Analyzing Apple's Strategy for a Cheaper Vision Pro Headset

Apple recently unveiled its highly anticipated AR headset, the Vision Pro, with a price tag of $3,500. While the device boasts cutting-edge technology and advanced functionalities, its high price has faced criticism from consumers and online commentators. This is despite the fact that the closest competitor, Microsoft, sells a Hololens 2 for $3500 that does few things that the Vision Pro can do.  In this article, we will delve into Apple's strategy for introducing a more affordable version of the Vision Pro headset, exploring the factors behind its pricing decisions and the potential compromises Apple might make to lower the cost.

Understanding Apple's Pricing and Consumer Feedback

The initial price of the Vision Pro headset has been a topic of contention among consumers and tech enthusiasts. Apple's argument for the high price is that the technology and functionality of the headset surpass other devices in the market. They may look similar but they could not be more different according to Apple product developers. And they are correct, these two devices do not do the same things. So comparing the Vision Pro to other devices like TVs and computers, and even the Quest 3, is misleading because the headset is designed for individual productivity and improving the computing, not the gaming, experience.. This has led to the perception that the price is disproportionate to the intended user experience.

With the introduction of the vision pro headset, Apple is implementing a two-product strategy in the VR market. The Vision Pro spatial computer targets consumers looking for an affordable VR experience without compromising on quality, while the vision one caters to those seeking a more premium VR experience. This strategy allows Apple to cater to different price points and consumer preferences, expanding its reach in the VR market.

What about the Competition?

The closest competitor is Meta and its continuation of the Quest Series that started with Oculus. The Meta Quest 3 will be much more powerful than the Quest 2 and is not exactly cheap at $499 and used mainly for VR gaming, not work or productivity.

We briefly compare them here.  As the Vision Pro represents a move toward truly mixed reality in real time, the Quest 3 does not come close to 1/7th of the capabilities or in sophistication of hardware so the price comparison is an apples to oranges one that's really difficult to make fairly. The Vision Pro blows away the Quest 3 (whose remaining features will be revealed in September by Meta) as far as bringing consumers closer to the metaverse we've all heard about but not seen it's hard to see how Meta Quest 3 is an innovation at all.

Apple's Considerations and Future Plans

Apple considered delaying the announcement of the Vision Pro's price to avoid negative headlines. However, the company ultimately revealed the price at the event. It is important to note that the high cost of the Vision Pro may be justified by the extensive research and development that went into the product. Apple aims to recoup its investment in developing the headset, making the current pricing crucial for the success of the device.

To address the concerns raised by consumers, Apple plans to release a cheaper model of the Vision Pro in the future. This move demonstrates Apple's commitment to making the technology more accessible to a wider audience. By reducing the cost, Apple aims to attract a broader customer base and expand the reach of its AR headset technology.

Potential Strategies for Lowering the Cost

To achieve a lower price point, Apple may need to compromise on certain features and components in the cheaper model of the Vision Pro headset. One possibility is the use of lower-quality components, such as screens and headband materials, which can help reduce manufacturing costs. Removing certain features like the 3D camera or internal audio with Apple Airpods may also contribute to cost reduction while still retaining essential functionalities like the external screen and eye- and hand-tracking system.

• Apple has debuted the Vision Pro headset at a price of $3,500.
  - Apple is working on a cheaper model of the headset to make it more accessible.
  - The high price of the Vision Pro has been criticized by consumers and online commentators. However, the comparison made to other devices like TVs and computers is seen as misleading because the Vision Pro is made for individual use. Apple's argument for the price point is that the technology and functionality of the headset surpass other devices.
• Apple considered delaying the announcement of the price to avoid negative headlines, but ultimately revealed it at the event (to gasps at the sticker price from those in attendance). Apple could have emphasized that the technology is expensive and priced accordingly to recoup its investment in developing the product.
• In the future, Apple plans to release a cheaper model of the headset, along with a second-generation Vision Pro. Apple may release the cheaper model by the end of 2025,
  - The cost of the Vision Pro is near the manufacturing cost, and Apple may reduce the price by using lower-quality components.
  - Apple may compromise on certain features for the cheaper model, such as using lower-quality screens, a simpler headband design, and removing certain features like the 3D camera.
  - The external screen and eye- and hand-tracking system are expected to be retained in the cheaper model.
• Tim Cook and other Apple executives have not publicly worn the Vision Pro, which suggests some reservations about its design and confidence.
  - Apple Store revenue varies depending on the location, with average revenue ranging from $40 million to over $100 million per year.
  - The company makes about 40% of its revenue from its own sales channels, including brick-and-mortar and online stores.

Apple's Timeline for the Cheaper Model

According to industry sources, Apple is planning to release the cheaper model of the Vision Pro headset by the end of 2025, approximately two years after the launch of the original Vision Pro. This timeline allows Apple to refine the technology and address any potential issues before introducing a more affordable version to the market.

The Future of VR: Apple's Vision Pro and Mixed Reality

Apple's vision pro headset marks the company's foray into the mixed reality (MR) space. While primarily focused on VR, the vision pro headset can seamlessly switch between augmented and virtual reality, thanks to its advanced technology and intuitive control system. This versatility positions Apple as a major player in the evolving MR landscape.

Executive Reservations and Market Revenue

Interestingly, Apple's CEO, Tim Cook, and other Apple executives have not publicly worn the Vision Pro headset. This might indicate some reservations about the device's design and confidence in its current state of development. However, it is important to note that this does not necessarily reflect the overall quality of the headset or its potential for success. It's way too early to declare victory or loss in this competition.

Key Takeaway: Apple is working on a cheaper version of its Vision Pro headset, which was initially priced at $3,500. The high price has received criticism, and Apple may reduce the cost by using lower-quality components and compromising on certain features. The company plans to release the cheaper model by the end of 2025 and is also developing a base model Vision One to sell in large numbers at a lower price. According to Apple, the expensive Vision Pros are not expected to sell in high number and they've planned accordingly: only 100,00 units are planned to be manufactured in the first round. Apple's concerns are not chiefly about the revenue from the Vision Pro but about creating a new disruptive product which may replace the need for an iPhone depending on the capabilities the more mainstream model will have when released.

A new series is being filmed in spatial 3D, like your own photos and video you take with the the headset, for AppleTV+ featuring giant monsters in "Legacy of Monsters: Monarch."

It is less than the time between movie releases, the flagship mixed reality product will have another join it. A lot can change about the technology in that time however. It a cheaper product is the solution that is certainly attainable. If the new headset could fill both or multiple roles of other Apple products they use already (if it obviates the need to buy a phone and/or a laptop) the cost makes a lot more sense. Both the Vision Pro and its cheaper base version (Vision One) will almost certainly come down in price as the technology grows.