*

Samsung partners with Google and Qualcomm ( QCOM ) for Galaxy XR

*

Galaxy XR to cost $1,799 and be available on October 21

*

VR/AR market faces decline despite competitive landscape

By Kenneth Li

Oct 21 (Reuters) - Samsung Electronics ( SSNLF )

released its Galaxy XR extended reality headset on Tuesday,

counting on AI features from Google to propel it into the

nascent and uncertain market of computing-on-your-face that is

dominated by Meta and Apple ( AAPL ).

The headset, resembling those made by others such as Meta,

will cost $1,799, or about half of what Apple ( AAPL ) charges

for its Vision Pro headset.

It is the first of a family of new devices, powered by the

Android XR operating system and artificial intelligence, in a

long-term partnership with Alphabet's Google and

Qualcomm ( QCOM ).

"There's a whole journey ahead of us in terms of other

devices and form factors," said Google's vice president of AR/XR

Sharham Izadi in an interview ahead of the launch.

Up next will be the release of lighter eyeglasses,

executives said, declining to elaborate. Samsung has announced

partnerships with Warby Parker ( WRBY ) and South Korea's Gentle

Monster luxury eyewear.

The race to find new form factors for entertainment and

computing, underpinned by AI, has fueled a battle among the

biggest technology companies. Instagram-owner Meta

overwhelmingly dominates the VR headset industry with about an

80% market share, with Apple ( AAPL ) trailing behind.

ChatGPT-maker OpenAI is also diving into the market and

spent $6.5 billion to buy iPhone designer Jony Ive's hardware

startup io Products in May to figure out devices in the AI age.

USING GOOGLE AI STRENGTH

The long-awaited Samsung Galaxy XR, first demonstrated last

year, combines virtual reality and mixed reality features. The

goggles immerse users watching videos, such as on Alphabet's

YouTube, or playing games and viewing pictures, while also

allowing users to interact with their surroundings.

The latter feature takes advantage of Google's Gemini

service, which can analyze what users are seeing and offer

directions or information about real-world objects by looking

and circling objects with their fingers.

In an interview last week, executives from Google and

Samsung discussed how they believe extended reality headsets,

which have yet to ignite mass consumer interest, would benefit

greatly from the application of Google's powerful multimodal AI

features throughout the device that can process information from

different types of data such as text, photos and videos.

It's a set of software capabilities that Apple ( AAPL ) has yet to

demonstrate, despite rolling out an updated Vision Pro with a

more powerful chip.

"Google entering the fray again changes the dynamic in the

ecosystem," said Anshel Sag, principal analyst at Moor Insights

& Strategy, noting that Google's software added $1,000 in value

to the device by some estimates. "Google really wants people to

get the full experience of Gemini when using this headset."

Customers who buy the device this year will receive a bundle

of free services including 12 months of access to Google AI Pro,

YouTube Premium, Google Play Pass and other specialized XR

content, the companies said.

The prototype for AI-enhanced goggles was ready by the time

Apple ( AAPL ) had launched its Vision Pro headset in 2024, executives

said, as they sought to enhance existing applications like

YouTube and Google Photos and Google Maps, while creating new

immersive experiences.

Like many first generation technologies, it attempts to do

multiple things that could have consumer and enterprise

applications.

Qualcomm ( QCOM ) is providing its Snapdragon XR2+ Gen 2 chip to

power the headset.

DIFFICULT MARKET

Many tech CEOs have been seduced by what they say is the

next big thing in personal computing, but the market remains

tiny by tech standards.

Research firm Gartner estimated the global Head-Mounted

Display market is expected to rise by 2.6% from this year to

$7.27 billion next year. Lighter, eyeglass-type AI devices such

as Meta's smartglasses made in collaboration with

EssilorLuxottica Ray-Bans are expected to drive most

of this growth.

Despite the expanding competitive landscape, the global

virtual reality market, which includes so-called "mixed reality"

headsets launching more recently, has faced three consecutive

years of decline. Weakening again, shipments in 2025 are

expected to fall 20% year on year, according to research firm

Counterpoint.

"With a potentially more competitive price point than

Apple's ( AAPL ) Vision Pro, Samsung's Project Moohan headset could

emerge as a strong contender in the premium VR segment,

particularly within the enterprise market," Counterpoint senior

analyst Flora Tang.

The Galaxy XR is the first Android XR device. But Samsung

has dabbled with face-mounted computing devices dating back a

decade, involving slipping a smartphone into a headset, called

the Gear VR, in partnership with VR headset maker Oculus. Meta

acquired Oculus in 2014.