Apple’s Augmented Reality Faces Real Questions
Summary
- Vision Pro headset is an expensive gamble for a company that needs a new hit
Apple’s augmented-reality device is finally real. The company has the rest of the year to give consumers a real reason to spend nearly $3,500 on it.
Apple used the opening keynote of its annual Worldwide Developers Conference on Monday to introduce the Vision Pro, an AR headset that also allows for virtual-reality uses. The device has been heavily rumored for months, and the design was mostly in line with previously reported leaks, resembling a pair of high-tech ski goggles tethered with a power cable to a portable battery pack. It will go on sale sometime early next year at a starting price of $3,499.
That is more than three times the price of the Quest Pro headset sold by Meta Platforms after the Facebook parent slashed that price by a third earlier this year following weak sales. Apple has never been shy about trying to command premium prices, and the Vision Pro introduced Monday certainly offers a more attractive design than previous VR and AR headsets.
It also attempts to raise the game for user interface typical in such devices, as Apple’s headset uses eye-tracking and gesture recognition instead of hand-held controllers. The Vision Pro uses Apple’s M2 chip—the same central processor that powers its latest Mac computers—along with another, new in-house chip processing input from the several cameras and sensors embedded in the headset.
Still, it is an eye-popping price tag, especially for a technology that has so far failed to garner more than a niche audience mostly comprised of gamers. That leaves Apple with the same problem faced by Meta, Sony, Microsoft and other major tech players that have tried to crack the code for making AR/VR devices mainstream. Some cool VR games haven’t been enough to get the broader videogaming market to buy into the technology. And even a company running social networks with more than a third of the earth’s population checking in daily hasn’t gotten the masses to buy into its “metaverse" dream. Meta’s “Horizon Worlds" VR app had just over 200,000 users as of February before the company decided to open it up to teenagers as young as 13—over the objections of lawmakers and child-health experts, according to The Wall Street Journal.
Apple, the world’s most valuable company with a market capitalization now approaching $3 trillion, can’t afford to just make a niche gaming device. The Vision Pro represents the company’s first new device platform since the first Apple Watch went on sale eight years ago. Most of Apple’s business is still tied to hardware products such as the iPhone, iPad and Mac computers that inhabit mature markets that users are refreshing less frequently as prices rise. Apple’s revenue is expected to slip 3% in the current fiscal year ending in September and to rise only in the mid-single-digit range for the next two years, according to analysts polled by FactSet.
Yet investors have high hopes; Apple’s shares had jumped 39% since the start of the year before the developers’ conference—the stock’s biggest run in that period since 2012. The company could really use a new hit.
Apple will need a killer app to even give the Vision Pro a chance of being that hit. This explains why the company is pushing the device hard to its developer community; one-third of its two-hour keynote on Monday was devoted to the Vision Pro. It also explains the long lead time Apple is giving the device for going on sale, similar to the eight months that elapsed between the announcement of the first Apple Watch and its actual launch.
The watch eventually became a successful product, generating nearly $18 billion in revenue last year, according to consensus estimates from Visible Alpha. But that took a while to build up, and it is an unobtrusive device with clear selling points in healthcare monitoring and exercise tracking. A face-mounted computer cabled to a fanny pack will be Apple’s toughest sale yet.
Write to Dan Gallagher at dan.gallagher@wsj.com
