Apple’s Mixed Reality headset is a hedge against future disruption

What if Apple came out with its most important new product in years and the world yawned?

Apple’s expected unveiling of its Mixed Reality headset next week — a product that combines virtual reality with augmented reality, which overlays a digital world onto the real one — seems oddly out of time.

Generative AI has taken the tech industry by storm this year. It may represent the most important new way of interacting with computers in a long time, with an impact resulting from the iPhone’s multitouch screen 16 years ago.

It is not yet clear how this new form of AI will affect the smartphone domain dominated by Apple. ChatGPT’s text-heavy interactions are not suited for small screens and voice- and image-based applications of the technology for handsets, which are still under development. But for now, it’s become the tech industry’s foremost experimental focus, rather than the immersive world of VR.

Even without this explosion of interest in a different corner of the tech world, the headset Apple has been working on for years would still feel strangely outlandish to most consumers. At around $3,000, its high price will limit sales to a handful of enthusiasts as well as developers who want to build software for it. And the world isn’t asking for a cheap VR device (Meta’s Quest 2 will soon be selling for as low as $299). Most people who have tried virtual reality are amazed by the novelty, but have little desire to put on a headset when they want to work, play games or be entertained.

However, Apple’s venture into virtual and augmented reality should be judged against a broader set of objectives. It is best seen as a hedge against future technology disruption, a relatively minor but still useful extension of Apple’s existing universe of services and gadgets and a place holder for a technology revolution. Which is likely to take several years to play out.

Hedging against threats to Apple’s iPhone empire. It’s unclear whether the smartphone will lose its central place in people’s digital lives, but Apple clearly needs to bet more on the future.

The company formerly known as Facebook was the first to attempt the leap beyond smartphones with its acquisition of VR company Oculus nine years ago. It failed miserably: According to an estimate by Interactive Data Corporation, only 8.5 million VR headsets were sold last year. That still leaves the field open for Apple.

Even if sales are minimal for an extended period, the headset should be a moderately profitable addition to Apple’s line-up and another way to tie users more tightly into its expanding digital universe. With a suite of its own digital services like music, video content and game subscriptions, Apple will be well-positioned to develop the VR experiences needed to stimulate demand for its headsets.

The 34mn software developers registered to work on Apple’s devices represent an even more powerful asset. It’s unclear what the “killer apps” for VR will be, but the combined efforts of these guys make it likely they’ll come to Apple’s headsets first.

This has made most Wall Street analysts optimistic about the expected expansion of Apple’s hardware range. For example, Goldman Sachs estimates that sales of its headsets will reach $18 billion five years from now. It would give a useful lift to Apple’s division that sells wearables, home devices and accessories, and which generated $41 billion in sales last year. A wild card is the high-margin services sold with the headset: if consumers are willing to pay for the deeply immersive experiences that come with VR, software sales could eventually outpace the amount spent each year on hardware. is, as they do in the console. gaming market.

Ultimately, as a place holder in an important new category of technology, an Apple headset would be a statement of intent rather than an end in itself. No matter how impressive the technology behind the device is, it will still suffer from a problem common to all VR and AR headsets: most people don’t want to wear a bulky headset or enter a different digital realm to immerse themselves in the world. do not want to separate from

Until similar experiences can be worked into lightweight glasses — or even, one day, contact lenses that make the technology completely invisible — VR and AR are more likely to infiltrate everyday life like smartphones. Not likely. But if Apple does launch its headset next week, it will have taken the most important first step.

richard.waters@ft.com