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Apple Vision Pro is on sale. XR requires confidence in the long term but patience in the short term.
2024-02-05
In 2023, the Chinese VR all-in-one headset market experienced significant fluctuations with a 67% y/y decline in sales. 
 

The virtual reality and augmented reality industries are still in the early exploration stages, characterized by high hardware complexity, long development cycles, and demanding requirements for hardware-software integration. Apple's new prototype product, the Apple Vision Pro, is positioned at a high price point of $3499, targeting developers and early adopters with a focus on building an application ecosystem and niche markets.

The Vision Pro boasts hardware and interaction features such as the M2+R1 dual-chip design, multiple cameras and sensors, high-performance display screens, as well as eye-tracking and gesture recognition technology, offering a relatively advanced immersive experience. Despite the limited initial market size, it is anticipated that in the next 3-5 years, as technology advances and the market matures, the industry will gradually enter a growth phase. Vision Pro has the potential to transition from a high-end prototype product to a device for a broader market.


The short-term development of the virtual reality and augmented reality industries requires a stronger strategic patience.

 

According to Sandalwood's China e-commerce market monitoring data, the sales of VR all-in-one headsets in the Chinese market experienced a y/y decline of 67% in 2023. The VR all-in-one headset market went through a roller-coaster-like change between 2022 and 2023. Meanwhile, the Apple Vision Pro started its sales in all Apple retail stores and the online Apple Store in the United States on February 2nd.


The categories within the virtual reality and augmented reality industries are still in their early exploratory stages. In the early phases, the key players who have gained significant sales and scale in these industries have predominantly been internet-based companies. In terms of business models, internet platforms, especially large-scale social media platforms, have pursued a "winner-takes-all" approach, aiming to cover as broad a user base as possible. In contrast, the hardware market is more diverse because it's challenging to quickly satisfy the diverse needs of different users with a single brand or product in the short term. This is a gradual process of diffusion.

Hardware development and iteration cycles are also much longer compared to software, which is quite different from the rapid iteration mechanisms and culture of internet companies. In 2023, the market experienced a noticeable cooling down, as the level of supply chain readiness and the maturity of product experiences did not reach the point where they could stimulate greater mainstream market demand.

Apple's strategy with the Apple Vision Pro is to first enhance the core performance of its prototype product to a relatively reliable level. Priced at $3499, it is significantly higher than the prices of Apple's mainstream devices, primarily targeting developers and early adopters to develop an application ecosystem and create niche markets. In the future, through technological iterations and supply chain optimization, Apple aims to further develop scalable products for mature markets. Although Vision Pro may not bring about a breakthrough in terms of massive scale in its early stages, it will undoubtedly be a focal product in 2024, opening up new avenues of growth for Apple.

 


Vision Pro elevates the hardware performance of both augmented reality and virtual reality to a relatively high level


Vision Pro incorporates a dual-chip design featuring M2+R1, along with 12 advanced cameras, 5 efficient sensors, and 6 sensitive microphones, ensuring an intelligent and interactive user experience. In terms of display technology, Vision Pro adopts a 1.4-inch, 23 million-pixel Micro OLED inner screen and a flexible OLED outer screen, complemented by high-performance 3P Pancake optical lenses, resulting in stunning visual effects. Additionally, the introduction of the Apple Immersive Video spatial audiovisual format brings innovative spatial video recording capabilities to iPhone 15 Pro series users, with these videos being presented on the Vision Pro with a 3D effect, enhancing the overall immersive experience for users.


Vision Pro's human-machine interaction breaks free from the constraints of physical devices, simultaneously minimizing the gap between the virtual and the real.


The interaction system of Vision Pro utilizes high-precision eye-tracking technology to accurately capture the user's gaze, combined with advanced gesture recognition technology to interpret the user's intentions accurately. This interactive mode, which combines eye tracking and gesture recognition, not only enhances the precision and efficiency of interaction but also makes the user experience smoother and more natural. Vision Pro achieves a new balance in the integration of virtual reality and augmented reality, providing immersive experiences while allowing natural interaction with the surrounding environment. This balance enhances user comfort and practicality while paving the way for new possibilities in the application of virtual reality technology in the future.


It is expected that within the next 3-5 years, the industry will begin to enter a growth phase.


Although Apple's innovations in the smartphone and tablet fields have demonstrated its potential market leadership capabilities, Vision Pro may still face the initial challenges of high pricing and a niche market. Achieving widespread adoption will require more time for development and maturity, involving factors such as technological advancements, cost reductions, and improved market acceptance. It is expected that after a market nurturing period of 2-3 years, as applications and content in areas like gaming, spatial video, productivity, and social interaction continue to diversify, Vision Pro has the potential to gradually transition from a high-end prototype product into a more comprehensive, practical, and affordable device. Apple's market entry will also encourage the participation of other manufacturers, collectively driving the development of the virtual reality and augmented reality industry, with expectations of the industry entering a growth phase within the next 3-5 years.


Please contact service@sandalwoodadvisors.com if you have interest in finding out more.

Disclaimer: The content and viewpoints expressed in this article are for reference purposes only and should not be construed as investment advice or recommendations. very investor should conduct thorough independent research and consult with professional investment advisors before making any investment decisions.
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