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Why Meta Quest May Outshine Apple Vision Pro In The Near Term

Jun. 06, 2023 5:18 AM ETApple Inc. (AAPL), META68 Comments
Johnny Zhang, CFA profile picture
Johnny Zhang, CFA


  • Apple Vision Pro, a combination of AR and VR, is set to be released in early next year, but its high price may limit mainstream adoption compared to Meta's more affordable Quest 3.
  • The market for AR and VR devices is still in an early stage, bringing uncertainty about scalability and profit generation for investors.
  • Meta's Reality Labs' financial performance shows increasing operating losses and higher R&D spending, indicating that achieving profitability in this new industry takes time and patience.

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The Debut of "Ski Goggle"

In the WWDC presentation, Apple (NASDAQ:AAPL) unveiled Apple Vision Pro, a new "jaw-dropping" product that has immediately captured significant attention and made headlines on numerous news websites. This announcement marked

This article was written by

Johnny Zhang, CFA profile picture
I'm specialized in fundamental equity research, global macro strategy, and top-down portfolio construction. I graduated from UCLA with a degree of Business Economics and UMich Ross School of Business with a Master of Accounting. I'm a senior analyst at a multi-strategy hedge fund. In my opinion, HODL can't generate significant alpha or maintain a high Sharpe ratio over the long run. Seeking Alpha requires active management and minimizing opportunity costs. Investors should understand seeking a high positive return doesn't necessarily mean you are generating high alpha.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of AAPL, META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (68)

Paul T. Lambert profile picture
Why bother with a fully immersive headset when iPhone users already tend to turn zombie-like when "immersed" in their cell phones while walking down the street and even straight into oncoming traffic? In addition to making people look ridiculous, it's not clear how much additional immersion such goggles can truly offer.
The author is weirdly convinced that the cheapest product wins. That’s definitely not true for iPhone, iPad and Apple Watch, which capture a majority of their product category profits.
Johnny Zhang, CFA profile picture
@davepete63 I never said the cheapest product wins. There is a big difference between affordable and cheap. The most affordable product can eventually dominate the mainstream, not just a specific group of users. I hardly see an expensive item can have big market share in the near term if its alternatives are way more affordable. You can’t compare Vision Pro to iPhone because it’s not a “must” for most people right now.
@Johnny Zhang, CFA - The one consumers deem the best value can eventually dominate profits. Market share is like growth, it is only a good thing under certain conditions.
Johnny Zhang, CFA profile picture
@metoo5 That’s true. It will eventually come down to affordability. From the company’s perspective, what’s the point if most consumers think it’s a valuable product but can’t afford one?
Danoxx profile picture
Meta’s is dead. Look at the first eight minutes a new functional and profitable ecosystem has just been created literally out of thin air.

And because this is an investor site, look very closely at what the first generation headset device made by Apple can actually do look very close.

Because of the M2 processor, it is basically a Mac computer with a new Apple designed R1 co-processor, reduced to an even smaller size, the significance is that a large number of existing software programs can be quickly ported over by existing developers on the iPhone, iPad, Apple Watch, and the Mac, and be ready on launch day within the next six months.

@Danoxx Lol. Cook only reiterated the fact that Meta is on the right track with their already number one selling headset and app store. Couple that with 3+billion users and Meta's family of apps. Apple's only recourse is to keep tightening security with the iOS updates, in hopes of slowing down Meta's dominance.
Danoxx profile picture
@BigEarn Meta and Google will be developing their, spyware for the Vision ecosystem, Tim Cook was being calm, nice and diplomatic as always. The Art of War “ If your enemy is making a mistake do not stop them let them be”
For all the ridicule the Street gave Mark for developing Oculus Quest as not worth the cost and risk for the reward, Tim cook has just validated Zuck's vision and now all is well with 'headsets; ..
@coolcatnip Exactly. I just made the same comment to @Danoxx before seeing yours.
@coolcatnip - The iPhone validated Nokia & Blackberry's market too so not sure that's a strong point. People saying or implying they need the validation of competitors is revealing, no?
@metoo5 Not close to the same
I thought this was an interesting launch of a product I did not see working for me. The presentation intrigued me that maybe I could use this in my day to day life - “the Metaverse” is a bit like emojis to me - irrelevant & unnecessary .
Apple is also using shared components from other products , so will hopefully not be seeing the same cost R&D impact as Meta - a good start but will take couple of years and a lower price point to get volumes IMO.
Some people will buy this new product, even at this crazy price.

