Apple’s Metaverse – Fool’s Errand

A cheaper Vision Pro makes less sense than the original.

• In response to poor sales, it appears that Apple is working on a cheaper version of the Vision Pro which will make even more horrible compromises than the original meaning that volumes will again be low leading to another disappointment.
• Furthermore, this obviates the entire reason that the Vision Prio exists which is to develop the best Metaverse technology just in case Metaverse devices take off and start to eat into smartphone shipments.
• At some point in time, the smartphone may suffer a “Nokia moment” when some other new form factor becomes a better place for users to live their Digital Lives.
• Almost the entirely of Apple’s business depends on the iPhone remaining at the centre of the digital ecosystem, and if it does not have the other product ready to go when the switch happens, it will suffer Nokia’s fate.
• I have long argued that this is what the Apple Vision Pro has always been about and that the number of devices that it sells is virtually irrelevant.
• The lacklustre shipments of Apple Vision Pro also argue strongly for my long-held view that Apple came to market way too early with a Metaverse device as the technology is not yet available that would allow a viable smartphone replacement to be created.
• RFM Research has long concluded that this will not come before 2025 to 2027 at the earliest and so there is very little point in coming to market with a device with the intent to make money before that time.
• Instead, the Vision Pro is an insurance policy that allows Apple to get its architecture developed such that when the right technology is available to make a marketable device, it can move quickly.
• A good example of this is the RealityOS system that Apple has developed that perceives the real world, hand gestures and the state of the user and overlays that over the virtual world.
• Apple made the right decision to develop this system completely separately from the system that creates the virtual world, and this puts it in an excellent position to create a device quickly when the market is ready for it.
• Following the slump of 2022, the Metaverse market has recovered somewhat but remains very far away from anything approaching the mainstream and it remains an irrelevant rounding error compared to smartphones.
• This is precisely why it makes no sense for Apple to seriously address this market now meaning that its efforts should be focused on fixing the technology issues and getting developers onside.
• A cheaper device that makes even more compromises but remains orders of magnitude more expensive than market leader Meta’s Quest 3 makes no sense at all in my opinion.
• Instead, I think Apple will continue to develop the technology, curate developers and wait for the right time to really go after this market.
• The right time may be never but even billions of dollars in expenditure are a rounding error in terms of the payout should the Metaverse take off and Apple successfully transfer the iPhone business to a Metaverse device of some description.
• This is why the Vision Pro remains an insurance policy and very little more.
• Apple has rallied recently on the idea that it is now an AI company which in my opinion has done nothing else other than make the valuation of a company struggling for growth look even more expensive.
• I would continue to look elsewhere.