Will Vision Pro sell well? What does Apple's foray into virtual reality mean for the Metaverse?

Meta Platforms' vision is to create a future where people work, play and communicate in virtual worlds. Thanks to Apple, plans to fully realize the Metaverse are officially starting to accelerate.

Last Monday, Apple unveiled Vision Pro, its highly anticipated mixed reality product, at its annual Worldwide Developers Conference. Expected to go on sale in 2024 for a hefty $3,499, the product will allow users to interact with content and popular iPhone apps without a controller.

Apple's launch comes at a time when interest in the Metaverse appears to have waned, and investors are pinning their hopes on the momentum of artificial intelligence.

It's been over a year and a half since betting on Meta Platforms. Confident in the bright future of the Metaverse, Facebook rebranded itself Meta in 2021 to better reflect its vision outside of social media.

At the time, CEO Mark Zuckerberg called the Metaverse "the next frontier" and likened it to a social network when the company first launched.

With Meta's big bet, brands like Walmart, Roblox and the popular casual dining chain Chipotle Mexican Grill quickly jumped on the bandwagon. Even luxury brand Gucci has entered the virtual world.

But that hype quickly died down as the economy slowed and tech stocks slumped, leaving many investors to question Meta's bet and whether the masses would buy into the vision.

A year and a half later, Apple's entry into the Metaverse may finally provide much-needed support to Meta's overly ambitious vision and lure once-skeptical investors back into the virtual world. "It's a huge endorsement," says Gene Munster of Deepwater Asset Management, "a step forward for the bigger picture of the metaverse."

So far this year, Meta has recovered from the 2022 sell-off, with shares up more than 120%. But those gains come mostly from the company's cost-cutting and AI focus, not the Metaverse.

Apple bets on the "Grand Slam"

For years, Wall Street has viewed Apple as a technology bellwether. It is one of the largest companies in the world, bigger than many overseas markets. It accounts for nearly 5.500% of the S&P 7's weighting, and its market capitalization closed Friday at around $US2.85 trillion.

Its shares hit an all-time high earlier this week before pulling back. "You're a company this big, and your new product can't just get by," said Paul Meeks, portfolio manager at Independent Solutions Wealth Management. "Everything you do has to be a grand slam to keep the stock valued."

Wall Street and investors are expecting a relatively muted market launch. JP Morgan's Samik Chatterjee said in a recent note that he doesn't expect a lot of sales, although he sees the headset as a "potential catalyst" for the industry in the long-term.

He writes that "Apple has proven in the past that consumer engagement can lead to a willingness to pay a premium, and Apple is clearly focusing on winning consumer engagement with the first device rather than chasing sales volume, although The development of this platform will take many years."

JoAnne Feeney of Advisors Capital management believes that the first edition is aimed at a smaller, wealthier and more ardent fan and developer market. She expects more new, more affordable models to follow in the future, similar to the trajectory of the iPhone.

The introduction of such a product, even at a high price, would incentivize the developer community to create apps for consumers and allow Apple to defer the cost of app creation, the portfolio manager said.

Deepwater's Munster said that Meta's headset launch will likely follow this path.

Challenging in a severe environment

The timing of Apple's entry into virtual reality is actually bad, as the ongoing recession and still-high inflation squeeze consumers' pocketbooks and discourage big-ticket purchases. Because the company and the metaverse vision are so reliant on consumer adoption, this creates a difficult situation, Meeks said.

But this background has the potential to be a major plus for Meta's Quest Pro. DA Davidson's Tom Forte emphasized in downgrading Apple that it is less than one-third the price.

While some worry that the hefty price tag might scare off most buyers, many investors share similarities with previous product launches. When the iPhone debuted in 2007, investors scoffed at the high sticker price, and a similar phenomenon happened during the Vision Pro's launch.

Fifteen years after the release of the iPhone, Apple has captured a major share of the global smartphone market and managed to get consumers willing to wait hours in line to get their hands on the latest model. The iPhone 14 starts at a whopping $799.

Apple may not always offer the best price point for consumers, but it always comes to market with the most top-notch design and it tends to launch later than its competitors because it has more to perfect, Feeney said. Function.

Bernstein's Toni Sacconaghi highlighted in a recent report that the company has a strong track record of creating new markets with its products, such as its entry into the smartphone, wireless and music player industries, growing the market tenfold in five years. "Overall, we believe AR adoption will be a long-term process and will have no financial impact on Apple in the short term," he said.

The original text was written by Samantha Subin, and the Chinese content was compiled by the MetaverseHub team. If you need to reprint, please contact us.