Apple unveils Vision Pro mixed reality headset, but $3,499 price tag 'a tough pill to swallow', says analyst

Apple is officially entering the headset business, announcing its Vision Pro mixed reality headset at its annual WWDC event. There was a lot of excitement about the announcement, but the $3,499 price tag may turn away some potential buyers. Eric Abbruzzese, ABI Research Research Director, and Bob O'Donnell, TECHnalysis Research President & Chief Analyst join Yahoo Finance Live to break down some of the key themes and announcements from the event.

Video transcript

SEANA SMITH: After years in the making, Apple revealing its brand-new product for the first time. The huge product launch here in just about a decade since 2014. The Vision Pro is the first of its kind from the tech giant, rivaling Meta and some of the others that are already dominating this market. But could this be the headset that really is a game changer for VR?

Joining us now, we want to bring in Eric Abbruzzese, and we also want to bring in-- he's a research director at ABI, and Bob O'Donnell, the research president and chief analyst here at TECHanalysis. Great to have you both. Eric, let me-- or Bob, let me start with you, since you were at-- Bob, some of these things, you were at the event. What did you make of this headset starting there and whether or not this is going to be a game changer for this sector of devices?

BOB O'DONNELL: Well, it's a great question, Seana. I mean, it's clearly a very exciting device. And like you said, I think they did a good job of positioning it in a way that a lot of different people could see, oh, maybe I could use that. That is, of course, until the price point hit. And then that's obviously a big concern.

But-- but here's my bigger concern, because I've tracked and watched a lot of these AR and VR devices over the years. And Apple did a fantastic job of showing this Vision. But we've seen some of these things before with HoloLens and with Magic Leap and with the early Meta stuff. And the question really for me is, what's the long-term wearability of the device?

Because what I've found in the past-- and I even did some research on this before-- after about 30 or 40 minutes, a lot of people are like this is uncomfortable, and I don't really want to wear it. Of course, the battery pack only lasts two hours anyway. But that will be a big question is, what's the long-term comfort? And then does it deliver enough value for that $3,500 price point?

AKITA FUJITA: Yeah. Bob, it feels like comfort is really going to be key. I mean, I'm with you. I've tried all these headsets before. You get a bit of a headache after a while. But you know, my question to you is about the timing of all this, because there was so much anticipation around this. You could argue last year was the year of the metaverse, where everybody was talking about these headsets. Apple had to delay things a bit. Now, it feels like the enthusiasm has kind of died down. Can Apple in the launch today reinvigorate that?

BOB O'DONNELL: It's a great question, Akiko. And, you know, I think they're clearly going to. It's Apple, right? I mean, Apple creates categories. That's what they do. And they're famous for that. And I think you're going to see reinvigoration.

The other big question I have in terms of-- besides wearability is the experience. There's no controllers. It's only going to be your hands and your voice. And oh, by the way, the voice is Siri. And it's not a generative AI-powered Siri. It's just plain old Siri. So let's see what happens there, because, if that experience isn't great, then I think that could be a challenge as well.

SEANA SMITH: So Eric, I know you're paying close attention to the price and the target users. Enough to make this product successful?

ERIC ABBRUZZESE: Well, like Bob said, they did everything right that they could have. You know, if you do everything right, it has a cost in an early market like this with nascent technology. And we saw that cost. They had a fine line to tread between consumer and enterprise content. And I think they did a good job. They announced enterprise partnerships. And they announced consumer partnerships with Disney. So they've covered all their bases.

$3,500 is a tough pill to swallow for anybody. It creates a difficult go-to market, I think, if you're going up against similar headsets like Meta Quest Pro at $1,100 or Quest 2 and 3 that are $500 and under. Does it deliver three times or five times or 10 times the value of those? That's up for debate. I think a lot of people will probably think no. But Apple is very good at delivering unique content in a very seamless way.

And so I think the use cases and the user experience will probably be best in class. And it really leads to a future product. You know, I mentioned-- I noticed that Pro was already in the name. Usually, there's a regular device and then a pro. So I expect a regular non-pro device going forward that'll be a lower cost.

