Virtual reality startups are pinning their hopes on the release of Apple’s long-awaited mixed reality headset to be the catalyst for a rebound in industry funding.
Expectations are growing that the iPhone maker will host its biggest hardware event since the 2010 iPad at its annual developer conference on Monday. The headset, likely to cost around $3,000, is expected to combine augmented reality technology, which conjures digital images into the real world, and virtual reality, immersing users in a game-like realm.
“Code for the New World,” Apple’s website read at Monday’s event, which many interpreted as a reference to the new computing platform.
Tipatat Chennavasin, co-founder of Venture Reality Fund, said he expects the Apple headset to include a new App Store — “the next ecosystem where millions of developers are selling to billions of people and making millions of dollars.” “.
For years, start-ups have been showing potential investors “hockey stick” charts to predict rapid revenue growth once Apple validates the technology with its own hardware, he added.
“For about six years, I’ve been seeing people at pitches promising Apple devices,” said Chennavasin, whose fund has backed 50 companies in the industry since 2016. Now that the promised headphone launch could be days away, market sentiment, he said, has reached “feverish levels.”
The hype that AR/VR technology will be the industry’s “next big thing” has been dashed over the past six months with the release of artificial intelligence tools led by ChatGPT, an OpenAI-powered chatbot that provides Human-like answers.
The AR/VR tech frenzy is so rife in late 2021 that Facebook is renaming it Meta, a sign of confidence in the company’s $10 billion-a-year avatar-filled “Metaverse” to develop.
The fanfare accompanying Apple’s expected launch prompted Meta to step in this week to show off its latest virtual reality headset, the Quest 3. CEO Mark Zuckerberg called it Meta’s “most powerful headset yet.” It will be available in the fall for $499.
But interest has waned as the focus has shifted from AR/VR to generative AI. Venture capital investment in AR and VR companies plunged 74% to $800 million in the six months through March compared with a year earlier, according to PitchBook data.
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“Metaverse is no longer a term anyone wants to use to get money,” said Tuong Nguyen, an analyst at Gartner. “But there is an idea that Apple can ride a wave for all boats.”
Ori Inbar, founder of early augmented reality fund Super Ventures, admits that “things are moving a lot slower than we all expected”. However, he added that Apple’s event could well be an “amazing” catalyst for “driving all the investments in hardware, software, tools and apps.”
Still, Inbar worries that the entire industry is pinning its hopes on the announcement.
Inga Petryaevskaya, CEO of collaborative VR modeling app ShapesXR, said morale across the industry has been “pretty low” lately.
“People are struggling to raise capital, businesses are slowing down investments in mixed reality, and Meta has had several rounds of layoffs,” Petryaevskaya said. “We’ve been through a couple of VR winters, but we need to show investors that we’re going to be producing 100 million headsets — not just 10 or 20 million — so they can understand our growth Potential. But it’s hard to show right now.”
Hopefully, Apple’s latest device will once again benefit other companies by creating services for headphones.
Launched in 2008, Apple’s App Store for mobile devices generated $30 million in sales in its first month. “Who knows, maybe at some point it’s going to be a billion-dollar market,” said Steve Jobs, the tech company’s late founder. Today, the App Store generates at least $70 billion in annual sales, Advertising-related revenues are even higher.
Unlike any other company, Apple can revive the industry by showing the way for others, said Chennavasin of the Venture Reality Fund. However, he warned that there are also concerns that Apple could become dominant in some areas and close competition due to its partially closed “walled garden” approach.
Additional reporting by George Hammond in San Francisco