At its Worldwide Developers Conference (WWDC) event on 5 June 2023, Apple unveiled its much-anticipated Vision Pro AR/VR headset. Although this puts to bed years’ worth of rumors, speculations, and dreadful product renderings, attention will now turn to how Apple decides to proceed into the world of extended reality (XR), having made this important first step. Given its eye-watering price of $3,499, the headset is firmly aimed at developers and prosumers – and is set to go on sale in early 2024 via Apple's retail channels in US.

Apple has positioned the Vision Pro as a premium device that appeals to both consumers and professionals. It demonstrated a wide range of use cases at the WWDC keynote, including productivity, education, entertainment, and gaming. It also revealed novel user interface features, such as the ability to gradually switch between AR and VR using a dedicated digital crown, and even a function to let others around the user see their digital version ‘through’ the headset.

However, these alone will not be enough to shift millions of units; more compelling use cases and unique content will have to be created, not to mention lowering the lowered to make it attainable for more people. Apple is well-positioned to easily forge partnerships with the likes of Walt Disney to build up its new ecosystem. Additionally, Apple will lean on its army of dedicated app developers, who will now begin to invest resources and expand on the uses for the headset.

The design of the Vision Pro headset is expectedly very distinctive, but it remains to be seen how it performs in real-life scenarios in terms of comfort, ease of use, and battery life (which is limited to just two hours). If Apple effectively marries its appealing design with useful apps and functions, the Vision Pro will serve as an aspirational product not for just consumers, but also its competitors.

Apple has been able to disrupt markets as a latecomer – history could repeat in XR

Undoubtedly, parallels will be drawn between the impact of Apple’s late entrance into the smartwatch market and its entrance into XR. Up until the launch of the Apple Watch in 2015, smartwatches failed to resonate with the mass market, despite other companies before it offering technically capable devices. Apple was able to effectively blend existing smartwatch technologies, produce an attractive product, and utilize its brand’s marketing prowess to dominate the premium smartwatch segment.

Its tightly integrated ecosystem of devices and software is arguably Apple’s biggest strength, meaning Vision Pro’s users will be immediately greeted with familiar user interface, apps, and personal content such as contacts and photos. The ability to seamlessly switch from one Apple device to another will be key, especially given Vision Pro’s limited battery life. Over the past decade, Apple has also accumulated invaluable XR knowhow through internal R&D and acquisitions of nearly 10 known AR/VR companies – including Metaio (AR), SensoMotoric Instruments (eye-tracking), Vrvana (AR), and NextVR (VR).

Apple’s release of ARKit API in 2017 was the company’s first serious move in the XR space. For many years, Omdia has argued that mobile AR would serve as an important stepping-stone for this journey towards consumer adoption of AR smart glasses. ARKit API-enabled smartphone apps have paved the way for XR headsets, as this toolkit accelerated the development of smartphone-based AR. Many leading social, messaging, and shopping mobile apps have already integrated AR enhancements, which will now be easily adapted to a head-worn device form factor.

Apple’s XR entry will be a net positive for its competitors and the industry at large

Meta, Qualcomm, and others who have been making significant investments in XR will feel a sense of vindication for their activities in the past years, and will benefit from increased awareness and interest. Tech companies who have been on a fence about making new (or renewed) investments into XR will now be much more inclined to do so.

Given the Vision Pro’s price, its first-year sales are projected to be low. At $3,499, the headset is more than three times as expensive as its main rival AR/VR headset, the Meta Quest Pro, and more than ten times as expensive as the $299 Quest 2 – a device that is nearing 20 million lifetime sales. Meta will release the Quest 3 this autumn for $499, which will be less capable than Apple’s, but will offer passthrough AR features. Vision Pro and Meta’s headsets are addressing different customer bases due to the price points, but this competition is likely to heat up in the future, especially if cheaper Vision variants are introduced.

The Vision Pro will certainly benefit from Apple’s strong brand loyalty and marketing power. It will leverage its retail network and online presence to showcase the headset’s features and capabilities – including hands-on in-store demonstrations. Combined with a lot of buzz and word-of-mouth among early adopters and influencers, it will go a long way to educate the broader market about the capabilities of AR and VR devices.

Underpowered gaming content suggests Apple’s early priorities lie elsewhere

Over 100 Apple Arcade games will be playable on the Vision Pro, in addition to a commitment to bring more iOS games and apps thanks to a partnership with Unity. Gaming has consistently been the low-hanging fruit for VR headset makers in the consumer space. But as Meta has found out, there is a limit to how many gamers can be persuaded to buy and use a headset just for this purpose. Apple is therefore attempting to cast a wide net, and appeal to a much bigger audience.

Aside from ‘traditional’ mobile games being played on a virtual large flat-screen display with a PlayStation 5 controller, Apple didn’t showcase any immersive AR or VR game being played. This is likely due to the fact that the Vision Pro will not ship with any hand controllers, which are required for nearly all leading VR game titles to function. Therefore, game developers will need to experiment with the device’s hand and eye tracking before attempting to port existing games or creating new ones.

Since the iOS and iPadOS frameworks are also in the new VisionOS operating system, Apple claims that hundreds of thousands of hand and eye tracking-enabled apps will be available at launch. Popular games developed using the Unity engine will have full access to VisionOS features such as passthrough, native gesture control, and high-resolution rendering. Despite these efforts, it raises doubts if the Vision Pro will be positioned as a serious AR/VR gaming headset – at least initially.

Passthrough mixed reality is here to stay for a while

As Omdia predicted at the end of 2021 in our Trends to Watch report series, passthrough is now putting us on the road to true augmented reality. AR promises to bring the best aspects of VR into the real world, but headsets, or glasses, have underwhelmed with issues including size and weight, limited field of view and image transparency.

As previously seen in Meta Quest Pro, rather than using novel see-through optics, the non-transparent screen inside the headset displays the live view of external cameras for a fuller field of view and better image quality. The Vision Pro employs a similar approach to deliver a mixed reality experience. Before good enough see-through optics are developed, passthrough will serve as a stop-gap solution in the near future. Apple’s endgame, however, will remain lightweight glasses, with see-through optics which can deliver a similar experience offered by the Vison Pro.

Apple will hope Vision Pro is the new iPhone, not the new Apple TV

Although Apple is well-positioned to accomplish a major breakthrough in the XR category, it has to be noted that not all of its similar efforts disrupted markets or were hugely successful. Apple TV and HomePod are examples of Apple products which offered some innovations, but failed to resonate with the mass market, who opted for competing cheaper products.

Some may have been wishing for a more aggressive push into the XR space – hoping for the so-called “iPhone moment”. But it’s important to highlight that in 2007, the iPhone itself was met with a lot of skepticism, given its many limitations. It wasn’t until several generations and improvements later when the device clicked with the mass consumer market.

The reality is that Apple’s core revenue-generating businesses are not under immediate threat and entering XR was not driven by these concerns. This leads Omdia to believe that Apple will take a measured approach moving forward, ensuring that the Vision Pro slots smoothly into its ecosystem.

Appendix

Author

George Jijiashvili, Senior Principal Analyst, Games

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