AKITA FUJITA: Yeah. I mean, and that's the next step. As we've seen, Apple do that with past product launches. To what extent, Eric, do you think enterprise is going to be the driver of all of this? Because, yes, you're always going to have Apple enthusiasts who are willing to shell out the money, but not everybody can afford $3,500.

ERIC ABBRUZZESE: Right. And $3,500 is enough for-- not a lot of enterprises are going to afford it either. So it's a really challenging price point. But even still, it's 100% going to be enterprise is driving it first. There's some developer, back-end support that I liked hearing about. It is Worldwide Developers Conference, so that was as expected. And that early developer ecosystem combined with some enterprise trials, you know, it won't ship 20 million units in enterprise. But it'll certainly ship some units. There is tons of hype and anticipation at Augmented World Expo. I had the pleasure of being at last week.

So there's definitely interest. I think that interest will maintain even at $3,500. It just needs hampered expectations around how many shipments will actually go through.

SEANA SMITH: Bob, with Apple aiming at AR, is that going to help Meta really maintain the leadership role it does have right now when it comes to the VR headsets? It's maybe it won't be as big of a competitor as we thought this product could potentially be?

BOB O'DONNELL: Well, potentially. But here's the thing, Seana, I mean, VR has always been more of a niche audience. And it's great for gaming and things like that. And it allows you to certainly get to a lower price point. But even Meta, we've seen has been moving towards more mixed reality, where you have the see-through lens to be able to perceive the world. So it's going to be interesting to see.

At some point, I mean, I imagine we're going to have very, very low-cost VR-only headsets. In fact, we've seen some of those from some of the Chinese manufacturers in the past. But they've always been a bit of a niche and kind of a throwaway. At this these price points, you know, whether it's the Meta Quest Pro or obviously the Vision Pro here, I think the expectations are going to be a lot higher for that more augmented reality experience.

And, you know, like Eric said, look, there's going to be a Vision, an Apple Vision at some point that hopefully is at a much more attractive price point that has a lot of these capabilities. But we've got to see what the apps are like. We've got to see what the experience is like as well.

AKITA FUJITA: Bob, we like to talk about the chip makers. And I'm going back to several years when Apple parted ways with Intel. The question was, what's going to be, you know, Apple's sort of core in terms of what they're developing? The M2 chip announced today for the Mac Pro. You talk about high price tag. Mac Pro's $6,999, $7,000. I mean, what does this tell you about Apple's internal ability, the research, the tech they have, to really churn out these products that they can own the stack on?

BOB O'DONNELL: Yeah. Sure, I mean, look, let's not forget the Mac Pro is a workstation. Apple doesn't call it that because that's not an Appley word. But if you compared it to any other Intel-based system, it would be a workstation. And there are Intel workstations that cost in that range.

And also, remember that the Mac Pro is using an Intel chip from many, many years ago. So it's not a surprise that the performance on the M2 Ultra was much better. It needed to be. But, you know, Apple's got these niches. Mac Pro, again, that sells in that, you know, very barely nudging in terms of the units compared to the rest of the Macs. The Studio is a more interesting line, where they've got this M2 Ultra.

But to your point, what we've seen Apple do, and we saw this again here with the Vision Pro, they're developing their own silicon, their own chips, and all the components they need. In the case of the Vision Pro, they took an M2 that they already had, but they added this R1 chip for the sensors. And that makes a big difference in terms of, you know, when you move your heads around and all the sensor data, not giving you the sense of vertigo or other sickness, which a lot of these headsets do.

Still haven't had a chance to try it yet, so I don't know. But of course, that's going to be the big question is what they can do. But their overall vision clearly is to virtualize as much as they can and doing all the silicon on their own, allows them to then charge whatever they feel they can get away with.

AKITA FUJITA: Well, Bob, when you get your hands on the Vision Pro, we're going to have to have you back on the show. Bob O'Donnell, Eric Abbruzzese, it's good to have both of you on today to break down all of the launches from the Worldwide Developers Conference.