Longtime Apple analyst says XR headset risks flop

Longtime Apple analyst says XR headset risks flop

For years, Bloomberg's Apple journalist Mark Gurman has leaked information about Apple's upcoming XR headset. Now, on the eve of its possible unveiling, he's skeptical. Could Apple's headset suffer the same fate as Hololens and others?

Since the big hype around 2016, sales of VR, AR, and most recently XR headsets have fallen far short of projections. With Meta and Sony, two big companies are still investing in XR hardware, although Meta is clearly taking a bigger risk than Sony, which is "only" launching a VR headset as a console accessory with PSVR 2. Other big companies like Microsoft or Samsung seem to have pulled out or never really got in (e.g. LG).

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Some expect Apple's entry into the headset market to give the industry a boost. But why, really? Can Apple's hardware and software really be so far ahead of all previous attempts that suddenly everything XR struggled with, like too much weight and hassle and limited usage scenarios, will work?

In his latest newsletter "Power On", Gurman describes Apple's headset as a technological marvel that is clearly superior to anything currently on the market. However, he said it is still "impractical and too expensive for most consumers".

According to Gurman, the device lacks a killer app. Apple is hoping that immersive video, integration with other Apple products, and realistic Facetime VR calls will appeal to consumers. "I’m skeptical that the approach will be enough," Gurman writes.

He also said the headset doesn't offer a clear advantage over Apple's existing products. "The price is high, the uses are limited, and most consumers are wary."

So far, Apple has entered existing markets with a new but better product, he said. But AR and VR headsets are a new product category, and consumers have yet to be convinced to buy them. Gurman's conclusion: Apple's reputation as a "guaranteed hitmaker" is on the line.


Apple headset could be positioned as a preview of the computing future

Apple also expects demand to be muted. The company reportedly plans to produce only about one million devices in the first year. The iPhone, iPad, and even the often-criticized Apple Watch sold millions of units in the first weeks and months after their release.

Apple may be trying to position its first headset as a preview of future products, Gurman said. Apple's marketing department may have to move more carefully than usual to do that. The launch would have to be followed by rapid development and a price under $1,000 with longer battery life. Apple is already rumored to be working on a second, less expensive mixed reality headset.

Gurman sees a breakthrough comparable to the iPhone only with a true AR headset that offers the price, features, and battery life of an iPhone. However, Apple is said to have recently postponed this very headset indefinitely due to technical problems.

Some people in Apple's management, Gurman said, are convinced that the new product category has the long-term potential to replace the iPhone as the company's hallmark. The internal vision, he said, is for a headset that can be worn all day, everywhere, replacing laptops and smartphones. Apple's first mixed-reality headset could be a taste of that future, or, as Gurman fears, "a bomb."