When Tim Cook unveils Apple’s mixed reality headset later this year, he won’t just be showing off the tech giant’s latest shiny gadget. The Apple boss will ensure that his pioneering legacy includes a next-generation electronic device that some within the company believe will one day rival the iPhone.
After seven years of research and development – Twice the time required for an iPhone – Apple is expected to introduce a virtual and augmented reality headset. The stakes are high for Cook, the FT comments, because the headset will be the first Apple device to be developed entirely under his leadership. The iPhone, iPad and Apple Watch were originally designed when Steve Jobs, who died in 2011, was at the helm.
Growth during Cook’s tenure was staggering, growing the company’s value from about $350 billion in 2011 to about $2.4 trillion dollars today. But despite the double success of launching the Apple Watch in 2015 and AirPods a year later (which turned the division accessories into a lucrative business worth $41 billion), Apple is criticized for repeating old ideas instead of breaking new ground.
“They’re under a lot of pressure” because of the headset, said a former Apple engineer who worked on product development. “They’ve been delaying the launch every year for the past few years.”. The timing of the launch has been a source of tension since the project was launched in early 2016, according to people familiar with Apple’s internal deliberations.
The Apple team insisted on starting with a product that looked like ski goggles and allowed users to watch 3D videos, perform interactive workouts, or chat with lifelike avatars through a revamped FaceTime. But Apple’s industrial design team asked them to be patient, as they wanted to delay the launch Until a lighter version of augmented reality glasses becomes technically possible.
Most in the tech industry estimate this will take several more years. In deciding to launch it this year, Cook sided with chief operating officer Jeff Williams (according to two people familiar with Apple’s decisions) and overruled the objections of Apple designers who demanded they wait until technology made their vision possible.
“A few years ago it would have been unthinkable to go against the wishes of Apple’s powerful design team,” the Financial Times commented. But after the departure of longtime corporate chief Jony Ive in 2019, Apple’s structure has been reshaped, with design now subordinate to Williams. Ive’s previous role as head of design has been split into two, with Evans Hanke on hardware and Alan Day on software. Hanky announced last October that she would be leaving in six months.
Apple’s 12-member executive team reflects how the company’s focus has shifted under the leadership of Cook, who also served as chief operating officer. Four of the top 12 CEOs have risen through the corporate ranks, while none have succeeded Yves as chief design officer, who oversaw development of the iMac, iPod, iPhone and Apple Watch.
While the success or failure of the headset could have major ramifications for Cook’s reputation and Apple’s external image for being able to keep innovating, sales of the device will likely be limited at first. Apple expects to sell only about 1 million headphones in the first 12 months, less than the devices that the first generations of iPhone or Apple Watch sold in the first 12 months after their release.
The complex device, which will contain a host of high-resolution cameras and screens, is expected to cost around $3,000., at three times the price of the Meta Quest Pro, which may limit its appeal. Even $3 billion in annual sales would be a small part of Apple’s revenue, which last year exceeded $400 billion.
A modest goal may give the false impression that Apple is expecting a “half-hearted” response. But Apple has a long history of starting slowly when entering new product categories and then conquering the market within a few years. Apple insiders say that despite Target’s modest sales, the company is preparing an advertising “tsunami” for the new product.
“The market has consistently underestimated the long-term impact of (Apple’s) new products/services,” Morgan Stanley analysts wrote in a note to clients earlier this month. Apple typically sells more than 200 million iPhones a year, and last year it sold about 50 million smartwatches.
Selling 1 million headsets would represent about 10% of the still-nonexistent virtual reality marketCCS Insight estimates that 10 million mixed reality devices were sold worldwide last year. Amit Daryanani, an analyst at Evercore ISI, noted that Apple often uses a first-generation product to capture the interest of loyal Apple users and act as a catalyst for its huge developer community.
“The product allows application developers to see how people use the product and allows them to identify the most attractive development opportunities,” he said. Last year, Cook said Apple had 34 million registered developers building apps for its devices.
This would allow Apple to take a “build it, they’ll take it” approach. “We’ve seen the iPhone thrive as the developer community has grown, and consumers have subscribed to the power of apps,” said Hanish Bhatia, deputy director at Counterpoint Research Group. “We expect similar dynamics (…) for the headphone category, where each subsequent generation represents an improvement over the previous one.”
Source: Financial Times
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