracking technologies and foveated rendering technologies from the likes of Apple, Meta's Oculus, Tobii, Pupil Labs, Adhawk, and Eyeware is optimizing processing power usage, allowing for more efficient and powerful XR experiences. Haptic feedback systems developed by the likes of Immersion, Texas Instruments, and Synaptics have also evolved, providing more nuanced tactile sensations that enhance the sense of presence in virtual environments.

These technological advancements have enabled the emergence of new, more user-friendly, and relatively stylish form factors. All-in-one VR headsets like the Meta Quest series have eliminated the need for external hardware, dramatically lowering barriers to entry for consumers. In the AR space, devices from the likes of Xreal are approaching the form factor of standard commercial eyewear, portending a future where AR could be as ubiquitous as smartphones are today.

Despite these hardware advancements, the XR software landscape remains highly fragmented, presenting a significant obstacle to widespread adoption and scalability. The proliferation of XR-specific operating systems—including Meta Horizon OS, visionOS, and Windows Mixed Reality, among others—has created siloed ecosystems that complicate development and limit interoperability. Despite the fact that the majority of commercial XR models, aside from Apple and Microsoft devices, are powered by Android-based operating systems, they all provide proprietary runtimes and application development environments.

This fragmentation is evidently reflected in the XR application ecosystem. ABI Research estimates the number of XR applications at less than 20,000, with even popular titles struggling to achieve significant download numbers often generated from a single device model. This is insignificant in comparison to the mobile app ecosystem, which boasts 4-5 million applications, with top performers generating hundreds of thousands or even millions of downloads.

The fragmented development environment forces developers to create multiple versions of their applications for different platforms, significantly increasing development costs and lowering the developers' margins. This not only discourages smaller developers from entering the XR space but also limits the ability of larger developers to achieve economies of scale.

Hardware manufacturers are also constrained by this fragmentation, as they must cater to a variety of screens, designs, operating systems, and form factors. This complexity hinders innovation and drives up costs, ultimately slowing the pace of hardware advancement and market growth. This fragmentation has discouraged many chipset suppliers from competing in this market, leaving captive players like Google, Microsoft, and Apple to develop their own chipsets. An exception to this is Qualcomm, which currently dominates the standalone XR headset market.

The Case for Harmonization

Addressing this fragmentation through harmonization efforts throughout the entire ecosystem is an essential factor in enabling the XR industry's future growth and mainstream adoption. A unified software environment would offer several key benefits:

• Enable more chipset suppliers: This would include NVIDIA, AMD, Intel, and MediaTek, to compete effectively in this market to enable XR headset OEMs to move away from chipset captivity or reduce their reliance on a single vendor.
• Accelerated Innovation: A standardized platform would allow developers to focus on creating compelling content rather than navigating disparate systems, potentially leading to a surge in high-quality XR applications.
• Economies of Scale: Harmonization would enable developers and hardware manufacturers to achieve greater economies of scale, potentially reducing costs and making XR devices more accessible to a broader audience.
• Cross-Platform Development: A unified environment would make it easier for traditional PC and mobile developers to augment their applications with XR experiences, rapidly expanding the XR and spatial computing content ecosystem.
• Enhanced User Experience: Consumers would benefit from a more seamless experience across devices and platforms, potentially driving increased adoption and usage.

Market Leaders and Harmonization Efforts

Several entities are trying to lead harmonization efforts in the XR space:

Industry consortiums like the XR Association and the Khronos Group (responsible for OpenXR) are working to establish cross-platform standards. OpenXR, in particular, has gained traction as an open standard for XR development, with support from major players including Microsoft, Meta, and Valve.

Open-source initiatives such as OSVR (Open Source Virtual Reality) and Monado offer potential foundations for a unified XR platform, though they currently lack the widespread adoption of proprietary systems.

While they have made significant progress in bringing the XR industry together, several factors are contributing to the underwhelming results of these industry consortiums. Firstly, XR technology innovation is moving at a fast pace to the point where it makes it challenging for universal standards to keep up with this innovation. Secondly, major players often prioritize their own ecosystems over industry-wide standards. These tech companies, particularly those with significant investments in XR like Meta, Apple, Google, and Qualcomm, could leverage their market influence to drive standardization, but competing interests pose challenges to achieving industry-wide consensus. The dominance of these players can also make the barrier to influence and actively participate in standards development very high for smaller players, given the significant R&D resources this may require for these players.

However, hyperscalers like Google or social network leaders like Meta could potentially lead the creation of a unified XR application development environment. This strategic move could solidify their market positions while expanding opportunities in advertising and AI data collection from immersive XR experiences. Emulating the Android model, which revolutionized the smartphone market, could be key to rapidly scaling the XR user base.

Meta's recent opening of its Horizon OS, an Android-based framework formerly known as Meta Quest App, to third-party OEMs marks a significant step towards harmonizing XR experiences globally. The next step for Meta could potentially be to open-source Horizon, which could further accelerate innovation, foster trust, promote the platform to a wider development community, and reduce development costs for Meta by leveraging a broader community of contributors. However, realizing these benefits would require Meta to implement a robust governance model, ensuring the platform's integrity and direction while harnessing the power of open collaboration.

The XR market is poised for significant growth, but realizing its full potential requires addressing the current fragmentation in the software landscape. Industry stakeholders should prioritize the following actions:

• Collaborate on open standards: Support and contribute to initiatives like OpenXR to create a common foundation for XR development.
• Invest in cross-platform development tools: Develop and promote tools that simplify the creation of XR applications for multiple platforms.
• Foster interoperability: Work towards ensuring that XR content and experiences can seamlessly transition between different devices and platforms.
• Support developer education: Invest in resources and programs to help traditional developers transition to XR development.
• Engage in industry-wide dialogue: Participate in forums and consortiums to address fragmentation and work towards common goals.
• Most importantly, participate in creating an open-source framework with a strong governance model: This will accelerate hardware and software innovation, widen the application development environment, increase trust and integrity, while lowering the cost of developing the platform. 

By addressing these priorities, the XR industry can pave the way for a new era of spatial computing, transforming how we interact with digital content and the world around us. The potential for XR to revolutionize industries from entertainment and education to healthcare and manufacturing is immense, but realizing this potential will require concerted effort and collaboration across the entire XR ecosystem.