On the eve of WWDC I’m going to share my hottest of takes: there’s a decent chance that Apple’s VR headset ends up being a product that Apple tries but will ultimately exit the market.
It’s not that I think Apple will do a bad job with this product; if anything I think their execution is going to set the bar for the product category, and like the iPhone I think that future VR headsets from competitors are going to magically start looking and feeling like whatever Apple makes.
I’m bearish on VR itself. Specifically, I’m bearish on VR as a mass market product.
It’s interesting to me that Apple is entering this market. They’re very conservative about entering new markets, even though I think there are dozens of product categories they could do great work in. Apple may be the only company capable of getting VR to properly take off as a technology for the masses.
But a lot needs to happen for VR to really take off. Naturally, it’s going to need to get smaller and much cheaper, but I am confident Apple will solve those tech problems in the coming years if VR shows traction. But VR needs two very big things to happen to succeed, and they are tall orders.
First, VR needs a killer app. There needs to be an application that’s 1) only possible with VR, 2) is so compelling that people will literally buy the hardware just to use the app, and 3) is widely popular. VR will probably need a few killer apps. But a killer app for VR hasn’t surfaced so far elsewhere. And VR headsets have been pretty competent for years now, to the point where it’s been possible for someone to build a killer app on them. But collectively, I don’t think anyone has ideas for something that’s any good, and I don’t think that a better headset product from Apple will fix that.
Second, we’d need to make the technological leap past these headsets and toward something like the glasses Apple is rumored to also be working on. If there’s a good enough app people will tolerate the relative clunkiness of a headset, but eventually people are going to want something that’s more portable and able to integrate into everyday life. Not only is that going to help make the device feel less dorky, it’s going to open up use cases that aren’t feasible with the headset. With today’s tech, even with Apple’s access to very fast custom chips, just the headset itself is proving to be challenging. It’s hard building something with the display quality Apple demands at the tiny size needed for a headset. Transforming from that to something that can project an image onto transparent glasses lenses feels like the kind of effort that’s at least a decade away.
Apple historically has been great at taking products that exist, have traction, and that incumbent companies suck at making, and then reinventing the entire category. They did this with computers multiple times. They did it with personal audio players. They did it with the smartphone. They did it with tablets. They kind of did it with the smartwatch.
With VR, Apple needs to kickstart the entire category. And it’s odd because VR isn’t brand new. Companies have been working on it for years, and a lot of VR tech is quite mature now.
The other thing: Apple’s a big, big company. Their minor products have the sales of Fortune 500 companies. Around 9.6 million VR headsets were sold in 2022. If Apple sold 10 million a year, all for $3000 a pop, it would still be a relatively small business for them. When you’re bringing in upwards of $400 billion in revenues annually, your threshold for success is remarkably high. Hell, given the years this product has spent in the R&D phase it will face an uphill battle recouping that investment.
I’m smart enough that I know not to bet against Apple. However, if they are announcing a VR headset tomorrow at WWDC (and at this point I have to assume they are, because if they weren’t they would have quietly leaked that to the press to tamp down expectations), then this will be Apple’s biggest and riskiest bet to date.
And even if Apple doesn’t succeed at this, I like them being bold like this.
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