Apple (NASDAQ:AAPL) held its much anticipated Worldwide Developers Conference (WWDC) event, where it presented a series of new features and updates.
The biggest takeaway from the event was the unveiling of Apple Vision Pro, which marks the company’s entry into the augmented reality (AR) market. The Cupertino-based giant hopes the new product can reaccelerate top-line growth as it sees Vision Pro as a “revolutionary product.”
While Apple shares hit a fresh record high hours before the WWDC event started, the stock then retreated from highs during the presentation as investors are worried that the product’s price (starts at $3,499) could be a bit too much. Some initial projections had Apple pricing the company’s first virtual reality (VR) product at $2,999.
The Riskiest Bet In Years
While Apple also introduced a new MacBook, the key takeaway from the event was the presentation of Apple Vision Pro. CEO Tim Cook spent years building up the hype for Apple’s entry into the AR/VR space.
Back in 2016 in an interview with Washington Post, Cook first discussed Apple’s possible entry into the AR market. In the meantime, the launch has been delayed several times.
“I think AR [augmented reality] is extremely interesting and sort of a core technology. So, yes, it’s something we’re doing a lot of things behind that curtain that we talked about,” Cook said back in 2016.
For years, media outlets discussed Apple’s upcoming “risky bets” – from the VR to Apple Car. On Monday, Apple presented a new product that could ultimately prove to be a new “killer app” for the Cupertino-based tech behemoth.
“This is a day that’s been years in the making,” Cook said on Monday. “Blending digital content with the real world can unlock experiences like nothing we’ve ever seen.”
Disney CEO Bob Iger also appeared on stage to present a partnership with Apple as Disney+ content will be available on Vision Pro from day one. Needham & Company analysts argue that Apple should buy Disney to boost Vision Pro adoption and utilize the company’s massive IP portfolio.
“At $3,500, we expect adoption to be slow. However, if AAPL buys DIS, its storytellers could create unique content to drive consumer adoption of AAPL’s Vision Pro goggles, we believe,” analysts said in a client note.
While the new VR product could revolutionize the metaverse, it also bears a lot of risk for Apple.
According to International Data Corp., the sales of AR/VR products fell 21% to 8.6 million in 2022. Similarly, venture capital investments into VR startups fell 24% in 2022.
Last year, the WSJ reported that more than half of Meta Platforms’ Quest headsets – which start at $400 – aren’t in use six months after they are purchased.
Moreover, the $3,499 price could be an obstacle for many who would want to own the device, especially at a time of challenging economic uncertainty. The device, which allows users to interact with digital content in the physical space, won’t be available before 2024 when Apple is expected to ship a couple of hundred of thousand units.
Many companies failed to entice the public and investors with products in this space. Apple will be competing with companies like Meta Platforms, which has also been spending billions of dollars on building the metaverse family of apps in recent years.
“So many companies are dependent on Apple to announce this headset, it’s unbelievable,” said Inga Petryaevskaya, CEO of ShapesXR.
According to P&S Intelligence, the AR/VR market size is likely to hit $200 billion by 2023, growing at a rate of 24.2% from 2021 to 2030
Other WWDC Takeaways
Besides Apple Vision Pro, the biggest takeaway from Monday’s presentation was the new 15-inch MacBook Air powered by Apple-made M2 chips. The tech titan said its new laptop is just 11.5 mm thin while weighing only 3.3 pounds.
Apple also said the new MacBook Air’s battery can last for 18 hours. The price is also affordable – $1,299 for the basic version ($1,199 for education) – and better than expected as Apple hopes to increase its PC market share.
The company is likely to help reaccelerate Mac sales. For the January quarter, Apple reported $7.17 billion in revenue for its Mac unit, significantly lower than the expected $7.8 billion.
Elsewhere, Apple unveiled some new updates for iOS17 that should arrive latest this year. For instance, a new feature called “Live Voicemail” can transcribe a caller’s message in real-time.
iPad, Apple Watch, and AirPods also got some new updates. While Apple’s senior executive mentioned artificial intelligence (AI) several times, it is clear that Apple’s focus remains AR/VR and not so much AI – where Microsoft, Alphabet, and Nvidia are the biggest beneficiaries so far.
Summary
Apple unveiled its much-awaited MR headset Vision Pro yesterday, which will be available early next year at a higher-than-anticipated price of $3,499. Investors seem to be feeling a little cold after the event given very high expectations for the Apple Vision Pro.
Hence, we could see a deeper pullback in Apple shares given that they gained 38.2% year-to-date through Monday’s close.
Shane Neagle is the EIC of The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.
