Apple – Failure to launch.

Apple’s incremental reality

• The new reality of the Metaverse appears to have caused Apple to delay its AR headset and although the media still expects it to release a VR-like device this year, I continue to think that there is only downside and no upside in releasing any VR or AR devices before 2025.
• Apple also updated its Mac lineup by updating them to new variants of the M2 processor which sport improvements in the 20% – 30% range over their predecessors indicating that silicon-based improvements are slowly grinding to a halt.
• Superimposing the virtual world on top of the real one is much more difficult technically despite some good progress I saw at CES, and so it makes complete sense that Apple would delay its AR device.
• What makes no sense at all is the idea that Apple will release anything for the Metaverse this year where sentiment is currently in the dumps and its economic relevance is virtually zero.
• Apple is in a very different position than it was in 2007 in that it could take huge chances on launching a new category without putting an existing profit stream at risk.
• It also has a radically different management style compared to 15 years ago with the current crew being very risk-averse.
• If Apple launches a new segment, gets it wrong and a competitor takes over then its digital ecosystem juggernaut is at risk of going the way of the Dodo, which adds another dimension of difficulty when it comes to decision-making.
• Time spent in the Metaverse is approximately 0.01% of the time spent with smartphones meaning that the upside of launching a product this year is minimal.
• Furthermore, the technology to produce a decent user experience remains some years away despite billions of dollars in investments meaning that any device launched in 2023 would most likely fall short of the very high standards that Apple sets for itself in the user experience.
• Taking all of these factors together supports the idea that there is no reason for Apple to launch a device much before 2025 or 2026 but that will not stop wild speculation in the media.
• This is a similar situation to the silliness that surrounds the idea of Apple launching an electric vehicle.
• For over 7 years the media has wildly speculated that Apple was just about to launch a car, going silent when nothing happens and going around the circle again when the idea pops up again.
• I am certain that Apple has built a vehicle in the same way that Qualcomm has built a vehicle and it has done so in order to understand the vehicle and test it to work out what the best play for Apple is in this segment.
• Apple has also built all sorts of Metaverse devices which leads to leaks and then wild speculation, but I am far from convinced that it makes sense to launch any of them given the limited return and the risks involved.
• At the same time, Apple’s new M2 chip variants and Mac releases have gone by with barely a murmur as these were widely expected.
• As good as these devices are, what is relevant is that the speed of improvement over older versions is slowing down indicating that silicon’s ability to continually deliver rapid improvement in performance is grinding to a halt.
• This means that the real opportunity for performance improvements lies with Intel which has everything to prove and with Apple Silicon competitors like MediaTek and Qualcomm who have a lot of ground to make up.
• Qualcomm in particular is working flat out to come up with an M-series equivalent and devices are expected to hit the market in 2024.
• I continue to remain pretty ambivalent to Apple and large US technology in general given that it has not fallen anything like enough for it to be considered value.
• Value is to be found in the Chinese technology sector which is roundly hated by the market, very cheap and is still not pricing in an economic rebound that is certain to come once China has gotten past the current Covid wave.