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Months after Apple announced a privacy change that threatened Facebook’s core advertising business, the social networking company rebranded to Meta and shifted its focus to virtual reality.
Now, less than two years later, Apple could endanger Meta’s business there as well.
Apple (AAPL) on Monday unveiled its mixed reality headset, the Vision Pro, as part of one of its most ambitious product launches in years. Kicking off the company’s annual developer conference, Apple (AAPL) CEO Tim Cook touted the Vision Pro, a $3,499 device that combines virtual reality and augmented reality, as a “revolutionary product” with the potential to transform the way and Changing the way users interact with technology.
The new Apple product, set to launch early next year, puts Apple in direct competition with Meta, which has been making headsets for years.
On Thursday, just days before WWDC, Meta CEO Mark Zuckerberg tried to preempt Apple’s anticipated headset announcement by unveiling the Meta Quest 3. The new headset promises improved performance, new mixed reality features, and a slimmer, more comfortable design—all at a far lower price ($499).
Every era of consumer technology seems to be marked by heated rivalries. Apple’s competition with Microsoft (MSFT) was central to the early personal computing era. Apple’s late CEO Steve Jobs declared “thermonuclear war” on Google over smartphones. Now, Apple and Meta could be the defining rivalry of the VR/AR era.
The two companies had a strained relationship even before Apple entered the market. They competed for news and messaging capabilities, and their CEOs squabbled over privacy and app store policies. Last February, Meta said the company was likely to face a $10 billion loss in 2022 because Apple is restricting how apps like Facebook collect data for targeted advertising.
But the rivalry seems to be on a new level.
Josh Edelson/AFP/Getty Images
Apple unveiled its first-ever virtual reality headset on Monday, challenging Facebook owner Meta in a market that hasn’t yet found widespread consumer acceptance.
Meta has been the dominant player in the headset market so far. But virtual and augmented reality remain an emerging market with little adoption by mainstream consumers. The Wall Street Journal reported last year that Meta had just 200,000 active users on Horizon Worlds, its VR socializing app. And by 2023, IDC estimates that the entire market will ship just 10.1 million AR/VR headsets worldwide, far fewer than the tens of millions of iPhones Apple sells each quarter.
Analysts at Morgan Stanley called Apple’s Vision Pro a “lunar project” after its announcement on Monday, saying the product has “the potential to become Apple’s next computing platform” but the company has “a lot to prove” before the headset launches next year comes onto the market.
“We’re always excited when more people join us in building the future,” Sheeva Slovan, spokeswoman for Meta’s Reality Labs division, said in a statement to CNN.
Apple and Meta could end up competing not just over who can convince consumers to choose their product, but whether either of them can even convince millions of customers to embrace this new wave of technology decide.
Apple seems to have the upper hand in many ways, with its existing loyal customer base of more than two billion devices, impressive hardware qualities, and access to hundreds of stores where consumers can potentially try out the device.
“Everything up to that moment felt kind of like a prelude to me preparing for the moment when Apple would bring this into the public consciousness and let people know, hey, these technologies exist in reality, this isn’t just a gimmick,” Eric Alexander, founder of VR music experience app Soundscape, told CNN after Apple’s announcement.
The iPhone maker also appears to be marketing its device differently. Apple didn’t focus on the term “virtual reality,” nor did it show legless, disembodied avatars living in a virtual world like Meta originally did. Instead, Apple exploited the headset’s potential to integrate much more seamlessly into users’ real lives through augmented reality, a technology that can overlay virtual objects over live real-world video.
“I don’t think Apple sees itself competing with Meta,” said Julie Ask, principal analyst at Forrester. Zuckerberg is “fully immersed in this virtual world, and that’s not what Apple is about.” Apple says, “We don’t think people want to be disconnected from the real world … we want to improve the world in which they live.” the consumers are.”
The Quest 3 headset that Meta unveiled last week is also a mixed reality headset with AR capabilities, so it’s likely Meta will converge on Apple’s approach in the future. However, a demo video posted by Zuckerberg on Instagram seems to indicate that the device is still largely geared toward gaming.
From Meta
Meta unveiled its new Quest 3 headset days ahead of Apple’s Vision Pro announcement.
Many analysts say the biggest hurdle to consumer adoption of mixed reality headsets is ensuring a wide range of potential use cases and experiences are available on the devices.
While Meta has introduced features that allow users to play games, explore virtual worlds, watch YouTube videos, exercise, chat with friends, and more, it has yet to convince most consumers that the device is worth it.
Apple’s announcement at WWDC appears aimed at ensuring that the large developer base in its ecosystem will help create enticing new experiences for the device ahead of its launch.
Developing new AR and VR apps requires significant investment, not to mention hands-on experience with a device, Alexander said. As such, it may take a while for a wide range of experiences to be available for the Vision Pro. The lack of controllers and other accessories could also make it difficult for developers to create certain types of apps, such as games, for the new device.
Still, Apple touted features from Disney like Disney+ and gaming company Unity at Monday’s event, which will be available on the device from launch, in addition to the iPhone maker’s existing services.
Apple’s Vision One “isn’t a device that I buy and think, ‘Oh, now I have to buy content,'” Forrester’s Ask said. “This is a device that when I buy it has a very intuitive interface… it’s a place where I can watch my Apple TV and watch movies and all of that stuff. It’s not like, ‘Oh, I bought this device now, what do I do with it?’”
DA Davidson analyst Tom Forte compared the Vision Pro’s launch to the post-Blackberry launch of the iPhone, an unfavorable comparison that would likely make Zuckerberg grin. (Forte noted that Meta’s headset is less likely to fade into obscurity like the Blackberry eventually did.)
“Blackberry proved there was a market for smartphones and built a dominant position, but what didn’t really nail it were the apps,” Forte said, adding that the iPhone introduced the idea of having a number of different use cases to offer a device. “In some ways, it’s like iPhone, where we need to see how the ecosystem evolves over time to make that happen.”
However, should Apple succeed in driving widespread consumer adoption of mixed reality headsets, Meta could still benefit from the expansion since it’s the budget choice, Forte said.
Meta stock edged up Tuesday after Apple’s announcement.
