Apple’s Vision Pro headset: Impressive, but niche

On Tuesday, analysts lauded Apple’s Vision Pro headset for its impressive technological advancements. However, they cautioned that widespread adoption of the $3,499 augmented reality (AR) headset may take a few years to materialize. Investors greeted the device with lukewarm enthusiasm, considering it Apple’s first new product line since the launch of the Apple Watch nearly a decade ago.

CEO Tim Cook expressed his vision for the headset to revolutionize “spatial computing,” where digital content seamlessly merges with the physical world, much like the iPhone transformed the mobile industry. Analysts, however, believe that this vision may take time to unfold due to several factors.

The primary challenge lies in the high price tag, which is likely to deter a significant portion of potential buyers. Additionally, the product’s use cases beyond entertainment remain relatively limited in the nascent AR market. Analysts noted the absence of a “killer app” and pointed out practical concerns such as a bulky external battery pack.

While Apple showcased its ability to conceptualize the role of AR technology for consumers and presented the Vision Pro as a sleek and differentiated offering, analysts agreed that the headset is not yet ready for mass consumption. They also highlighted potential competition from Meta Platforms, the market leader, whose Meta Quest 2 retails at $299 and the recently unveiled Meta Quest 3 is priced at $499.

Although Apple is expected to present a significant challenge to Meta, analysts believe that it may not surpass Meta in terms of shipments. However, they noted that Apple’s success does not necessarily depend on dominating shipments but rather on becoming the most prominent player in the market, as it has done in the smartphone industry by commanding a majority of profitability despite a smaller market share.

Projections for Vision Pro shipments vary widely, with estimates ranging from 200,000 units in the first year, according to KGI Securities analyst Christine Wang, to over 1 million units predicted by Credit Suisse. For comparison, Apple sold over 1.4 million iPhones in the first year, generating $630 million in sales.

The uncertainty surrounding Vision Pro sales resulted in a 0.7% decline in Apple’s shares on Tuesday. Nonetheless, analysts view Apple’s foray into AR as a “no lose” situation. If the headset drives a platform shift from mobile to AR, Apple has positioned itself to extend its leadership from the smartphone era into this new epoch. Conversely, if VR/AR fails to gain traction, Apple’s dominance in the smartphone market will likely persist as the primary consumer device.