The main competitor in the space is Meta Platforms Inc. (aka the artist formerly known as Facebook). CEO Mark Zuckerberg rebranded the company and pledged to spend $10 billion a year to bring his vision of a VR-enabled metaverse to life.
And there’s been some serious progress: Meta’s Quest 2 sales hit 8.7 million units in 2021, twice as many as the previous year, and the company has 80% of the market.
The Quest 2 sales figure is a drop in the handheld hardware bucket from what Apple has been able to move, however. According to Apple analyst Neil Cybart, the iPhone maker shipped over 100 million wearables (Apple Watch, AirPods and Beats headphones) in 2021, a 4x increase from 2017. neither are the 233 million iPhones it shipped last year.
No other company can move high-end consumer hardware at Apple’s scale.
In an article from last May, Cybart argues that Apple has built a “decades-long lead in wearable devices” by bringing together several advantages:
Custom silicon chips: Apple acquired semiconductor company PA Semi in 2008 for $278 million. Since then, the company has rolled out bespoke chips – often better than the alternatives – for its devices: A-Series (iPad, iPhone), M-Series (Mac), S-Series (Watch), W-Series (AirPods).
• Design-driven product developments: Apple has long been a design-driven company that tightly integrates design with engineering. When it comes to wearables, combining function and fashion is vital. Former Apple executive Jony Ive practically perfected this approach (according to The Information, Ive consulted Apple’s headset, including key details such as “battery, camera placement and ergonomics “).
• A ready ecosystem: A successful mixed reality headset will not be a standalone product, especially if it is meant to interact with the real world. Apple has already implemented solutions for audio (AirPods) and gesture (AssistiveTouch via the Apple Watch) requirements. We can expect fairly seamless integration with the headset.
The experience of building and shipping all of this wearable gear applies directly to helmets.
Unlike Meta, Apple has been mum on its actual investment in mixed reality, but we can assume it’s significant. According to Gurman, Apple has 2,000 employees in its technology development group working on both a mixed reality (AR/VR) headset and a standalone AR headset (unlike full-immersion VR, AR overlays “information and digital images above the real world”.
Apple has also made a number of AR-related acquisitions in recent years: AR software company Metaio (2015), computer vision company SensoMotoric Instruments (2017), hand-tracking technology start-up Vrvana (2017), AR glass technology startup Akonia Holographics (2018), and two AR content startups NextVR and Spaces (2020).
It’s not just hardware either. In another post, Cybart points out that Apple has rolled out features on the iPhone that can be used in a mixed reality world:
• Memojis: Animated digital representations (usually portraits) of an individual.
• FaceTime SharePlay: This feature lets you listen to music or watch movies with a friend (it “will have a big role to play in mixed reality as we consume content while simultaneously interacting with our friends and family “)
• Live text on photos: an important way to overlay real-world information
• Apple Maps: this feature allows navigation in augmented reality on the iPhone (and will obviously be useful in a helmet)
There’s a reason Apple isn’t messing around with its headphones: Consumer devices account for 80% of the company’s revenue, and it’s waiting for the next hit (by comparison, almost all of Meta’s sales are based on The advertisement).
One obstacle to Apple’s headset dominance is price: its headset could cost as much as $2,000 (a Quest 2 is available at $299 and $399).
There will also be competition from Microsoft Corp., Alphabet Inc., Snap and Sony Group Corp. But none of these companies can match Apple’s combination of design chops, cutting-edge hardware, and a huge existing ecosystem.
If Apple does end up winning the headphone battle, it wouldn’t be the first time the company has entered a category that someone else has launched – MP3 player, smartphone, smartwatch – and won it outright.
More from this writer and others on Bloomberg Opinion:
Google shares our data on a surprising scale: Parmy Olson
How useful is Big Tech in a Covid lockdown, really? : Shuli Ren
Apple’s revenue is a big step backwards for transparency: Tim Culpan
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Trung Phan is co-host of the Not Investment Advice podcast and writes the SatPost newsletter. He was previously the senior editor of Hustle, a tech newsletter.
More stories like this are available at bloomberg.com/opinion