Zuckerberg’s VR Vision Validated By Apple’s Vision Pro Pullback

(Bloomberg Opinion) -- As Apple Inc. prepared to introduce its Vision Pro headset a year ago, the worry at Meta Platforms Inc. was that the hardware geniuses in Cupertino were about to unveil a breakthrough in mixed reality, some new take on a computing platform that Chief Executive Officer Mark Zuckerberg had been trying to crack for more than a decade.

But once the public saw what Apple had come up with, there was relief. Apple’s entrance into mixed reality validated Zuckerberg’s own dizzying expenditure. And “the good news,” he wrote in a memo to staff, “is that there’s no kind of magical solutions that they have to any of the constraints on laws of physics that our teams haven’t already explored.”

Later, in an Instagram video, he was even more confident. Not only was his device cheaper than Apple’s, he said, but he felt it was better at the “vast majority” of use cases for mixed-reality headsets. Apple’s trade-offs — a heavy device, a cumbersome tether and a price tag seven times that of Meta’s Quest 3 — weren’t worth it. His cheaper, lighter offerings make more sense to consumers.

As time goes on, Zuckerberg’s instincts appear to have been spot on. Last week, The Information reported that Apple was scaling back on developing the next high-end version of the Vision Pro and would instead focus on a more “affordable” model to be released by the end of 2025. “The pullback comes as analysts and supply chain partners have flagged slowing sales of the $3,500 device,” reporters Wayne Ma and Qianer Liu wrote. 

This weekend, Bloomberg’s Mark Gurman fleshed out this strategic rethinking further. “This cheaper device, codenamed N107, is now the focus,” he confirmed. A more expensive device is still in the works but will not arrive until at least late 2026, Gurman wrote.

From a sales perspective, the first version of the Vision Pro was never intended to be a blockbuster device. Bloomberg Intelligence analysts estimate the device will drive $1 billion in total sales for fiscal 2024 — a drop in the bucket of the $388 billion projected revenue for the entire company. 

But that’s not to say Apple didn’t consider the device a significant addition to its product lineup. The Vision Pro was unveiled in the hallowed “one more thing” slot at the company’s World Wide Developers Conference (WWDC) in 2023, and its US release was as considerable a publicity effort as any other. CEO Tim Cook sat down for an interview and photo shoot in Vanity Fair, wearing the headset at his desk like an executive from the future. (I wonder how many tasks he actually uses the Vision Pro for today.) Apple stores across the land were converted to accommodate Vision Pro fittings or tryouts. An international launch is slated to begin by the end of this month.

But the initial rush of attention has subsided, with dwindling viral footage of people wearing the device on the subway or while crossing the street. Many early adopters are posting on social media that they just haven’t found a use case that sees them picking up their Vision Pro every day or even every week. Some complain, as reviewers had warned, that it is too heavy to be comfortable for long periods. At $3,500, only the most dedicated Apple fans are handing over their money.

Meanwhile, investors are nonplussed; their attention is instead focused on Apple’s plans for artificial intelligence. Zuckerberg faces these dynamics, too. The jury is still out on the headset form factor, for sure, but Zuckerberg has positioned Meta most favorably through a mixture of foresight and stubbornness. The Meta Quest line is the best-selling VR headset in the world. Its ecosystem of games and applications is growing steadily, not unlike the early days of Microsoft Corp.’s Windows. 

The company also has a surprise hit on its hands: the $329 Ray-Ban Meta Smart Glasses. This device introduces lightweight AI functionality — you can ask, “What am I looking at?” or take pictures and videos — to a pair of actually fashionable sunglasses and has been a strong seller. Meta recently did a department reorganization to dedicate more resources to its development. 

Zuckerberg’s thesis is that these two products will eventually meet: high-end mixed reality in the lightweight and discreet form of regular sunglasses. That is years out, yes, but no company is closer than Meta. Apple’s effort at smart sunglasses likely won’t be seen until 2028, Gurman reported. Far from blowing Meta’s VR out of the water, as some had predicted before the Vision Pro’s debut, Apple is instead playing catch-up.

Hanging over all of this, for both companies, is Wall Street’s limited patience for any investment in anything other than AI. But here Zuckerberg has played a strong hand. Meta Ray-Ban’s AI functions help him spin the yarn that the billions in “Reality Labs” spending is also an investment in the Great AI Hope.

As Zuckerberg reminded investors recently, times of heavy investment at Meta have resulted in big gains down the line. Mixed reality is the riskiest bet to date and the butt of many jokes. Nevertheless, Zuckerberg’s intuition is so far holding up. To steal a phrase popular on social media: Let him cook.

More From Bloomberg Opinion’s Dave Lee:

• Finally, a New Apple Device Really Worth Talking About
• Meta Can Ride Apple’s Coattails to a Mixed-Reality Win
• If Apple Has Something Up Its Sleeve, Now’s the Time

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Dave Lee is Bloomberg Opinion's US technology columnist. He was previously a correspondent for the Financial Times and BBC News.

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