The Invisible Elephant
With 14 VR headsets from 8 brands being actually released in 2021, and the term “Metaverse” maintaining a near 100 (reference) search level since October, there has been considerable attention paid to the potential for the creation of VR and AR based hardware and content that can be used to focus attention on a 3 dimensional virtual ecosystem that can ‘enhance the user experience’ and allow anyone to visit an almost infinite number of worlds dreamed up by content creators and game designers. There are big players like Facebook (FB), Steam (pvt) and Microsoft (MSFT) and literally hundreds of small players, with names like VRgineers (pvt) or XRspace (pvt), and while some CE companies have been a bit shy about eulogizing the absolute necessity of the Metaverse, many companies on the periphery of the CE space have somehow included the Metaverse in their public business plans, either by reference to some future development project or how the Metaverse will cause their existing business to expand.
There is one player who has been quiet about any direct plans for the Metaverse, and that is Apple (AAPL), whose entry into the space would be the hallmark of the Metaverse’s future with consumers. Apple is not a technology leader in the sense of releasing product with the latest and most advanced features, but tends to start development early and continue such until they have been able to both justify a commercial product and have been able to find a way to put a differentiating Apple ‘stamp’ on the company’s foray into a new product market.
The less Apple says about its AR/VR technology development the more rumors circulate and Project T288 and other project names seem to ebb and flow like the Bay of Fundy tides, but other than making a number of AR/VR related acquisitions over the last few years, Apple has been quiet about its plans to enter what is now called the Metaverse, and while Apple’s acquisition focus might not have seemed as ‘Metaverse’ oriented back in the 2013’s and 2014’s, such acquisitions have all contributed to what are now AR/VR development projects.
Much of the speculation about Apple’s entry into the AR/VR market is based on hardware. We see speculation about processors, cameras, optics, displays, and ‘sleek designs’ almost daily, but what we believe is most important to Apple is the ecosystem that can and must be created around the hardware, as the company has done with many of its other products. While the sales of AR/VR headsets will be important to Apple and to investors, what should be the driving force behind Apple’s VR/AR development projects is how that hardware will drive an Apple Store AR/VR segment. Apple will make a profit on the hardware, and it will likely be a premium priced product relative to what is available at the time of release, but the real long-term game is not to have the best-selling AR/VR headset, but to have the highest secondary sales numbers for each headset sold and to sustain customer loyalty to build that base.
As with the iPhone, customer loyalty is developed by offering a better looking and better performing device, even if it is not entirely ‘bleeding edge, so while the eventual Apple AR/VR headset might not actually be as sophisticated as some that have been developed by competitive brands, Apple’s entry into the VR/AR market will signal another step function in the development of the industry that surrounds the Metaverse. That said, we try to focus less on speculating on what hardware Apple might be developing or using and more on what users can do with the device.
Items such as development tools for an Apple VR OS, particularly porting existing VR games to such a platform will be essential, as will be Apple’s own Metaverse world development, which is a bit different than what has driven Apple store sales in the past. Apple has relied on much outside development for applications and user content, and has built a large infrastructure around such content, however Apple has the option to create in-house VR/AR content, less like iTunes and more like “Appleverse” where Apple VR users can explore, and of course buy stuff. This would be a bit more of a conflict with potential external Apple Metaverse content developers, but the ‘space’ in the Metaverse is so wide that Apple might stake a few claims and leave the door open to developers to fill in areas of less interest.
