100 Days Since Launch: Is the Apple Vision Pro a Failure

Recent news has proclaimed the Apple Vision Pro a failure. Headlines claim that Apple has slashed its production and sales forecasts after the initial early adopter sales didn’t sustain the sales rate.

On a recent earnings call, Tim Cook shared that half of the Fortune 100 companies have invested in the Apple Vision Pro. He’s still bullish and sees this as a testament to its value and potential. So, is it a failure, a success, or something in between? The answer might surprise you.

Above: Bob’s video “Did Apple Screw Up When Pricing the Vision Pro VR Headset at $3500?

I’ve been covering the Apple Vision Pro since its announcement in June 2023, In the hype that ensued between then and the first shipments in February of this year, there were lots of opinions about the Apple Vision Pro being too expensive. I was one of the only voices saying it wasn’t.

I still maintain that the Apple Vision Pro is NOT too expensive.

It’s Not a Mobile Phone Replacement

One misconception about the Apple Vision Pro is that it’s designed to replace the iPhone. This misunderstanding has led to people claiming it’s overpriced and making comparisons to the iPhone’s early sales. But the Apple Vision Pro is a laptop replacement. If you watch the promo videos, you’ll see it used in office and home environments, not in cars or on the street.

Above: The Vision Pro is not a phone replacement

The original Macintosh sold for $2500 in 1984, equivalent to about $7500 today. This is almost twice the cost of the Apple Vision Pro (when you add in the case, warranty, etc.). Like the AVP, the Mac flew off the shelves early after launch. Apple sold 72,000 Macs in the first 100 days, representing about $500 million in sales in today’s dollars.

See also  Synthesis VR Brings Free Roam VR To Forefront

So, how does the Vision Pro stack up? Apple is not releasing actual sales numbers.  Noted analyst Ming-Chi Kuo (who, like all analysts, has mixed results) recently posted that Apple’s internal forecast sits at about 200K units in the US market and 400-450K units globally in 2024. This contradicts his initial estimate of Apple selling 180K units at launch. So, who knows?

Apple has yet to release the product outside of North America. However, they have been recruiting for “Briefing Experience Specialist” roles in countries from the UK to China and Japan since March 2024, so the launch is imminent.

If we stick with the 200K number and only the entry-level unit price without accessories, the Vision Pro generated $700 million in sales in the first 100 days in the US market. With memory upgrades, optics inserts, cases, and other accessories, that number is probably close to $1 billion. That would be double the inflation-adjusted revenue for the first 100 days of the Mac launch.

Early Mac Demand Almost Killed Apple

Above: (1984): Steve Jobs presents the very first Apple Macintosh, Image: IDG 

But there’s more to the story. Steve Jobs had predicted they would sell 50,000 Macintosh computers at launch. Barbara Koalkin, the marketing manager for Apple, claimed, “We could have sold 200,000 Macintoshes if we could have built them.” In his exuberance, Jobs increased production of the Mac to 110,000 units a month, building up a massive inventory. By the end of 1984 sales were only 10,000 units a month. It took Apple until March 1987 to sell a million Macintoshes.

It looks like we are seeing a similar pattern with the Vision Pro. Early adopters rushed to pre-order the device, chewing through the initial supply-constrained inventory. Sales have tapered off in the US as the market waits to see what applications and media become available. While Apple claims millions of iPad apps work on the Vision Pro at launch, that won’t justify a $3500 purchase.

See also  Apple Vision Pro and The Inevitability of the Metaverse: Embracing a New Reality (21:54)

Price and Performance

In his Walter Isaacson biography, Jobs claims that he lost a fight with his CEO, John Scully, who made him increase the price from $1999 to $2499 to cover the cost of marketing and sales. He maintained that price difference was key in ceding the PC market to Microsoft. In the early days of the PC, pricing mattered.

But performance matters too. The original Mac “was a dazzling but woefully slow and underpowered computer, and no amount of hoopla could mask that,” wrote Isaacson.  It shipped with only 128K of RAM compared to 1 Megabyte of Apple’s competing Lisa computer. And Steve forbade the inclusion of a fan because it “distracted from the calm of the computer.” Users nicknamed it the “beige toaster” because of the heat-accelerated component failures.

The Apple Vision Pro, on the other hand, is a performance beast with specs that even the most hardened Apple haters tip their caps. The user experience is sublime compared to any other headset. So, as high as it is, the price feels justified by the tech and performance, if not the utility and comfort.

The difference between Apple now and 1984 is that Apple is a professionally run technology and media juggernaut, with a supply chain expert as the CEO. They are sitting on nine figures in cash and can let the spatial computing market develop without over-investing in inventory to meet short-term demand that may or may not exist. Unlike Apple in 1984, they’re not worried about survival.

Apple was on the verge of collapse when it launched the Mac, and its inflated inventory and capital drain contributed to Steve Jobs’ firing. Over the years, though, the Mac found its place in the market. Microsoft copied Apple’s GUI with Windows in late 1985, and the personal computer market exploded. Apple might have lost the market share battle to IBM and Microsoft, but the Mac is widely credited for helping bring personal computing to the masses.

See also  Elevating Hygiene in VR Entertainment : The Power of UV-C Technology
Above: The Mac.

Will Apple’s Vision Pro hold that same position in the future? Will people credit the Vision Pro as the thing that caused virtual reality to explode? Quest and other headsets used eye and hand tracking before Apple. Meta is already working on copying Apple’s UX for their next headset. But Vision Pro’s impact on how users interact with virtual worlds will be as big as the graphical user interface was for personal computers. And industry insiders will point back to the Vision Pro launch and see it as the moment Apple validated virtual or mixed reality as the next computing paradigm.

The Verdict

So, is Apple Vision Pro a failure or a success? Apple reportedly maintains a 50% gross margin on the Vision Pro. So, if you look at margin contribution alone, AVP generated half a billion dollars in the first 100 days. That’s enough to fund a couple of weeks’ worth of Apple TV+ production. It’s certainly not a material amount for Apple, but it’s nothing to sneeze at.

If you agree that the Mac was a success, I will find it hard to argue that Vision Pro is a failure after 100 days. It represents an entirely new way to interact with computers, which always takes time. I predict that within a few years, and at least one or two iterations and price reductions, the Vision Pro will be seen as a viable computing platform. It won’t completely replace the laptop, but for most users, it will be a more compelling experience than pecking away at a keyboard and staring at a 14” screen like I am doing now.