Apple’s Bold Gamble with Apple Vision Pro — A Smart Move or a Risky Misstep
What happened?
If you haven’t heard already, on June 5th Apple took the world by storm when it announced its first-ever ‘spatial computer’ with the Vision Pro priced at a whopping $3499, what would arguably be its most ambitious launch since the iPad in 2010 and that too in the middle of an AI revolution frenzy.
AR/VR headsets once hailed as revolutionary, have failed to gain widespread appeal beyond gaming and specialized industries. Even industry pioneers like Google, who launched the Glass device in 2012, had to abandon their consumer ambitions and refocus on industrial use before ultimately discontinuing the product. Similarly, Microsoft’s HoloLens AR headset, introduced in 2016, hasn’t managed to make a significant impact, leading the company to reassure its commitment to the device through blog posts. It’s evident that these headsets have struggled to captivate mainstream audiences, leaving companies grappling with unmet expectations.
But here’s the intriguing twist: Why play this move in the midst of an AI revolution? Is it a calculated strategic move or a response to Meta’s metaverse revolution?
Meta, known for its pioneering role in the VR realm, has been at the forefront of the recent trend. Last year, Meta’s Reality Labs reported a staggering loss of $13.7 billion in the VR and AR space. Now, with Apple’s Vision Pro announcement, is this trend about to revive and take the world by storm once again?
Why is it surprising?
1. Known for waiting things out
Vision Pro is the first new major product Apple has unveiled since the Apple watch in 2014. Since then, it’s only been modifications or improvements to the already existing product lines.
Apple has a brilliant strategy: they take already popular products, improve them significantly, and leave us wanting more. They’re masters at enhancing existing solutions that keep us hooked and eagerly awaiting their next move.
Usually, Apple likes to wait until a product gains mass adoption before swooping in, as they did with the iPod and the iPhone. Even with the Apple watch, when they entered the market they were tapping into a market that had many competitors already. It is very unlike Apple to enter a relatively new and struggling market.
2. Market Declining
The AR/VR market has hit a bit of a rough patch. According to renowned analyst Ming-Chi Kuo, some of the biggest bets in VR have left much to be desired, with sales falling short of expectations —
- Sony has trimmed production plans for the highly anticipated PS VR2 by about 20 percent
- Meta’s Quest Pro struggles to make a dent with just 300,000 units shipped
- Pico’s shipments in 2022 fell over 40 percent below projections.
In simpler terms, the impressive PSVR 2 from Sony didn’t quite capture the hearts of gamers as hoped, the Meta Quest Pro barely made a ripple compared to the wildly successful Quest 2, and even ByteDance-owned Pico faced its fair share of challenges.
To add fuel to the fire, signs have emerged that high-end VR might not be gaining the traction it needs. Meta had to slash the Quest Pro’s price from $1,500 to $1,000 just months after its launch. With all this uncertainty, the question lingers: Can AR/VR headsets become the next superstar in consumer electronics?
3. But, where’s the AI?
We’re right in the thick of the AI revolution. Ever since OpenAI’s ChatGPT made its grand entrance back in November, it’s become nearly impossible to have a five-minute tech conversation without bringing up the term “artificial intelligence”. But here’s what’s surprising: How in the world did Apple manage to deliver a two-hour keynote without even uttering the words “generative AI”?
Now, if we take a look at the top dogs in the tech industry, you’ll find that the next 15 or so in line have all hopped on the AI bandwagon, each with their own well-laid plans to ride the AI trend. Microsoft and Alphabet are leading the pack with their chatbots and grand schemes of integrating AI features into their applications. They’re really going all-in!
On the other hand, let’s talk about Apple’s virtual assistant, Siri. It’s been nearly 12 years since Apple first introduced her to the world. However, her growth seems to have hit a bit of a roadblock. Sure, she’s handy for making calls or shooting off texts while you’re cruising down the road, but when it comes to generating code or drafting documents, Siri falls short. It’s a whole different ballgame now with ChatGPT, Bing, and Bard taking the spotlight.
