The Apple Vision Pro's Path to Business Significance

Credit image: Apple
Credit image: Apple

Article by: Andacs Robert Eugen, on 09 July 2023, at 08:45 am PDT

The Apple Vision Pro is expected to take a significant amount of time before it becomes a major contributor to Apple's business, according to a recent report. 

Comparisons made in Bloomberg's "Power On" newsletter by tech analyst Mark Gurman revealed that the headset business is far from reaching the sales levels achieved by Apple's popular iPad. Initial sales expectations for the Vision Pro are low, leading to claims that Apple has reduced its initial orders for the headset due to production difficulties and general complaints about its cost.

Gurman notes that the growth trajectory of the Vision Pro is likely to be much slower compared to other arms of Apple's empire. He cites examples such as the iPhone and iPad, which quickly became significant revenue generators upon their respective launches. The original iPhone sold a million units in under three months and contributed to a third of Apple's overall revenue by 2009. Similarly, the iPad captured 18% of total sales revenue within a year of its debut.

In contrast, the Apple Watch experienced a slower start but has gradually become an important part of Apple's business. Although Apple hasn't provided specific sales figures for the Apple Watch, it falls under the Wearables, Home, and Accessories segment, which generates approximately $40 billion annually.

Gurman explains that the limited release schedule of the Vision Pro, launching initially in the United States at a significantly higher price than the Apple Watch, will further slow down its sales trajectory. Expansion into other countries is not expected until several months after the early 2024 launch and may not reach resellers until 2025.

Gurman highlights the cultural and financial challenges faced by Vision Pro. Unlike wristwatches, which have been prevalent for two centuries, a bulky headset with separate batteries and worn on the face poses a novel adoption challenge. In terms of finances, initial sales projections for Vision Pro have significantly decreased over time. Current estimates range between 400,000 and 500,000 units in the first year, generating around $1.5 billion in earnings with an average selling price of $3,700.

To achieve revenue levels comparable to the iPad, Gurman believes the Vision Pro would need to grow twentyfold, reaching approximately 8 million units per year. However, even with the introduction of a cheaper model, reaching iPad-level revenue is deemed "all but impossible" in the near future. Gurman suggests that most consumers will opt for the "safer pick" of a Mac or iPad until Apple releases a version of the headset that resembles a pair of glasses.

It is not surprising that the Vision Pro is considered a slow-burner for Apple. The initial release is expected to target a specific consumer base and serve as an aspirational product, paving the way for wider adoption in the future. With technological advancements and Apple's substantial resources, the company has the flexibility to play the waiting game and refine its headset offering. Therefore, expecting the Vision Pro to achieve the same sales success as the iPhone is unrealistic at this stage.

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