The Lex Newsletter: Apple, VR and the $37 Billion Elephant in the Room

Dear reader,

Virtual reality is full of stop-starts. Five years ago, I tried out a headset from Miami start-up Magic Leap that made virtual pink flowers bloom on the carpet in front of me. Walls melted and black holes took their place. It was the most impressive display of VR I had ever seen. But the $2,300 headsets were too clunky and expensive to become mass-produced. Founder Rony Abovitz left the company. A few weeks ago, the Financial Times reported that Magic Leap was considering licensing its technology to Meta.

Meta, of course, threw its lot into VR two years ago and went so far as to change its name from Facebook. The company hopes that headset sales can ameliorate any drop in digital ad revenue. To date, operating losses attributed to the Reality Labs unit exceed $37 billion.

In the wake of every new VR announcement, the excitement isn’t translating into sales. Go back to 1995 when Nintendo released the Virtual Boy. Players peered into this handheld game console to experience the illusion of depth. More recently, manufacturers have launched 3D televisions that bring sporting events and movies to life. Lots of press, not much sales.

Is Apple going to change all that? Early reviews of the $3,500 Vision Pro VR headset, including the FT’s, praise the comfort of the glasses, the realism of the virtual effects, and the smooth eye and hand tracking technology.

It is clear that it is way ahead of the competition. But that doesn’t mean it will sell.

Lex sees the benefits of a future in which online interactions are not limited to 2D screens on smartphones and laptops. We agree that the future of VR lies in technology that shows the wearer real and virtual worlds. This is the so-called mixed or augmented reality.

But we’re not sure many people want to wear thick glasses over their eyes while they work or play. Especially if they have to tie themselves to a battery pack that only lasts two hours. Will people line up to pay nearly $3,500? And does Apple really expect to recoup VR research and development from the sale of this headset?

Maybe the company should have waited until it could release something more people would wear. To do away with external packages, it needs small batteries in headsets that do not overheat. Advanced displays that can display images on unobtrusive screens are also nice to have.

But if Apple sweated too long over the perfect product, there was a chance that Meta would bring in the best developers and conquer the market.

A few days before Apple released its headset, I drove with Patrick McGee from the FT to Santa Clara for the annual Augmented World Expo (AWE), a conference that brings together developers, founders, and other augmented reality enthusiasts. Magic Leap was there, as was Meta. In fact, every big name is Apple.

There was a lot of focus on the weight of hardware and the ability to interact with the real world and share common experiences. Many headsets looked like 1980s style sunglasses. Business use – for architects, surgeons and industrial repair – was common.

Haptics was also big news. This is the idea that to be fully immersed in VR, you need to feel and see virtual objects.

One of the weirdest gadgets I tried was a pair of gloves made by a Seattle-based start-up called HaptX. Attached to a headset and backpack, the gloves let you turn on a virtual tap and feel virtual water flowing over your hands. They follow the user’s movements, pump air and create resistance with cables to create sensations. It didn’t exactly feel like water, but there was a distinct difference between holding your hands under a virtual tap and pressing them down on a virtual kitchen counter.

The gloves are not, it must be said, customer friendly. They are bulky and heavy and covered with cables and pumps. One day, perhaps gamers will trade handheld controllers for gloves and companies will use them to perform remote tasks.

Those clunky gloves came to mind when I watched Apple’s VR headset presentation. People expect Apple to set a new standard for the industry when it releases a polished consumer product. This happened with smartphones, MP3 players and tablets.

But the $3,500 VR headsets are still a work in progress in some ways. They’re also not priced for the average Apple customer. For now, these goggles are only for early adopters who are intensely focused on new technology.

Elsewhere in tech

There have been a lot of of reviews of the Apple Vision Pro headsets this week. Besides the FTs, I liked it this one from The Atlantic incorporating the author’s conflicting feelings about the idea that goggles are the future of computers.

Two years into Lina Khan’s tenure at the Federal Trade Commission, Bloomberg takes stock of the “most aggressive trustbuster” in decades.

This Vanity Fair story about the TV series’ hapless writer’s room Lost takes place a few miles south of San Francisco in Los Angeles. It is a great insider account about what sounds like a very toxic workplace.

Enjoy the rest of your week,

Elaine Moore
Deputy head of Lex

lexfeedback@ft.com