Mark Zuckerberg's metaverse is beginning to show signs of activity, but not through virtual reality.

• The company, previously known as Facebook, seems to have discovered its path in virtual and augmented reality with the use of smart glasses.
• Meta is planning to strengthen its ties with software developers as it works on creating a consumer version of the Orion smart glasses.
• The company is promoting its current Ray-Ban Meta smart glasses to a wider audience during the 2024 holiday shopping season.

In October 2021, Facebook CEO Mark Zuckerberg unveiled his vision of a digital future of work and leisure accessible through a virtual reality headset. The company then launched its virtual reality play universe, Horizon Worlds, featuring personalized avatars floating in the air.

Despite the third anniversary of the rebranding to Meta, none of the changes have become widely accepted.

The company seems to have discovered its footing in virtual and augmented reality through a different approach.

Meta, the parent company of Facebook, is generating excitement for a new pair of glasses called Orion, which is a decade-old project. The reveal of Orion by CEO Mark Zuckerberg has sparked a level of enthusiasm in the metaverse that is unfamiliar.

The successful demonstration at Meta's annual Connect event was a relief to many employees and marked a shift in sentiment towards Zuckerberg's expensive hardware aspirations, according to sources close to the company who requested anonymity due to not being authorized to speak to the media.

During the demo, Zuckerberg displayed a black, thick-framed AR glasses device to the audience. He then put it on his face. Orion is a gadget that uses a wireless puck to create holographic virtual images on top of real-life views. It also uses a wristband to detect neural signals and let users control the device.

The demo was smooth, and the crowd applauded enthusiastically. Positive reviews poured in from those who tried it out. CNBC's Julia Boorstin shared with her producer that it felt like they were video chatting, but he was in her glasses. The Verge's Alex Heath played Zuckerberg in a game of Pong and noted minimal lag.

"At Connect, Zuckerberg stated that the correct perspective on Orion is as a time machine. He added that these glasses are impressive and offer a glimpse of an exciting future."

Meta is planning to enhance its collaboration with software developers and increase the availability of its current Ray-Ban Meta smart glasses for the 2024 holiday season, as it works on developing a consumer version of the device following the Orion showcase.

The company is considering adapting the technology from the Orion wristband to its other consumer devices, including the Quest VR headsets and Ray-Ban Meta smart glasses, according to a source.

Meta's stock price has surged more than 60% in 2024, reaching a new high after the company lost almost two-thirds of its value in 2022 and then slashed about a quarter of its workforce, or 21,000 jobs.

Meta demonstrated the strength of its leading online advertising platform by adapting to the new iOS privacy policy and enhancing its technology, while also introducing AI tools to simplify brand campaign management.

Proving the success of a digital ad in a new market has been a persistent challenge.

Since its initial $2 billion purchase of Oculus in 2014, Facebook has invested over $63 billion in its Reality Labs division, which focuses on AR and VR hardware and software. Despite these investments, the company is currently recording operating losses in the billions of dollars per quarter.

In the second quarter, Reality Labs generated only $353 million in revenue, which was less than 1% of the company's total sales. Meanwhile, global shipments of VR and AR headsets in the period fell by 28% from the previous year to 1.1 million units, according to market researcher IDC.

"In July 2023, Zuckerberg stated that the bet was a very long-term one, acknowledging the discomfort that many investors felt with it because it did not fit within the typical long-term investment model."

Reality Labs' strategy is demonstrated by Orion, and a logical next step following smart glasses is evident, according to people familiar with the company.

Meta declined to comment.

A project 10 years in the making

According to sources, Meta plans to target developers in the coming year to generate interest in building apps for Orion, in order to determine what consumers would find appealing.

The release of a more powerful Llama AI model by Meta is expected to coincide with its push into the developer community. The company hopes that developers will incorporate the software into their future AR apps to enhance tasks such as object recognition and voice command response, according to sources.

Meta aims to create a consumer version of Orion within the next two years, according to their statement.

It may be unrealistic to adhere to that timeline given the time it took to advance Orion to its current state.

Since 2016, Facebook has been working on the device under the leadership of Michael Abrash, who was then the chief scientist at Oculus. Abrash is currently the chief scientist at Reality Labs.

In 2018, the project transitioned from research and development to the product path under the leadership of Andrew "Boz" Bosworth, who was Facebook's head of hardware at the time and is now Meta's technology chief.

The device had AR visuals, but it was only functional in controlled settings, such as indoors, according to the people.

The Orion glasses have been under development at Meta for over two years, and the company has finally unveiled the product to the broader company and outsiders. The prototype was completed in March, and engineers worked hard to make the device weigh less than 100 grams (3.5 ounces), which is about twice the weight of a heavy pair of glasses, and to have a 70-degree field of view, sources said.

The driving force behind the company's advances in AR and VR, Zuckerberg, made the ultimate decision to go public with Orion, according to sources.

Building on surprise success

Orion, a consumer version of Meta, is unlikely to be available for several years, and there are significant obstacles that must be overcome to achieve mass production.

"Joseph Bonner, an analyst at Argus Research, wrote in a report on Oct. 4 that one could criticize Orion as vaporware, referring to technology that may not result in an actual product. Despite this, Bonner recommended buying the stock, stating that the product showcases Meta's dedication to virtual and mixed reality applications."

Developing a global manufacturing supply chain for the rare materials used in the device, such as silicon carbide for the displays in the Orion lenses, will be a significant challenge.

According to sources, Meta recently hired someone from a semiconductor contract manufacturing company to assist in the development and management of the supply chain for Orion and related AR and VR devices.

Meta aims to expand on the success of its second-generation Ray-Ban Meta smart glasses.

The product, released in partnership with in September of last year, included several enhancements, such as enhanced camera quality, extended battery life, and an AI voice assistant.

The smart glasses became a sensation on TikTok during the holiday shopping season, with sales surpassing both companies' predictions. Over 730,000 units have been sold in the first three quarters since their release, according to IDC. Zuckerberg announced in July that they were a "bigger hit sooner than expected."

Luxottica and Meta have extended their partnership to launch a new, larger version of their glasses with a small display in one lens for the holiday season.

A Luxottica representative didn't respond to a request for comment.

Meta is launching a pop-up shop to showcase its smart glasses and increase consumer exposure.

BDS Connected Solutions is seeking retail staffers in West Hollywood for a pop-up shop at a retail space in Los Angeles.

"BDS is staffing up for a Meta pop-up experience in Los Angeles that will showcase the city's iconic street vibes and lowriders."

WATCH: Meta has more innovation momentum than Apple