After years of rumors, whispers, and unsubstantiated reports, Apple (AAPL 0.97%) finally revealed what was arguably the worst-kept secret in Silicon Valley. At the company's Worldwide Developers Conference on Monday, Apple unveiled its long-awaited mixed reality headset, dubbed Vision Pro.
With a starting price of $3,499, it's easily the most expensive mainstream device of its kind. It merges virtual reality (VR) and augmented reality (AR) into mixed reality, a combination of the two.
This immediately raises the question, "Who will buy it?" Given the steep cost, Apple's product is arguably out of reach of all but the most affluent buyers. With that as a backdrop, is the Vision Pro headset a game-changer or dead on arrival? Let's dig into the details to find out.
Image source: Apple.
Vision Pro: A revolutionary spatial computer
Apple describes the Vision Pro as a "revolutionary spatial computer that seamlessly blends digital content with the physical world," while saying it "lets users interact with digital content in a way that feels like it is physically present in their space." It employs a three-dimensional user interface that can be controlled by users' hand gestures, eye movements, or voice controls, helping "blend the physical world with digital content."
Vision Pro uses 23 million pixels across the two displays, resulting in a twin 4K display that provides an incredible dual-HDR image that is virtually lag-free. It also includes a feature dubbed "EyeSight," which shows the users' eyes when others are around. When fully immersed in an experience, the users' eyes won't be visible, letting others know they can't be seen.
The device also features a 3D camera that helps users immerse themselves in a favorite photo or video. Vision Pro also works with FaceTime, helping users feel like they are actually present with the person on the video call.
Of course, no mixed reality headset would be complete without the apps to support it. Apple didn't introduce any killer apps, but is rather hosting developer labs in California, London, Munich, Shanghai, Singapore, and Tokyo to get the ball rolling. The plan is to create a catalog of apps before the device goes on sale early next year.
There was a surprise cameo by Disney CEO Bob Iger, who revealed that a number of immersive experiences will launch on streaming video platform Disney+ when the Vision Pro is released next year. In some cases, users will be able to immerse themselves into the settings of the movies and television shows they're watching.
A technological masterpiece
A number of analysts were clearly impressed. Jefferies analyst Andrew Uerkwitz said the device is the "most technologically advanced device we've seen," while Stratechery's Ben Thompson was "blown away." Credit Suisse analyst Shannon Cross said the device "solves many of the technical limitations" evident in competing products, resulting in the "first uncompromised mixed reality solution," according to The Fly.
Others were more guarded, with many analysts citing the high price tag as a stumbling block -- at least over the short term.
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Key Data Points
The market leader in a category no one really asked for
Looking further ahead shows that Apple -- as always -- is playing the long game. The Vision Pro's unrivaled capabilities set the device apart, giving Apple the leading technological position in an evolving space. If history is any indicator, Apple will move to dominate the market over time.
The iPhone maker is establishing its bona fides now as the early leader in an emerging field. The cost to manufacture this cutting-edge device will no doubt come down over time, allowing Apple to release a lower-cost version down the road, capturing more of the market.
Remember the snickers and off-color remarks made in connection with the release of the iPad? Apple had the last laugh, as the device quickly became the category leader, all but defining the tablet market and becoming the global market share leader for more than a decade -- a distinction it still holds today.
Apple had a similar experience in early 2015 with the release of the Apple Watch, which one commentator called "the market leader in a category no one really asked for." By early 2020, Apple Watch dominated the smart watch category and was selling more timepieces than the entire Swiss watch industry. Apple continues to dominate the competition, controlling 34% of the global market in 2022, as well as 60% of the total market revenue, according to market research firm Counterpoint Technology.
No get-rich-quick scheme
To be clear, the Vision Pro won't be a big revenue generator for Apple anytime soon. The rollout of this device will be a multiyear undertaking.
Furthermore, keep in mind that the iPhone brought in more than $205 billion last year, representing 52% of Apple's total revenue. Even the most bullish analyst expects the Vision Pro sales of just 1.5 million units next year, which would represent revenue of roughly $5.2 billion -- so even if it meets these lofty first-year estimates, it won't move the needle. It's important to remember that Apple is playing the long game and thinking in terms of years and decades, not months.
