Why Apple’s headset could become first VR success story

on Monday, apple It is expected to release in 2014 the first new flagship product line since the Apple Watch.

During WWDC, Apple’s software-focused developer conference, it may unveil its first mixed reality headset and, increasingly, according to analyst research and media reports, vague reference from Apple itself.

According to reports, the headset will be equipped with a high-definition screen in front of the user’s eyes. But it also lets users see and interact with the real world through a high-performance camera mounted on the device, a trick sometimes called “passthrough” or “mixed reality.”

As the broader VR industry sifts through so-called trough of disillusionment.

“While the downturn in the AR/VR market and fleeting enthusiasm for the Metaverse creates a challenging backdrop, it’s instructive to remember that Apple has invented entirely new categories that have the potential to disrupt existing markets and create entirely new ones,” said Bank of America analyst Wamsi Mohan wrote in a recent report.

When Facebook changed its name to Meta in October 2021, it drew attention to virtual reality and “Metaverse” headsets.But since then, sales of existing VR headsets have been poor, and usage has been consistent. worseand the expected explosion of successful VR software companies Did not happen.

Augmented reality, a related technology that displays computer graphics through expensive, specialized transparent lenses, has also failed to flourish.Announced in 2014, Microsoft’s Hololens had a high-profile deal to make headsets for the U.S. Army, but more recently stand stillThe most high-profile AR startup, Magic Leap, has changed management and shifted its focus from making consumer-facing gaming devices to developing tools for a small segment of the industry.

Apple’s headset is expected to be more powerful than what’s out there — even the current $6,500 VR headset. Each eye is expected to feature a 4K-resolution screen and a powerful Apple-designed chip, according to TFI Securities analyst Ming-Chi Kuo.

It can also be expensive, retailing for as much as $3,000 and selling only a few hundred thousand units in its first year, according to a report from TD Cowen analyst Krish Sankar. By comparison, the Apple Watch sold millions in its first year.

But many in the industry believe Apple’s announcement will galvanize consumers and software developers and bring the technology closer to its ultimate promise: headphones you wear every day while conducting business, or a pair of lightweight glasses that help you contextualize information.

“It’s great to see other people getting into this business, especially Apple, and they don’t get in too early,” Magic Leap CEO Peggy Johnson told CNBC. “It’s a huge validation of what we’ve done so far, We welcome that because it’s also good for the ecosystem.”

Here’s why Apple can succeed where everyone else has failed:

Apple rarely invents something that hasn’t been done before. Instead, it takes existing ideas and improves them in key ways that make them more appealing to consumers.

Before the iPod, there were several hardware MP3 players on the market. Before the iPhone was released, BlackBerry combined wireless cellular Internet connectivity and a pocket computer into what was still called a “smartphone,” and other companies were building smartphones based on Microsoft’s Windows Mobile system. When Apple released the Apple Watch, a host of other smartwatches appeared on the market, chasing a concept that’s been featured in cartoons and science fiction for decades.

Historically, Apple has used its significant consumer brand and huge marketing budget to explain to consumers why they want its latest product.

“Apple has a level of trust and empowerment that no one else has, and they’ve earned it,” said Jarrett Webb, technical director at Argodesign, which develops mixed reality apps. “They have this leadership and this posture that can help define this new form of computing and give them confidence.”

The best example is At the original iPhone launch event. Steve Jobs, Apple’s founder and CEO at the time, described the new device as a combination of three things: an Internet communications device, an MP3 player, and a phone.

Additionally, Apple has approximately 34 million developers For current mobile phones. It’s a huge resource that Apple can encourage it to build a killer app that turns its headphones into a must-have.

Since 2016, Apple CEO Tim Cook started frequently When talking about the benefits of augmented reality, it’s often contrasted with the limitations of virtual reality.

Around the same time, Apple began acquiring several companies focused on specific technologies that could eventually be used in headphones.

• In 2013, it acquired Primesense, whose 3D camera sensors eventually became part of the foundation of FaceID, the company’s facial recognition system for iPhones and influenced the company’s current depth-sensing cameras.
• In 2015, it acquired Metaio, which develops AR software for mobile devices.
• In 2016, it acquired Flyby Media, which works on computer vision technology.
• In 2017, it acquired SensoMotoric Instruments, which develops core VR technology eye tracking, and Vrvrana, which develops VR headsets.
• In 2018, it acquired Akonia Holographics, which developed transparent lenses for AR glasses
• It acquired NextVR, which shoots video content for virtual reality, including sports events.

Apple has also begun releasing developer kits for augmented reality, including one called ARKit, which can use the iPhone’s hardware to create limited AR experiences on the phone, such as interacting with virtual pets or trying out digital furniture in a living room.

Apple now has the entire software library to perform the difficult tasks that a headset needs to be able to do to seamlessly integrate the real and virtual worlds.

• RealityKit allows developers to render graphics that match the real world.
• RoomPlan scans the rooms around the user.
• Animoji are 3D avatars that match the user’s facial expressions.
• Spatial Audio can make audio sound like it’s coming from somewhere other than just the user’s headphones.

One early thought was that the Apple Watch would become a fashion must-have. In the early days of the product, Apple spent a lot of time courting the fashion press and cultivating fashionistas in the product. Beyoncé was spotted wearing a gold Apple Watch model (with a never released band) before posting.

But once the Apple Watch was in the hands of users, Apple found that people were most interested in it as a fitness tracker. Subsequent releases de-emphasized the extravagant gold models, but introduced a version co-branded with Nike.

When Apple finally releases a new Apple Watch premium model, the Apple Watch Ultra, it’s touting the features a dedicated fitness tracker offers serious weekend warriors, like marathon battery life and a bigger screen.

Apple could do the same with its headphones. Even though the first one was expensive and didn’t sell well, Apple already has plans for future versions with lower prices and higher sales, According to Guo.

Analysts don’t expect Apple’s earbuds to be a significant revenue stream right away. But they believe Apple is tapping into a market that could one day be worth billions of dollars.

“By 2030, I believe the wearables/glasses space could be 10% of Apple’s sales (assuming they don’t release a car), similar to the size of the Mac and iPad business today,” said Gene Munster, founder of Deepwater Asset Management, in in email.