For example, if you would be an Apple AR/VR headset user and subscriber, you could visit Apple’s iAvatar Metaverse, where you could wander down aisles of avatar parts, clothing, hairstyles and accoutrement, giving you the avatar ‘you always dreamed of’ for your own Metaverse site (that operates under a proprietary Apple Metaverse OS). Perhaps Apple has designed the iAvatar Store itself, while offering ‘avatar-related products’ that have been developed by outside developers under the Apple Metaverse OS. As an avatar developer, you would certainly want to tap into the potential Apple AR/VR base, just as developers do currently for IoS, and as, say a virtual furniture developer, you would want to find a good spot in Apple’s iFurniture store in the same way. So there is far more to Apple’s entry into the VR/AR Metaverse space than just the hardware and speculation on how many 6DoF tracking cameras might be on such a device. This is interesting but rather limited in scope. More to Apple’s long-term success in the Metaverse would be what Apple builds out alongside the release of an AR/VR headset as in the end having a fancy headset and not much to do with it is not going to generate the revenue that pays for a slew of acquisitions over the years. Once again, content is king. “Can’t see the forest for the trees” – John Heywood
There is one player who has been quiet about any direct plans for the Metaverse, and that is Apple (AAPL), whose entry into the space would be the hallmark of the Metaverse’s future with consumers. Apple is not a technology leader in the sense of releasing product with the latest and most advanced features, but tends to start development early and continue such until they have been able to both justify a commercial product and have been able to find a way to put a differentiating Apple ‘stamp’ on the company’s foray into a new product market.
The less Apple says about its AR/VR technology development the more rumors circulate and Project T288 and other project names seem to ebb and flow like the Bay of Fundy tides, but other than making a number of AR/VR related acquisitions over the last few years, Apple has been quiet about its plans to enter what is now called the Metaverse, and while Apple’s acquisition focus might not have seemed as ‘Metaverse’ oriented back in the 2013’s and 2014’s, such acquisitions have all contributed to what are now AR/VR development projects.
Much of the speculation about Apple’s entry into the AR/VR market is based on hardware. We see speculation about processors, cameras, optics, displays, and ‘sleek designs’ almost daily, but what we believe is most important to Apple is the ecosystem that can and must be created around the hardware, as the company has done with many of its other products. While the sales of AR/VR headsets will be important to Apple and to investors, what should be the driving force behind Apple’s VR/AR development projects is how that hardware will drive an Apple Store AR/VR segment. Apple will make a profit on the hardware, and it will likely be a premium priced product relative to what is available at the time of release, but the real long-term game is not to have the best-selling AR/VR headset, but to have the highest secondary sales numbers for each headset sold and to sustain customer loyalty to build that base.
As with the iPhone, customer loyalty is developed by offering a better looking and better performing device, even if it is not entirely ‘bleeding edge, so while the eventual Apple AR/VR headset might not actually be as sophisticated as some that have been developed by competitive brands, Apple’s entry into the VR/AR market will signal another step function in the development of the industry that surrounds the Metaverse. That said, we try to focus less on speculating on what hardware Apple might be developing or using and more on what users can do with the device.
Items such as development tools for an Apple VR OS, particularly porting existing VR games to such a platform will be essential, as will be Apple’s own Metaverse world development, which is a bit different than what has driven Apple store sales in the past. Apple has relied on much outside development for applications and user content, and has built a large infrastructure around such content, however Apple has the option to create in-house VR/AR content, less like iTunes and more like “Appleverse” where Apple VR users can explore, and of course buy stuff. This would be a bit more of a conflict with potential external Apple Metaverse content developers, but the ‘space’ in the Metaverse is so wide that Apple might stake a few claims and leave the door open to developers to fill in areas of less interest.
For example, if you would be an Apple AR/VR headset user and subscriber, you could visit Apple’s iAvatar Metaverse, where you could wander down aisles of avatar parts, clothing, hairstyles and accoutrement, giving you the avatar ‘you always dreamed of’ for your own Metaverse site (that operates under a proprietary Apple Metaverse OS). Perhaps Apple has designed the iAvatar Store itself, while offering ‘avatar-related products’ that have been developed by outside developers under the Apple Metaverse OS. As an avatar developer, you would certainly want to tap into the potential Apple AR/VR base, just as developers do currently for IoS, and as, say a virtual furniture developer, you would want to find a good spot in Apple’s iFurniture store in the same way. So there is far more to Apple’s entry into the VR/AR Metaverse space than just the hardware and speculation on how many 6DoF tracking cameras might be on such a device. This is interesting but rather limited in scope. More to Apple’s long-term success in the Metaverse would be what Apple builds out alongside the release of an AR/VR headset as in the end having a fancy headset and not much to do with it is not going to generate the revenue that pays for a slew of acquisitions over the years. Once again, content is king. “Can’t see the forest for the trees” – John Heywood
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