While Apple may announce its AR/VR headset next week at its Worldwide Developers Conference (WWDC), Morgan Stanley analyst Erik Woodring’s sources within the Apple supply chain say the devices won’t ship in quantity until fall.
In his latest client note, the analyst makes and/or confirms some of the earlier speculation that’s been circulating as the Appleverse prepares for what it thinks will be a June 5 WWDC keynote reveal.
What Morgan Stanley expects
To recap Woodring’s expectations:
- The mixed-reality function will enable users to slip between AR and VR use of the device using pass-through cameras and a dial.
- In one mode you will see your surroundings, thanks to the devices built in cameras, while in the VR state you’ll enter a more immersive environment.
- Built-in sensors and cameras will track hand gestures and eye movements to control the device.
- The Home screen “is expected to mimic a 3D iPhone layout,” and contain familiar apps, including Messages, Mail, TV, FaceTime.
- You’ll also be able to run existing third-party apps.
- The analyst also reprises the expectation that when wearing the glasses, the outward facing display will represent your face and facial gestures, so you still have a natural-feeling experience when talking together.
New systems won’t ship until fall
But the real meat in the report is about when the device is expected to ship. Citing supply-chain sources, Woodring insists that production won’t begin until October, “with general availability” scheduled just ahead of the December holidays.
That’s entirely in line with current speculation, and also means Apple won’t announce any sales or revenue data concerning the new product until Q1 ’24.
The analyst echoes current speculation concerning the $3,000 price and likely sales plans. He tells us that his sources are preparing to build somewhere between 300,000 and 500,000 of the devices this year but expect to make 1.2 million of them in 2024.
His sources anticipate that once Apple introduces new versions of the initial product, sales will increase fast, reaching up to 4 million in 2025. They also suggest Apple’s gross margins are close to break even.
Apple Reality seems expensive
While Woodring thinks the cost of these devices will fall a little in the future, he also thinks price will be a challenge to mass-market adoption. To manage this, Apple will need to spice up next week’s product launch with a little magic, in the form of uniquely interesting usage cases and content partnerships.
“However, to overcome the steep price point (of $3k to start) and entice early adopters, we believe Apple will need to highlight entirely new mixed-reality applications/use cases, and ideally showcase exclusive content partnerships with leading developers to distance themselves from the incumbents,” the analyst wrote.
That tallies well with some of the other whispers currently in circulation concerning Apple’s product plans. No Man’s Sky creator Sean Murray has set a lot of tongues wagging among gamers with cryptic Tweets concerning his game and Apple.
If Apple gets the introduction right (which history shows it usually does), then the analyst expects the mixed-reality goggles will become a $20-$70 billion a year business for Apple, accounting for up to 18% of revenue. He also pointed out that the new devices will help stimulate additional take-up of Apple services.
All eyes on Apple Reality
Like most enterprise professionals, I’m waiting to see what Apple has to introduce next week. What new opportunities will it provide, and to what extent will the “Mac you can wear like sunglasses” transform the way we work in the longer term?
They say to understand the future you must look to the past, and just as the iPhone grew to fill a far more significant space than it was aimed at on launch, these devices are likely to become platforms for future evolution — so the v.1 device must be seen as the start of the journey and not the endgame.
Supporting the product introduction, Apple is also expected to introduce a hefty swath of new Macs and to announce new operating systems, services, and evolutions of existing services at the show. All the same, most attention will be firmly aimed at what’s next in Apple’s reality show.
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