Meta Platforms vs. Apple – Metaverse Debate

Apple is back to front but can easily flip.

• While the commentariat is impressed with Meta Platform’s new Orion AR device, it is also unusually critical of Apple which it thinks has made the wrong technical choice, but I suspect that Apple has got much more up its sleeve than everyone thinks.
• Although there appears to be a lot of debate surrounding how to implement The Metaverse, there is no disagreement that it needs to be made up of the real world and the virtual world blended together.
• This can be achieved by either overlaying the virtual world on top of the real world or the other way around.
• Meta has chosen the former which is technically very demanding while Apple has chosen the latter and Meta’s demonstration of Orion has reignited the debate about whether Apple has made the wrong choice.
• This is where I think the commentariat is not looking far enough ahead.
• When it comes to the mass market takeoff of The Metaverse, there is no doubt in my mind that overlaying the virtual world on top of the real world is the only way to do it.
• If users are going to live their digital lives in The Metaverse rather than on smartphones, they will need to stay in touch with reality rather than a representation of it.
• Overlaying the virtual world on top of the real will ensure that the resolution of reality will remain infinite with world-beating latency of 0ms.
• Hence, there is no doubt in my mind while Apple talks about AR being the only way to do The Metaverse, it has implemented it backwards which is a dead end.
• The commentariat agrees but where we differ is that I think that in a few generations from now, Apple will be in a position to flip its implementation on its ahead and move to implementing the virtual world on top of the real world.
• It will be able to do this reasonably easily as Apple has built two completely different systems that run independently of one another where one captures and interprets reality and the other creates the virtual world.
• Meta’s Orion has taken a similar approach, and the device uses a puck roughly the size of a smartphone to achieve its 100g weight.
• The system that interprets reality and the battery is in the glasses while the virtual world is processed and rendered on the puck and then wirelessly streamed to the glasses.
• Hence, it is very clear that the two worlds need to be created or detected separately and then interlaced together with the virtual world being overlayed via transparent lenses.
• The assumption is that the future roadmap for the Vision Pro is to remain a VR-based device, but I think that this is not the intent.
• Apple has a reputation for user experience and even now with Meta’s new product, the only way to deliver this today is to do it the way that Apple has.
• Once the technology is ready to deliver this quality of user experience with the virtual world being implemented on top of the real world, then I think Apple will be able to quickly flip its offering around.
• The fact that these are two independent systems will make it much easier to do this.
• I have long viewed the Vision Pro as an insurance policy against the demise of the smartphone rather than a statement of where Apple thinks the market is going and so I think Apple will change the Vision Pro to match what the market is demanding.
• Consequently, I don’t think that Apple has gone down a blind alley or taken or wrong turn but has merely produced a device with the best user experience using technology that is available today.
• It is also important to remember that the Meta Orion produces an inferior user experience and costs around $10,000 to make meaning that it is very far from being a commercially viable device.
• What Meta is looking for is something that offers at least as good or better in terms of user experience, weighs less and that it can sell for something closer to $1,000.
• Taken in this context, it is clear that Meta has very far to travel and so I see no need to change RFM’s current forecast of a viable Metaverse device much before 2026 or even later.
• Even from that point, and in an optimistic scenario, The Metaverse will take years to seize the digital life crown from the smartphone and so the iPhone business looks pretty safe for the foreseeable future and certainly for the usual investment horizon.
• That does not mean that I want to hold Apple shares as it remains expensive for a company struggling to show growth and so I would continue to look elsewhere.