AI Hardware: Entering Its Make-or-Break Moment

The start of a new year brings moments of reflection, renewal, and an endless stream of speculation about the future. Nowhere is this more palpable than at CES—the world’s premier consumer tech showcase—which kicks off in Las Vegas on January 7. Expect a surge of excitement over the latest gadgets, many of which will feature AI as a headline capability. From wearables to other cutting-edge devices, AI will undoubtedly take center stage.

For years, AI has been the star of CES and beyond, infiltrating nearly every corner of our culture. While CES 2024 saw a wave of AI-powered innovations, the buzz remains strong. According to Jitesh Ubrani, research manager at IDC, the focus has shifted: “This year, AI will be embedded within existing devices as an added feature, rather than serving as the sole purpose of dedicated hardware.”

AI Embedded Everywhere

The current AI boom has largely benefited tech giants like OpenAI, Google, and Meta, whose advanced language models dominate the market. Meanwhile, smaller startups are pivoting to hardware as a way to carve out a niche.

“Developing a proprietary AI model doesn’t add much value anymore,” explains Anshel Sag, principal analyst at Moor Insights & Strategy. “The next step is implementing AI in hardware, which opens up new possibilities.”

In 2024, AI-powered gadgets proliferated, ranging from AI pins to wearable microphones. Yet, many failed to stand out. Devices like the Humane AI Pin and Rabbit R1 aimed to pioneer this space but fell short of expectations. Others, such as the Plaud.AI pin, showed potential by summarizing meetings, hinting at broader capabilities like autonomous participation in virtual meetings.

This trend will continue at CES 2025, where we’ll see a wave of AI-infused wearables—from smart glasses and pins to headphones and even unconventional items like AI-enabled sex toys. Yet, questions persist: Will these products offer real innovation, or will they simply ride the AI hype?

The Challenge of Differentiation

While AI’s novelty once guaranteed consumer interest, today’s market demands more. Chatbots and AI agents—a key feature in many of these devices—struggle to offer compelling use cases. As Sag points out, “If AI is your only differentiator, you’re in trouble. It’s become a baseline feature.”

Ubrani agrees: “The reality is most AI-powered features can already be handled by your phone. Dedicated hardware isn’t always necessary.” As AI becomes ubiquitous, products must offer meaningful utility to stand out.

Success Through Integration

There are exceptions, like the Ray-Ban Meta smart glasses. These glasses seamlessly integrate AI with practical features such as photo-taking and music playback. Their success lies in offering functionality that goes beyond AI alone. This year, we’re likely to see more smart glasses at CES, each vying to capture consumer interest.

For smaller players, competing with giants like Meta is a steep challenge. However, differentiation through privacy and user control offers a path forward. Unlike data-hungry platforms, some startups, such as Even Realities and Looktech.AI, focus on privacy-first smart glasses, which could appeal to consumers seeking greater data security.

The Road Ahead

Ultimately, the future of AI hardware hinges on delivering real value. As Sag notes, “Consumers are asking: What can AI do for me beyond just being a buzzword?” To drive adoption, these devices must demonstrate clear, tangible benefits that improve daily life—not just claim AI as a feature.

At CES 2025, the AI hardware sector faces a defining moment. It’s no longer enough to incorporate AI; products must show they can make a real impact. The era of AI-powered innovation is evolving, and the stakes have never been higher.