In 2025, Meta’s Reality Labs division is undergoing a substantial transformation in its hardware sales income, transitioning from virtual reality (VR) headsets to artificial intelligence (AI) glasses. This change is redefining the company’s strategy towards extended reality (XR) technologies.
Although Meta saw unprecedented Christmas sales in 2024 for its VR and augmented reality (AR) offerings, the subsequent year has revealed a marked shift. The company’s CFO, Susan Li, announced that revenue growth was chiefly fueled by a rise in sales of Ray-Ban Meta glasses, while Quest headset sales experienced a downturn. This shift was underscored in both the Q1 and Q2 2025 earnings discussions, signaling a change in consumer preferences.
Looking forward, Meta’s Reality Labs is gearing up for an important year with the expected launch of new smart glasses, including an additional pair of Oakley Meta glasses, a third iteration of Ray-Ban Meta Smart glasses, and the firm’s inaugural smart glasses featuring a display in the lenses.
The Quest 4, which was originally set for launch, has been delayed in order to introduce a revamped design akin to goggles rather than a conventional VR headset. This modification mirrors Meta’s strategic emphasis on smart glasses to enhance XR hardware revenue, particularly with the forthcoming rollout of Android XR.
The Quest 3 series has not achieved the sales figures of its predecessor, the Quest 2, which surpassed Xbox in units sold. Meta’s updated Horizon Store and commitment to transparency with developers have yet to yield the anticipated sales numbers. Nevertheless, collaborations with prominent brands such as Xbox have enhanced the visibility of the Quest brand.
In contrast, AI glasses have experienced considerable progress. By February 2025, Meta had sold over 2 million Ray-Ban Meta Smart Glasses and intends to ramp up production to 10 million per year. These glasses are priced comparably to the Meta Quest 3S but are less costly to produce, making them a profitable item for Meta.
The favorable reception of AI glasses came as a surprise, given that Meta AI was not prepared for the initial release in October 2023. However, by April 2024, the product had markedly improved, resulting in heightened sales throughout 2024.
Meta’s future plans include evolving VR headsets to resemble glasses, with various prototypes currently in the works. The Meta Quest 4 is anticipated to take on the appearance of Meta Orion smart glasses, providing a more attractive option for consumers who are hesitant to utilize conventional VR headsets.
To summarize, Meta’s transition from VR headsets to AI glasses is transforming its Reality Labs division, with smart glasses emerging as a vital revenue source. The company’s commitment to AR/VR technology positions it to introduce cutting-edge products ahead of its rivals, with significant potential for ongoing expansion in the smart glasses sector.