After Apple’s big event, Wired Magazine came out with a bold headline: “Apple ghosts the generative AI revolution!” It’s like Apple went AWOL while everyone else was raving about AI.
Marketing Positioning
Global shipments of AR/VR headsets declined 54.4% year over year in Q1 2023, according to new data from the IDC Worldwide Quarterly Augmented and Virtual Reality Headset Tracker. — Business Insider
For years, the VR industry has battled to be taken seriously, primarily viewed by consumers as a medium for casual gaming rather than an integral part of their everyday lives. Despite the grand ambitions of Meta (formerly Facebook) with its Meta Quest headsets and the vision of the metaverse, widespread commercial success has proven elusive. Meta continues to bleed billions of dollars annually due to its hefty investment in technology.
Sales of VR headsets have also been lackluster, especially as consumers grapple with the soaring cost of living. According to research group NPD Group, U.S. sales of VR headsets dipped by 2% in 2022, amounting to $1.1 billion.
Let’s look at how Vision Pro is doing against the industry leader: Meta’s Quest Pro
The thing is Apple’s Vision Pro has not been advertised as a VR/AR headset, rather it’s more like a computer that can be worn on the head and operated with eye and hand gestures. In Apple’s keynote, they emphasized the fact that the Vision Pro is going to revolutionize the spatial computing space. However, even though they’re not exactly the same thing, there are a lot of fundamental use cases that overlap and Apple’s headset tops Meta’s in quite a few: screen quality, computing power, ecosystem integration, etc. Apple’s new headset does several things that no other headset does, including eye tracking and hand tracking. It also has FaceTime and the ecosystem allowing the Mac display to pop up.
Apple’s Vision Pro is an impressive product. But at the end of the day, this is not a product for the masses, but rather for Apple fans or hobbyists (unlike Meta’s). Apple initially expected to sell one million units of the Vision Pro at $3,499 each, bringing in $3.49 billion. However, they have revised their sales expectations to 150,000 units, resulting in an estimated revenue of $524.8 million. In comparison, Meta’s Meta Quest 2 has sold over 20 million units. Apple’s adjustment may reflect concerns about the Vision Pro’s high price and adoption potential.
What could their strategy be?
The question arises, what was Apple thinking when they launched this product? What could be their strategy? I don’t have a definite answer but here are some of my theories —
It’s way better
After watching a lot of videos on Youtube, I realized that it’s not anything like what’s already out there in the market. Apple, while announcing the product, didn’t use the word AR/VR even once, instead, they called it a revolutionary spatial computer. It’s different and can’t be compared to any of the “so-called” competitors. There may be a lot of fundamental use cases that would be overlapping but the device’s ability to capture and create content — a missing piece from existing devices in the market and the killer gesture controls land it in another league altogether. It’s basically a computer you can strap to your face and whoever’s used it till now is completely in awe of the device’s capability.
Apple today unveiled Apple Vision Pro, a revolutionary spatial computer that seamlessly blends digital content with the physical world, while allowing users to stay present and connected to others. Vision Pro creates an infinite canvas for apps that scales beyond the boundaries of a traditional display and introduces a fully three-dimensional user interface controlled by the most natural and intuitive inputs possible — a user’s eyes, hands, and voice. Featuring visionOS, the world’s first spatial operating system, Vision Pro lets users interact with digital content in a way that feels like it is physically present in their space.
Let’s not underestimate Apple. After all, they’re the world’s first company to hit $3 trillion, so they’re definitely not ignorant when it comes to tech. They must have something up their sleeve.
They’ve been working with technology in this space for the past 10 years and have filed 5000 patents. The Apple Vision Pro is a culmination of all the research and learnings from their previous products. Apple researcher Stephen Crispin took to Twitter to talk about how he contributed to developing a way to detect users’ mental states in immersive experiences using body and brain data. When examining Apple’s patents for the Vision Pro headset, we come across a filing named ‘eye-gaze based biofeedback.’ This patent aims to assess a user’s level of attention while they are engaged with specific content. Another patent involved predicting what a user would click o before they actually did. This was accomplished by monitoring the user’s eye behavior and creating a biofeedback loop with their brain. So at this point, it’s basically mind-reading.
