Everyone knows two things about the metaverse: it’s very expensive and it’s rubbish.
Facebook’s all-in pivot to virtual reality in November 2021 has been mocked in every way Martingale capex strategy to his limb deficiency. Meta’s stock price surge — up nearly 200 percent from a November 2021 low — was AI hype and rediscovered cost discipline instead of establishing one $10 billion a year digital wastelandwhich today is only mentioned in the context of how much it distracts management.
Meta’s problem with VR was that people didn’t really want to wear hanging diving masks. Even the people who thought they didn’t: The company has sold about 20 million Quest headsets, but many, perhaps most, gather dust. The hope may have been to create all-consuming immersive worlds, but the only major VR successes to date have been novelties with short attention spans such as rhythm games And filth.
Now it’s Apple’s turn to play:
Apple unveiled its long-awaited “mixed reality” headset on Monday, in the highly anticipated launch of hardware products since Steve Jobs unveiled the iPad in 2010.
The gadget, called Vision Pro, will be available “early next year”. It combines virtual reality with augmented reality, superimposing digital images on top of the real world. Apple said it would sell for $3,499, even more than most analysts expected and nearly 12 times the price of Meta’s Quest 2, the best-selling VR headset.
We won’t bore you with the differences between Apple’s headset and the current Meta setup; it’s mostly about whether full-frame augmented reality will be more involved than sensory immersion, as the FT’s Patrick McGee discusses here. Instead, we’re trying to address the most pressing issue for shareholders: will anyone buy this thing?
Horizon Worlds is Meta’s borderland, a candy-colored realm of epilepsy warnings where the occasional dismembered torso floats past. Anyone who voluntarily spends their time here is by definition a hardcore VR user.
Apple may have ambitions to bring VR to the mainstream, but if the iProduct is better, it’s these early adopters who should be the easiest to convince.
When we visited Horizon Worlds on Tuesday it was the busiest room The Soapstone Comedy Clubwith 24 inhabitants.
In the back room, a man with a Sheffield accent was playing acoustic guitar covers of Air and Chris Isaac, while a very drunk American man was shouting encouragement. On stage, there was a free game show where network outages hampered the flow of questions. In both cases, users seemed to be having their own thing, so it felt rude to interrupt with vox pops.
A corner of Soapstone seemed more promising. A group of avatars stood in deep silence, occasionally muttering advice as a man apparently tried to lift his mute. However, it was a mistake to take off the headset to write down the names, because when we got back into the room, we found that they were all gone.
We finally managed to corner Angelbay, a woman from Texas who wasn’t much of a talker. Can you hear me? “Yes.” Did you see the launch of the Apple headset? “Yes.” What did you think? “I actually do not know.” Not you? “No.” Are you drunk? “Yes.”
Male avatars soon surrounded Angelbay, turning the conversation into banal small talk with a sloppy undertone. Our questions about technology adoption were ignored.
Jiople15, an English man living in Texas, was more talkative. He likes the look of Vision Pro, but laughed at the idea of paying $3,500. What is he willing to pay? “About $700.”
What does he hope will improve on current technology? “It’s augmented reality, like lenses for your eyes, so it will be better than tunnel vision with the Oculus. The black edges make it feel more like a game.” Already an Apple user? “Yes, my phone is an iPhone.” And how often do you currently use your Oculus? “About once a week.”
Apple’s prices also surprised analysts. JP Morgan had expected a launch price of $2k – $3k, but was won over by the “richness of features”. No handheld controller, premium build quality, all-in functionality and an Apple look and feel should be enough to support “modest” initial sales volumes of 100-200,000, it told customers this morning.
Importantly, we envision combining the above key highlights and promoting things like ‘presence’, an easy learning curve, and a feature-rich/comfortable device that addresses some of the biggest hurdles of existing AR/VR headsets on the market that have so far had limited consumer engagement with this device category. While Vision Pro may not generate significant volumes given its high price point, it could be the potential catalyst for the AR/VR market, as Apple has proven in the past that consumer engagement can drive willingness to pay higher prices and drive the focus of Apple is clearly hitting a home run on consumer engagement as opposed to volumes with the first device in what will admittedly be a multi-year journey for the platform.
Morgan Stanley is cautious, calling Vision Pro “a long-running show-me story until a great app is established.”
On the upside, we believe Apple has proven they have a vision of the role AR technology/spatial computing could play for consumers and commercial entities, which has evolved from the more basic days of mobile AR/VR apps in late 2010s. And in our opinion the Vision Pro looked sleek/differentiated compared to the incumbents and performed with clear potential. On the negative side, Apple’s vision still faces a handful of hurdles, meaning the Vision Pro isn’t ready for mass consumption, including the lack of a “killer app”, technology challenges (no one wants to carry an external battery pack), and a high price, which initially means that the Vision Pro will mainly be aimed at a more specialized TAM of professionals and pros.
Back in Soapstone, GLO_420 was more concise in its review. “It might be cool I guess, but $3,500! By no means. Tim Apple hahah…,” he said, then disappeared abruptly without so much as a blow.
