When Tim Cook unveils Apple’s new ‘mixed reality’ headset later this year, he won’t just be showing off the tech giant’s latest shiny gadget.
The Apple boss will also ensure his legacy includes the launch of a next-generation hardware product that some at the company believe could one day rival the iPhone.
After seven years in development – twice that of the iPhone – the tech giant is widely expected to unveil a headset that offers both virtual and augmented reality by June.
There is a lot at stake for the chef. The headset will be the first of Apple’s new computing platform to be developed entirely under his direction. The iPhone, iPad, and even the Watch were originally designed by Apple co-founder Steve Jobs, who passed away in 2011.
Apple’s growth during Cook’s tenure has been staggering, taking its market cap from about $350 billion in 2011 to about $2.4 trillion today. But despite the dual launch of the Apple Watch in 2015 and AirPods a year later, which helped transform the accessories division into a $41 billion business, the company has been accused of iterating on previous ideas rather than breaking new ground go.
“You have a lot of pressure to charge the headset,” said a former Apple engineer who worked on product development. They’ve pushed back the launch every year in the past [few] Years.”
The launch timing has been a source of tension since the project began in early 2016, according to several people familiar with Apple’s internal discussions.
Apple’s operations team wanted to ship a “First Edition” product, a goggle-like headset that would allow users to watch immersive 3D videos, perform interactive exercises, or chat with realistic avatars via an overhauled FaceTime.
But Apple’s famous industrial design team warned against patience and wanted to wait until a lightweight version of augmented reality glasses became technically feasible. Most in the technology industry assume that this will take a few more years.
In his decision to go ahead with the debut this year, Cook sided with Chief Operating Officer Jeff Williams, according to two people familiar with Apple’s decision-making process, and overruled early objections from Apple’s designers to wait until the technology catches up with her vision. .
Just a few years ago, going against the wishes of Apple’s strong design team would have been unthinkable. But since the departure of its longtime leader Jony Ive in 2019, Apple’s structure has been streamlined, with design now following Williams.
Ive’s previous role as chief design officer was dual, with Evans Hanke for hardware and Alan Day for software. However, Hanke announced last October that she would be leaving in six months, which has contributed to a significant turnover rate in the department in recent years.
A former Apple engineer said that processes that have more control over product development are a “logical progression” of Apple’s path under Cook’s leadership. This person said that the best part of working at Apple was getting technical solutions to “crazy needs” from the design team, but that has changed in recent years.
Apple declined to comment.
Apple’s 12-strong executive team reflects how the company’s focus has shifted under the leadership of Cook, who was previously himself chief operating officer. Four of the 12 members rose through Apple’s ranks, while none succeeded Ive as chief design officer, overseeing development of the iMac, iPod, iPhone and Watch.
While the success or failure of the headset could have a big impact on Cook’s reputation as a consistent leader and Apple’s perceived ability to innovate, initial sales were likely a resounding failure.
Apple expects to sell just about 1 million units of its headphones in the first 12 months, according to two people familiar with the planning, fewer than the first generations of iPhone or Apple Watch in the year after their release.
The complex device, which will feature an array of cameras and high-resolution screens, is expected to cost around $3,000, triple the price of the Meta Quest Pro, which could limit its appeal.
Even generating $3 billion in annual revenue would be a small fraction of Apple’s roughly $400 billion in revenue last year.
The modest goal may give the impression that Apple expects failure. But Apple also has a long history of starting slowly as it moves into new product categories, and then breaking into the market within a few years. People close to Apple say that despite the modest target sales, the company is preparing a marketing campaign for the new product.
The market has historically underestimated the long-term impact of new products [Apple] Product/service launch,” Morgan Stanley analysts wrote in a note to clients earlier this month.
Apple typically sells more than 200 million iPhones a year and shipped an estimated 50 million watches last year. Selling 1 million headsets would account for about 10 percent of the fledgling virtual reality market, with CCS Insight estimating fewer than 10 million mixed reality headsets were sold worldwide last year.
Apple often uses a first-generation product to capture the interest of loyal Apple users and act as a catalyst for its broad developer community, said Amit Daryanani, an analyst at Evercore ISI.
“The product allows application developers to see how people are using the product and allows them to identify the most compelling development opportunities,” he said.
Last year, Cook said Apple had 34 million registered developers building apps for its devices. That should allow Apple to take a “if you build it, they come” approach and pave the way for more successful launches in quick succession.
“We’ve seen the iPhone thrive as the developer community grew and consumers embraced the power of apps,” Hanish Bhatia, associate director at Counterpoint, told the research group. “We expect similar growth dynamics for hockey sticks for the headphone category, with each generation improving on the previous generation.”