Anyone who’s tried the headset will agree that their experience was almost freaky and unreal. People might argue that Apple is behind in terms of tech trends but that’s only because they’re not joining the bandwagon with the other competitors and chanting jargon like “generative AI” in their keynotes. We’re discounting the fact that what they’ve developed is scarily close to mind-reading and miles ahead in terms of accuracy.
AI high ground
In a world where tech giants like Google and Facebook are often criticized for their data practices, Apple stands out as a champion of privacy and user protection. While these companies track our actions to predict our preferences, the data they rely on isn’t always accurate. For example, simply liking a post on Facebook can be misunderstood as genuine interest, showing the complexities of their data-driven approaches. Moreover, their reputation for making money from our personal data raises ethical concerns.
During the Facebook and Cambridge Analytica scandal five years ago, the notion of selling a computer that scans your retinas or an app that monitors your mental health would have been considered downright outrageous. But Apple is different. They prioritize user privacy and don’t sell our data to advertisers like other companies do. They’ve built a strong reputation for protecting our information rather than profiting from it. This means they can offer personalized services that require our data, like retina scanning or mental health tracking while assuring us that our privacy remains intact. That is why, in Apple we trust.
The headset has five sensors, six microphones, and 12 cameras therefore it generates a huge amount of data. This data helps understand individuals through their eyes, which provides deeper insights. By considering reactions visible in the eyes, Apple gains a more authentic understanding of users. With additional sensors in their ecosystem, such as the Apple Watch, a more complete portrait of a person’s passions, fears, and desires emerges. Apple’s emphasis on eye-tracking technology hints at its future plans. After all, eyes are windows to the souls.
Apple’s deep understanding of individuals, coupled with its impeccable track record in handling user data, positions them to develop the most human-like AI systems ever. While language models like ChatGPT gather extensive information, often from undisclosed sources, to mimic human output, Apple’s approach would already generate genuinely human-like output.
Apple’s Vision Pro is a game-changer in their AI strategy, and it’s a brilliant move. Despite the data generated by the headset, Apple has taken measures to protect user privacy. They encrypt and keep the optical data on the headset, without sharing it with Apple or third-party apps/websites. This approach extends to behavioral data collected by Health and the Journal app. Apple leaders surely know that the tradeoff for collecting and processing personal data is ensuring privacy. The Vision Pro is a sure-shot way to create a high-quality dataset for training models and enhance AI technology to be more personalized and human-like. Apple’s privacy reputation is maintained as a devices company using advanced proprietary chips like the R1, with apps processing data on the device rather than in the cloud. Long story short, they know how to keep their hands clean.
Safely entering the advertising market
Targeted ads leverage customer data to engage consumers in their preferred manner. With the upcoming headset generating massive amounts of data, Apple can safely enter the advertising arena, bypassing the privacy concerns that plague the industry. It’s a brilliant move that will revolutionize how we engage with ads, all while protecting our private information.
Apple has recently announced stricter rules for developers, making it more challenging for them to perform deIn its quest to prioritize user privacy, Apple has recently announced stricter rules for developers, making it more challenging for them to perform device fingerprinting for targeted advertising purposes. Additionally, developers are required to put in more effort to demonstrate how they collect user data.
You see, Apple has been quietly placing display ads not only on its App Store but also on its News and Stocks apps, with plans to extend these ads to other pages within the App Store. Their advertising unit has been steadily growing and gaining influence internally. In fact, according to a Bloomberg News report, Apple aims to escalate its annual ad revenue from $4 billion to double-digit billions within the next few years.
While Apple processes the data internally and doesn’t share it with third parties like Facebook does, it’s important to note that personal information still circulates within Apple’s vast internal ecosystem. Although Apple claims that three-quarters of its mobile users have personalized ads turned off, this leaves hundreds of millions of users whose personal details are leveraged by Apple to display ads in the App Store. As Apple’s ad business continues to expand, it’s likely that users will encounter these advertisements more frequently.
