VRAR Planet
The legendary Apple AR headset may soon be available. Guo Mingxi, an influential analyst at TF International Securities familiar with Apple's supply chain, recently reported that Apple may announce the device at the developer conference in the spring or June of this year, and officially launch it in the second half of this year. Bloomberg News also reported over the weekend that Apple plans to launch the product this spring.
No matter when it is released, Apple's AR headset will have a difficult road ahead. Augmented reality continues to plague well-funded tech startups and the industry's best-known companies. Microsoft, Facebook, and Google have all tried the technology seriously, but so far they have not achieved the desired results. Facebook has even changed its name to Meta Platforms and is dedicated to building the so-called metaverse, and augmented reality and virtual reality are key technologies in the metaverse. But the company reportedly canceled a commercial AR glasses project last year, and its VR efforts are draining its deep pockets. In the first three quarters of 2022, Meta's Reality Labs (covering VR business) unit incurred an operating loss of $9.4 billion.
Apple's advantages in product design should make it possible to launch a headset that is truly accepted by the masses. But even for a company like Apple, it's still a daunting task. The company has been working on the technology since at least 2016, when CEO Tim Cook said on an earnings call that Apple is "taking augmented reality very seriously in the long run." ”
But Apple's efforts for so long may still only produce a product with limited appeal. The Information recently reported that Apple suppliers are working early on to produce the product, which resembles a pair of ski goggles and requires a wired connection to an external battery pack that users must also wear. And it seems that the key features of this product are still in development. In a series of tweets last week, Kuo said Apple's AR headset was not keeping up with the plan "due to problems with mechanical component drop testing and lack of software development tools." He had predicted that Apple would launch the product this month.
Apple is usually willing to take the time to get things done. Still, given the underperformance of Apple's other businesses, the company may feel some additional pressure to launch new products this year. Wall Street now expects iPhone revenue to be flat in the fiscal year ending September 2022 from last year, in part because pandemic conditions in China have disrupted operations at the company's manufacturing plants in China. Meanwhile, Apple's services revenue is expected to grow by single digits for the first time, while Mac revenue is expected to decline 5% after three consecutive years of double-digit growth triggered by the pandemic. FactSet estimates that Apple's total hardware revenue — which still accounts for 80 percent of Apple's total business — is expected to grow just 1 percent this fiscal year.
Apple's AR devices must hit the ground up to help it break the $400 billion mark in revenue this year. Market research firm IDC expects total sales of VR and AR headsets to reach around 12.9 million units in 2023, a significant increase of 32% from last year's forecast. Even assuming Apple can take half of the share and sell for twice the current market-leading Meta Quest 2, this will only increase Apple's total revenue this year by less than 1%.
Even if Apple shows off the augmented reality device this spring, it won't be until it reaches consumers. Apple usually likes to release products closer to launch, but for new device lines that require outsourcing, this time stretches out. The first iPhone began showing up 6 months before the retail launch, compared to 8 months before the Apple Watch.
Considering the current lack of killer products in the AR field, if Apple's AR products disappoint, it means that even the world's most well-capitalized design studio will not be able to crack the code of mass adoption of AR technology. This blow is too big.
Text/R Starman