In pre-market trading on Tuesday, Apple (NASDAQ: AAPL) shares fell by approximately 3% as the Cupertino-based company released its long-awaited mixed reality (MR) headset at a price of $3499, which turned out to be higher than expected.
Tim Cook, CEO of Apple, stated, “Today marks the beginning of a new era in computing. Apple Vision Pro introduces us to the world of spatial computing, much like how Mac introduced us to personal computers and iPhone introduced us to mobile computing.”
Analysts at Oppenheimer note, “The management views the headset as a revolutionary product and the next step in interactive consumer experiences.”
CFRA analysts say, “While we are impressed by its high-end hardware and immersive capabilities, we believe that AAPL has yet to explain why this device is essential for consumers. However, with its market launch and active participation from developers, it may eventually support the penetration and development of new use cases.”
Goldman Sachs analysts highlight, “We are excited about the long-term contribution of the Vision Pro headset and its app ecosystem to growth, but we expect short-term financial contributions to be limited due to the high retail price, assumed breakeven sale of the headset, and a relatively small installed base.”
According to Bernstein analysts, the upcoming release of the new Apple mixed reality (MR) headset is expected to have limited financial impact for at least a few years. Although the device is anticipated to become financially significant in the long term (potentially contributing $50 billion in 5-10 years, less than 10% of revenues), it may cannibalize other hardware offerings from Apple due to its higher price.
Wells Fargo analysts note that Apple’s pricing strategy for the Vision Pro headset, priced at $3,499 compared to Meta’s Quest 2 at $300 (Quest 3 at $3,499 with $500 shipping this fall), emphasizes premium pricing. They anticipate some investor concerns about consumer demand elasticity at the $3,500 price point. However, Apple’s high-end features, such as 23 million pixels compared to Quest Pro’s 1800×1920 pixel resolution, are expected to drive adoption of AR/VR by consumers.
KeyBanc analysts believe that while the technology capabilities of the Vision Pro headset are impressive, it appears more like a replacement for TVs and monitors. They expect the device to have a minimal contribution to Apple’s revenue, assuming sales of a few hundred thousand units. However, they recognize Apple’s superior ability to integrate hardware, software, and services to create a differentiated platform that competitors may struggle to replicate.
Deutsche Bank analysts are impressed by the capabilities and performance of Apple’s revolutionary AR/VR platform, which seamlessly integrates with the rest of Apple’s ecosystem. They see significant expansion of AR/VR usage at home, work, and during travel. However, they also acknowledge that the high price of the device may limit its adoption.
Wedbush analysts believe that Apple is building its own AI ecosystem within its iOS developer community. They expect the launch of the Vision Pro headset to lead to a greater number of applications and use cases in the coming years. While investors’ initial reaction may focus on short-term expectations, they see this strengthening Apple’s developer community, which remains its golden installed base and Apple ecosystem.
Evercore ISI analysts highlight the impressive product demonstration and use cases. They emphasize the importance of market release timing and the development of applications. They consider it the beginning of the next computing shift, foreseeing opportunities in both productivity and entertainment, which make a higher average selling price (ASP) more acceptable, especially when applications are built on this platform.
DA Davidson analysts (who downgraded AAPL stock to neutral) believe that any positive news about the AR/VR product launch is already reflected in the stock price. They also foresee significant structural challenges for Apple in terms of consumer adoption of AR/VR hardware, which could limit short-term sales and profitability impact.
As evident from the analysts’ comments, Apple’s Vision Pro headset elicits mixed reactions. Despite its impressive capabilities, some analysts express doubts about its price and necessity for consumers. However, others see potential in the development of this field and anticipate long-term success.