More human and less dorky
If you remember Meta’s meme-powerhouse of a launch video for the metaverse, then you will understand how the Vision Pro launch video is a significant improvement. Unlike Meta, Apple keeps it real and relatable for the average consumer, showing how VR seamlessly fits into everyday life. It doesn’t try to introduce big, dorky concepts like the metaverse.
Gaming: the most popular use case for AR/VR, has been limited to a five-second clip and we see a world where you can watch wraparound TV, effortlessly flip through precious family videos, and even attend work FaceTime sessions without budging an inch from your cozy couch. Apple even teamed up with Disney to drive home the point that this tech is as normal and mainstream as can be. It’s user-friendly and appealing to all.
They know that VR can make you feel isolated, unlike Meta with its legless avatars. Their headsets project a digital image of your eyes onto the screen, making sure you don’t alienate the real-world folks around you. Plus, anyone nearby automatically pops into view, so you’ll never miss a connection.
Amid worries about technology leading us into a dystopian nightmare, Apple played a smart move by adding a human touch to this device!
Specific target audience
The Vision Pro is an expensive gadget that is priced at a whopping $3499. The price tag reveals sent waves of shock through the masses. No normal user is ever going to spend that amount on a device no matter how “revolutionary” it may be.
Stepping beyond the user-friendly essence we discussed earlier, a remarkable shift takes center stage: it's potential for enterprises. Consider the fire department — a domain where this device could be used for immersive firefighting training.
The question arises, amongst everyday users who are even going to buy it? Well, some people. Not all, some people. Apple definitely knows what they’re doing when they priced the device and I think they don’t envision this device as a mass consumer device just yet. They want to build trust first as they’re stepping into a new space: immersive technology and consolidate their position.
Therefore the target audience for this device is tech enthusiasts, Apple superfans, business professionals, and so on. It is likely that the customer lifetime value (CLV) of Vision Pro buyers will be significant, considering that rich people are likely to use the product. If we take Apple’s typical customers into account, iOS users tend to spend more compared to Android users. According to a study, iPhone users typically have an average income ranging from $50k to $85k, while Android users earn between $35k and $60k. The CLV of an iPhone user is higher due to the higher financial barrier.
Iterations of the product for masses
Apple has realistic expectations regarding the sales figures of these devices in their current form, priced at $3,499 each and they know who their target audience is. After the initial launch, Apple can gather valuable insights about the device’s potential through real-world testing and feedback from users. Looking into the future, as costs decrease, technology advances, and a multitude of compelling applications become available, Apple’s headset is expected to gain significant traction.
Remember, the original iPhone didn’t immediately become a massive success. It took a price cut and the eventual introduction of the App Store to truly propel its popularity. Apple could employ a similar strategy with its headset. Even if the initial version is expensive and doesn’t sell well, Apple is already making plans for future iterations that will be priced more affordably and produced in higher volumes.
Final Verdict
Finally, to answer the big question — Is Apple’s launch of the Vision Pro a smart move or a risky misstep? Well, only time will tell. However, I can tell you this much, this isn’t Apple’s response to Meta’s AR/VR metaverse revolution and neither is trying to join the “generative AI” race (at least not in the way the others are).
This is a carefully calculated move that takes into account factors that an average consumer can see through right now. I remember watching the demo video for the headset and thinking to myself, “Who is going to buy that?”, but the thing is people thought the same thing for iPads. Apple knows that this product isn’t for the masses and has filed 5000 patents, and dedicated 10 years of research and development into this for a reason — they’re trying to tap into a new level of immersive technology which is close to mind-reading which when monetized effectively can generate revenue in ways other than just the sales of the product.
The real challenge lies in making this piece of technology so irresistible that an average consumer would want to try it out and maintain the hype around it. Well, I’m sure they can figure this out, after all, they’re not the world’s first $3 trillion company for no reason.
