Mark Zuckerberg should probably be shaking in his designer sneakers.

Although his company Meta Platforms (META -3.83%) has a trillion-dollar valuation, and its social media platforms are essentially a money-printing machine, he sees virtual reality (VR) and augmented reality (AR) as the future, and VR/AR wearables as key to dominating the future's metaverse.

But a powerful new competitor is entering the AR wearables arena, and it's probably the one company Zuckerberg was hoping not to face. Here's why Apple (AAPL -3.40%) might just eat his VR lunch.

 

Why wearables

Most of Meta Platforms' money comes from its popular suite of social media platforms, which includes Facebook, Instagram, and WhatsApp. Ads on these platforms brought in $88 billion in the first half of this year alone.

Wearables, not so much. Meta's Reality Labs unit, which makes the company's wearables, lost $4.5 billion in the most recent quarter.

However, Zuckerberg wants to ensure his trillion-dollar company stays relevant in the future, and so he's willing to keep pouring money into Reality Labs and his vision of the metaverse: a virtual world where people can meet, talk, shop, attend events, make financial transactions -- you name it.

Despite his big investments, though, Reality Labs' VR headsets like the Quest 3 are still niche products, primarily used for gaming. Even there, they haven't gained much traction. Meta's release of the $300 Quest 3S boosted headset holiday sales in 2024, but overall VR headset purchases declined again in 2024.

A new type of wearable

This stagnation in the headset market may be why Meta has introduced a new wearable product: AI-enhanced glasses in partnership with Ray-Ban. These smart devices look like chunky plastic-framed glasses featuring small front-mounted cameras. The first two generations offer video recording and small speakers above the ear that can respond to voice commands.

Last month, however, Zuckerberg introduced the latest device in the lineup: the Meta Ray-Ban Display, billed as "the most advanced AI glasses we've ever sold with a full-color, high-resolution display that's there when you want it and gone when you don't." The glasses come with a Meta Neural Band electromyographic (EMG) wristband that translates finger movements into commands for the glasses.

Although the Display is currently on sale at select Ray-Ban, Best Buy, and LensCrafters stores, there are only a handful of locations actually selling it. For example, there are none within 50 miles of Cincinnati, just two near Chicago, and one in greater Boston.

The Display also requires a 20-minute demo -- booked in advance -- plus the $799 purchase price (or more if you need prescription lenses). Recent reports indicate it's so popular that it's already sold out at many locations.

Right now, Meta has this fast-growing field all to itself. But all that could be about to change.

The giant slayer

According to Bloomberg News, Apple has shifted employees who were working on a cheaper, lighter version of the Vision Pro to working on wearable glasses. Supposedly, there are two versions of these glasses in development: one that pairs with the iPhone but has no display -- similar to most of Meta's Ray-Ban products -- and one that will have an on-lens screen like the newly unveiled Meta Ray-Ban Display. The former could be unveiled next year and go on sale in 2027, with the latter following in 2028.

Apple has a history of introducing its own version of existing devices and turning them into cash cows for its company. The MP3 player, the smartphone, and the tablet had all been available for years before Apple introduced its iPod, iPhone, and iPad, all of which turned into smash hits (and turned those existing products into has-beens). So even though Apple is late to the AI glasses party, that hasn't stopped it from dominating a product niche in the past.

Why Zuckerberg should worry

Zuckerberg has already poured a lot of money into VR/AR wearables and has plenty more money to invest in this area in the future. But ultimately, Meta is a social media company, not a device company. Prior to its acquisition of Oculus, and its marketing of the Quest headset, it had no experience developing or marketing any devices of any kind.

Apple, on the other hand, is arguably the most successful device maker in history, with a huge global network of parts suppliers, supply chains, retail outlets, and expertise in mass-manufacturing and mass-marketing the latest tech gadgets. Meta has none of these advantages.

And that's why Mark Zuckerberg should be very, very worried right now.