Has the metaverse finally arrived? Wait, are we still using that term?
With a spectacular list of failures over the years, it's logical to have a heavy dose of skepticism for augmented and virtual reality (AR and VR) products. From Google Glass to Magic Leap to Meta's Oculus division, tens of billions of dollars have gone into building computing goggles, with minimal returns to show for it. After Facebook changed its name to Meta (META -14.05%) in 2021 and said it was investing at least $10 billion a year into building AR and VR products, industry hype went into overdrive and the term "metaverse" became a household name.
But as we sit here in 2023, barely anyone uses Meta Oculus devices, Microsoft and Alphabet have paired back their research in these fields, and the term metaverse rarely gets brought up by public company executives.
But where all these other companies have failed, Apple (AAPL 0.41%) thinks it can succeed. Here's how the iPhone maker plans to disrupt the computing market yet again.
Apple's "Vision" for the future
Apple revealed its Vision Pro augmented reality device to the world this week, which looks like sleek skiing or snorkeling goggles. The device is mixed reality, meaning you can block out all vision to the outside world (VR) or see digital images on top of the real world (AR).
Unlike other computing goggles, the Vision Pro does not have physical controllers, but instead lets you control the device with your eyes, hands, and voice. The actual computer will have a 4k display for each eye, 12 cameras, and five sensors to help users seamlessly operate the system.
There are a lot of other features we don't need to get into, but suffice it to say Apple is releasing a piece of extremely advanced technology with this new Vision Pro concept.
All these features mean the device is not going to be cheap. As of now, Apple plans to launch the Vision Pro in 2024 at a price point of $3,500, which is much more expensive than the Oculus devices Meta sells. This indicates that -- at least with its first mixed-reality device -- Apple is going for a niche audience (software developers, technology enthusiasts, etc.) that are willing to pay thousands of dollars for computing hardware.
If any company is going to get consumer adoption, it will be Apple
Apple has plenty of advantages compared to competitors like Meta when it comes to convincing people to buy mixed-reality headsets.
First, it already has more than 1 billion users of its smartphone, tablet, and other computing devices, which are all tied to the same ecosystem of application services. This will make the value proposition of the Vision Pro much higher than a device maker that has to start at a blank slate with software services.
Second, Apple has a fantastic reputation among consumers for making easy-to-use computing hardware. This brand surplus should translate over to the mixed reality market.
But the key for Apple compared to any other hardware maker is its ability to sell premium (am I allowed to say overpriced?) hardware devices to its most ardent customers.
If 1 million people purchase a Vision Pro at its $3,500 price point, that equates to $3.5 billion in revenue for Apple, excluding any software add-ons. For reference, Meta is currently selling its mainstream Oculus device for just $300, which equates to only $300 million in sales for every 1 million units sold, and likely with negative unit economics.
This difference in price point will allow Apple to earn a positive return from hardware sales that it can reinvest into better future mixed-reality products. Meta, on the other hand, is losing money on every hardware sale, and will not make money from its entire mixed-reality division unless it somehow can drive $10 billion+ in software sales from a standing start.
My money is on Apple -- the company with decades of experience building computers -- to win this competition by a country mile.
But do consumers want computing goggles?
The biggest barrier for Apple in mixed reality is not competition, but whether people actually want these devices. Convincing people to wear strange-looking goggles for hours at a time is going to take a lot of work, and there's not much evidence anyone enjoys doing that at the moment.
Plenty of reporters said their heads hurt or they felt nauseous after using the Vision Pro for just 30 minutes. It looks like there are still major technical challenges in making a mixed-reality device seamless to use for the everyday person that even Apple hasn't solved yet.
The Vision line of devices could be Apple's next big product to propel its business to new heights this decade. It has a head start versus competitors like Meta, and loyal consumers around the globe. But it is still to be determined whether AR and VR products will make it to the mainstream.
