Apple Inc. already has an iPhone for your pocket, as well as a watch for your wrist.
On Monday, the tech giant unveiled its Vision Pro headset to launch you into virtual and augmented reality — at a starting cost of $ 3,499.
“It’s the first Apple product you look through, and not at,” Apple CEO Tim Cook said at the company’s Worldwide Developers Conference in Cupertino, Calif. during the unveiling of the device, which will become available for purchase next year.
The Vision Pro is controlled by the user’s eyes, voice and hands — but use your head before buying the headset, tech experts say.
“‘Who, besides the VR enthusiast, is going to buy the product?’”
There’s the steep cost, the brewing competition and big-picture economics that could complicate a decision to buy the high-tech gear.
“The VR enthusiast, I think, will be all in on the product announcement. But I think in a lot of ways, the success of these markets is measured by the mass adoption. Who, besides the VR enthusiast, is going to buy the product?” Ben Arnold, consumer technology analyst at Circana, a consumer research firm.
“We still have a lot of unknowns at this point,” he noted.
“The price of Apple’s VR headset is more than double the median monthly mortgage payment in the U.S.”
There are already commercial-grade virtual reality headsets on the market that cost thousands of dollars, and are used for activities like military simulations, said technology analyst Rob Enderle of the Enderle Group in Bend, Ore.
But how much are most people willing to pay? He said a $ 500 price tag is roughly as far as most consumers will venture for now — not $ 3,500. That, incidentally, is more than double the median monthly mortgage payment in the U.S.
“Consumers have not come around to the idea that a device at that price point is something they want,” Enderle said. “This is going to require a lot of marketing heavy lifting.”
Apple AAPL, -0.76% shares were off 0.76% at the close of trading Monday. The Dow Jones Industrial Average DJIA, -0.59% closed 0.6% lower while the S&P 500 SPX, -0.20% was off 0.2%
Consumers are seeking real experiences
If you’re not up to buying electronics now, you’re not alone.
Consumers are spending less on electronics compared to 2020 and 2021 during the early days of the COVID-19 pandemic, Arnold said. Paying for experiences and contending with inflation are two reasons why consumer electronics are a lower spending priority, he noted.
In the next few months, over one-third of consumers said they would cut back on electronics due to rising prices, according to Numerator, a consumer markets and analytics firm.
Consumer electronics sales revenue is down 13% from January to April, compared to the same point last year — and it’s down by 64% for VR headsets in specific, Arnold said.
“‘It’s an ugly time to come out with an expensive product.’”
Last year, U.S. consumers bought 4.2 million VR headsets, down from 5 million in 2021, according to Arnold. Through April, consumers have purchased 485,000 headsets, he noted. The people who own VR headsets tend to be younger, male and affluent, according to Circana’s research.
“It’s an ugly time to come out with an expensive product,” Enderle said.
Many young Americans already have a lot on their plate. The late summer resumption of student-loan payments is looming. Following a payment freeze of more than three years, the payments are slated to resume in September as one part of the political deal signed by President Joe Biden on Saturday to raise the federal government’s debt ceiling.
Meanwhile, the Supreme Court is deciding if it should block Biden’s order to cancel up to $ 20,000 in student debt for borrowers. The ruling is expected later this month, when the court’s current term concludes.
Retailers, including Best Buy BBY, , are going to feel the pinch indirectly because of the number of customers who will have less disposable income after their loans restart, JPMorgan JPM, -0.97% analysts said last week.
Meta and Sony have cheaper VR headsets
Heavy is the price of Vision Pro on a consumer’s head. Here’s some price comparisons to the $ 3,499 Apple device.
The cost of the Meta Quest Pro, Facebook owner Meta’s VR headset, has been reduced to $ 999 from $ 1,499. The Meta Quest 3 will have a $ 499 starting price when it debuts in the fall. Sony SONY, sells its PlayStation VR2 for $ 549.99.
Meta’s META, -0.45% quick moves into the consumer-facing virtual and augmented reality market has “set up a price point expectation around $ 500 bucks,” Enderle said.
There will be early-adopters who want the cachet to be the first to see Apple’s take on virtual and extended reality, Arnold said. “Talk about being the coolest person in your friend group, or the most popular person in the neighborhood. There’s some value to that,” he said.
“‘You need the developers to get excited about the market. It’s a huge cart and horse issue.’”
But Apple’s gear — by virtue of the word ‘pro’ — is signaling its focus on developers.
Arnold said the Vision Pro did look “very impressive.” The price might be high, but he noted there are also higher end MacBook Pro’s around that $ 3,500 price range. “I think it’s a developers edition, and we’ll probably see something a little more catered to everyday consumers.”
Enderle agrees. It’s possible that Apple will eventually introduce a cheaper version of the Vision Pro, he said. But developers will only create extended reality apps and features for the headset if they see a consumer market worth developing for.
“You need the developers to get excited about the market,” he said. “It’s a huge cart and horse issue.”
The Disney+ app DIS, -0.25% is going to be part of the Vision Pro from the start, according to Monday’s announcement.
But Enderle questions if such an arrangement combined with the features of the Vision Pro will be enough to pull in buyers in search of new content and experiences. “We really don’t have much of an ecosystem for this headset to drop into,” he said.