Apple is poised to enter the AR/VR market with a (very expensive) bang

Apple is expected to finally announce the release of a mixed-reality headset in early June at its annual Worldwide Developers Conference. (We aren’t holding our breath, though. A headset announcement was rumored to be on the docket in 2020, and then again last year, and again in January.)

The expected unveiling comes at a challenging time in the AR/VR market: Global shipments of AR/VR headsets declined in 2022, user penetration of AR/VR hardware is under 2%, and most employees aren’t interested in using it in the workplace. At the same time, the gaming industry is flourishing, and in 2023, AR/VR headset shipments are expected to tick up by 14%.

Meta’s Quest headsets dominate the somewhat sparse competitive landscape, but Apple doesn’t want to be left behind, Jitesh Ubrani, research manager for IDC’s worldwide mobile device trackers, said. A combination of strong consumer trust and an immense content ecosystem could position Apple to be more successful in its headset ambitions than its competitors, he added.

“I think it’s something [Apple] certainly need[s] to do now,” Ubrani said. “From a consumer perspective, no one really knows what’s going to be the killer app outside of gaming, and I think until you have a product in the market, it’s going to be tough for you to be able to see.”

Headset history

The consumer tech giant has reportedly been working on a headset since 2015. Despite CEO Tim Cook’s enthusiasm for augmented reality, Apple will likely release a VR or mixed-reality headset, which completely obscures a user’s vision and uses cameras to display the outside world, Ubrani said.

The headset is expected to retail for around $3,000 and has reportedly strayed from Cook’s original vision of low-profile eyeglasses toward something that “resembles a pair of ski goggles and requires a separate battery pack,” per Bloomberg.

Even with the hefty price tag, Apple’s headset is poised to make immense waves, Brad Quinton, an adjunct professor at the University of British Columbia and founder of Singulos Research, said.

“I think the impact will really be to legitimize the market,” Quinton said. “Most people are targeting their hardware and software toward enterprise and industrial-type applications,” he explained. “If Apple comes out with a headset, I think that will make a statement that there is a market for…consumer augmented reality.”

Apple’s next move may also help address the content problem facing the AR/VR industry, Ubrani said, pointing to the company’s 2020 acquisition of NextVR, a startup focused on sports content.

That could be a differentiator for Apple, Ubrani said. But its in-house content empire, which includes Apple TV+ and an immense array of games, also gives it an advantage, he added.

“They certainly have developer support to create, really, a treasure trove of content,” he said. “What’s to be seen is what rises to the top, or what really sticks with consumers.”

Reality check

Grant Anderson, a former Apple software engineer and CEO of AR gaming app Mirrorscape, said Apple’s anticipated release (which he referred to as “kind of the world’s worst-kept secret”) will likely knock Meta out of its top spot in headset sales.

But the bigger issue is consumer expectations that aren’t always aligned with hardware realities, Anderson said.

“What everybody wants is just a regular pair of Ray-Bans that you put on, it looks stylish, they have all-day battery life, and have all the bells and whistles,” he said. “That’s really, really hard.”

That challenge persists on the enterprise side of the industry, Quinton said. There’s “quite a big disconnect” between expectations at the executive level and what’s practical, he explained.

“The whole state of the industry is trying to figure out…that intersection between what people want and what’s actually technically feasible.”