Apple Vision Pro – Too Much, Too Early.

Apple loses very little with the Vision Pro.

• It looks like Apple is going to miss its 1m target for the Apple Vision Pro with commentary from suppliers indicating volumes of 200,000 – 400,000 but this is very far from the disaster that it would appear to be.
• Apple’s main assembler for the Vision Pro (see here) appears to be cutting back its manufacturing capacity for the Vision Pro to 400,000 while other suppliers are talking volumes down to less than 200,000.
• I suspect that the lower numbers are coming from suppliers who may be part of dual source arrangements and so I would be more inclined to trust the numbers from the assembler itself.
• At a very high level, this looks like a humiliation for Apple, but it is important to remember that this is a tiny market and shipping 400,000 units is still pretty good performance, especially at a price point of $3,500.
• Furthermore, I don’t think that this has very much to do with the device or the user experience but is really about the market not being ready to receive it.
• The Metaverse is the leading contender to take over from the smartphone as the place where users live their digital lives, but this is a trend 10 to 15 years in the making.
• The original smartphone was launched by Nokia in 2001 but it took 7 years for someone to figure out the right user experience and then another 8 for it to become the preeminent digital device.
• If this time is overlayed onto the Metaverse, then it is likely to be 2027 or 2028 before a really usable device is even launched and 2035 before there are real volumes in the market.
• All of this assumes that the interoperability issues with the Metaverse are solved and as of today, there is very little sign of this as everyone is busy developing their own silo that is incompatible with anyone else.
• With these kinds of caveats, it is far from certain whether The Metaverse will ever really take off which is why I have always argued that Apple was too early to come into the market now.
• However, the Vision Pro is not a serious attempt by Apple to grow its revenues but an insurance policy so that it has something ready to go just in case The Metaverse does take off.
• This is how Apple avoids Nokia’s fate and given how much better the Vision Pro is compared to anything else on the market, I think this insurance policy is in pretty good condition.
• Furthermore, Apple has undoubtedly learned an enormous amount from making the Vision Pro and has, in my opinion, created a foundation for how some of the problems will be solved.
• This is the reality perception system which is a standalone real-time system that is responsible for the perception of the user’s surroundings which are then overlayed on top of the virtual world to create the user experience.
• Assuming that one could make the system small enough, this could be used just as well in augmented reality which is where the future of The Metaverse lies if it is going to hit the mass market.
• Apple is the only one to create a standalone system which makes it much more expensive to make, but the difference in performance could easily mean that this is the route that everyone will end up taking.
• A downgrade to sales estimates of 60% always looks bad, but I am not sure that Apple has lost very much here as it looks to be a step ahead in Metaverse device design which will put it in a good position to migrate the iPhone to the Metaverse should this transition ever occur.
• I still think that Apple has a difficult year ahead with low growth and challenges in China to name two and so I remain ambivalent about owning the shares.