Is Vision Pro Apple’s Next Big Thing?

Apple products on table

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Earlier this month, Apple (Nasdaq: AAPL) announced its first-quarter results that outpaced market expectations. However, the stock fell 4% in the after-hours trading session after Apple released a disappointing outlook for iPhone sales.

Apple’s Financials

Apple’s first-quarter revenues grew 2% to $119.58 billion, ahead of the market’s forecast of $117.91 billion. After a year of continued revenue declines, the recent holiday quarter helped drive revenues upwards. EPS of $2.18 was also ahead of the Street’s forecast of $2.10.

By segment, product revenues came in at $96.46 billion compared with $96.39 billion a year ago. iPhone revenues of $69.7 billion were ahead of the market’s estimates of $67.82 billion. Mac sales of $7.78 billion also surpassed Street’s estimates of $7.73 billion. iPad sales of $7.02 billion failed to meet the market’s forecast of $7.33 billion. Revenues from other products came in at $11.95 billion compared to $11.56 billion expected. Services revenues came in at $23.12 billion compared with $20.77 billion a year ago but missed the market’s projected $23.35 billion.

For the second quarter, Apple forecast sales of about $90 billion, down 5% over the year. The market estimated revenues of $95.32 billion and an EPS of $1.59.

Apple’s VR Headset

Apple’s big recent news was around the release of its virtual reality (VR) headset Apple Vision Pro. The headset has a steep price tag of $3,500-$3,900 and has only been released in the US so far. It will be released in other countries during the year. Vision Pro will allow users to access more than 150 3D movies for rent or purchase from the Apple TV app. It introduces Apple Immersive Video, a new entertainment format, which will embed users inside games and videos by integrating the 180-degree, three-dimensional 8K recordings captured with spatial audio.

The headset can also record and playback spatial videos captured with iPhone 15 Pro or iPhone 15 Pro Max and relive them through the headset. Besides a physical dial that will allow users to switch between virtual reality and the real world, it is also controlled by hand gestures, eye movements, and voice controls. Apple has released over 600 apps that can support the headset.

This is Apple’s expensive foray into the VR world. While the initial preorder release of 200,000 headsets have already been sold out, analysts aren’t entirely sure if this will be a game changing device for Apple. Initial reviews of the product have not been that great. Users have applauded the technological marvel that the headset is, but they have also commented on its weight, battery issues, and at times blurry videos and inconsistent tracking.

The biggest question mark surrounding the product is its price point, especially when compared with Meta’s Quest 3 which is priced at $500. Apple could release a lower priced model to gain a stronger foothold in the market in the future. But for now, some analysts are hopeful that it could sell over a million units by 2025.

Apple’s stock is trading at $183.86 with a market capitalization of $2.84 trillion. It touched a 52-week low of $143.90 in March last year and a 52-week high of $199.62 in December.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research ...

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