Expectations Muted for Apple’s New Headset
Market expectations are usually high when Apple (AAPL) introduces a new product. However, with market attention now focused on anything related to artificial intelligence (AI), the release of Apple’s headset, the company’s first new product in eight years, has not stirred much excitement. Apple will unveil its headset on June 5, and projections for initial product sales are mixed.
When Apple unveiled the Apple Watch in 2015, the last time the company released a new product, expectations were high for the product’s uses and applications, especially in health care. However, Mahoney Asset Management said Apple’s new “headset isn’t dead on arrival, but we don’t think it’s very exciting for people who aren’t gamers.”
Apple is hoping its mixed reality headset will prompt consumers to use it for tasks currently done on an iPhone or Mac, such as playing games or browsing the Web. Some analysts are concerned about Apple’s absence thus far in the AI space. Apple CEO Cook said the company will add such technology to its products on a “very thoughtful basis.” However, Mahoney Asset Management said, “AI is going to transform businesses, and not only does Apple not have a dance partner in AI, but it also doesn’t seem like it is even at the AI dance.”
The market for virtual reality headsets has struggled to gain acceptance. Alphabet (GOOGL) failed to find customers for its “Google Glass” product, though it is working on a new version of augmented reality glasses. Meta Platforms (META) is a leader in the field with its Meta Quest product, although its digital world, the Metaverse, has yet to prove popular with users. In addition, Microsoft (MSFT) released the first version of its HoloLens in 2016, but it failed to catch on to gamers or other consumer applications.
Most analysts expect Apple to have only modest success with its new headset. Goldman Sachs said, “the VR/AR industry has proved to be largely disappointing to date,” and they estimate the headset could contribute $11 billion to $20 billion of annual revenue for Apple from fiscal 2024 through 2028. Of the $394 billion Apple made last fiscal year, the wearables and home and accessories business accounted for only $41 billion, or 11% of total revenue. Bank of America said “the lackluster uptake” of the VR/AR market and “transitory enthusiasm about the Metaverse create a backdrop of challenges.” However, “Apple’s track record in disrupting and creating markets cannot be discounted.”
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