In my mind this is a long term bet by apple....in ten years when generation 3/4 comes out, it should be a very compelling high end product.

At this price it presumably covers its materials costs, so they can develop this line at minimal expense (perhaps even break even including R&D?) while Meta develops their line at the expense of shareholders.

I think there is room for both firms here..and both approaches. There are plenty of people who will long term take a cheap product from Meta in return for the firm monetizing their information, and plenty of people who will pay thru the nose for the security/privacy/ecosystem advantages of Apple.
Danoxx profile picture
@Steve971 Meta’s is done, the hardest decision they will make, is whether or not they support Apple vision concurrently as they go up in flames with their project. First eight minutes, where Marques describes the sensors and talks about the, user interface which is at the next level, note: Apple had to design another OS to control it all.

@Danoxx “Meta is done” - heard that a lot when the share price was as $90…
Danoxx profile picture
@harmjano2 Meta’s isn’t done, but their new hardware device is done just a matter of when they write it off as a complete loss, and that isn’t the most bitter part, having to design software for Apple‘s Vision Pro is the Actual bitter pill.
thotdoc profile picture
You missed an alternative way of understanding what Apple has done. Apple is on the road to spatial computing and where that vision will go. If you want to help us investors, immerse yourself in what is spatial computing and where it is going. Lead the narrative rather thsn writing this more traditional article.
In 1984 I purchased the first Apple Macintosh for $2,500. It had a smaller screen than IBM PCs. It was ONLY black and white. It had only 128K of memory. It had only one 400k disk. And as I recall, it had three, maybe four applications (Write, Paint, MS Excel, and maybe WORD). In today’s dollars, that would be about $7,300. Now, at age 74, I won’t be one of the buyers of the new product (at least not out the gate), but there WILL BE BUYERS. And over time, the headset will shrink, the battery will move on board and weigh next to nothing, and this will be an iPhone level product. Not the first year, and probably not the second or third year, but by 2030…. :-).
I was also a 1984 Mac purchaser. Eventually every OS looked like a Mac.
@davepete63 - then you remember - “Windows 95 = Mac 84”. :-)
VulpineMac profile picture
Certainly the Quest 3 is going to be a short-term success... people THINK they know what AR/VR is all about but Apple is definitely showing the others have no idea. We're talking about a full-fledged, wearable, computer with an M2 chipset vs devices little better than a smartphone. The Quest is little more than a toy by comparison. Sure, the Vision Pro is expensive but not that much more than a higher-end iMac or a low end Mac Studio/Mac Pro. The capabilities appear to be nearly equivalent to the Studio and Pro. The Quest 3 can't compare in power and performance, even though Meta is attempting to compete.

Like other devices before it, the Vision Pro is going to show how XR is supposed to work, while the others continue trying to guess at it.
Paul Wagner profile picture
Apple products tend to be more expensive than and command a smaller share of market than any individual competitor's products. Even the Iphone has only about 20% of global market and 56% of U.S. market. If past is prologue, this new product will establish a reputation as a superior product that millions of people want badly enough to stretch their budgets to get and that market share, currently zero, will grow to a meaningful if not dominant level.
META is going to benefit from this free ad campaign triggered by comparison.
Danoxx profile picture
@VenkatSankar Not in a good way, it’s going to be in a Steve Ballmer bad way.
Hi Johnny,
Will it work with my iMac?
Regards Graham
@big_prop did you watch the video? If not, please do.
tensei profile picture
@big_prop yes the meta quest works with apple products. I have the quest pro and can link to my mac laptop
Danoxx profile picture
@big_prop It literally is a even smaller Mac with a co-processing friend called R1.
What would people use this Apple product to do? Am not too clear..
Meta goggle at least has lots of games to play with.
Basit Saliu profile picture
@Yuji__0 Computing, Television Entertainment, Gaming, Video Calls. And it's both AR and VR.
@Yuji__0 all iPad games already work with this…..
@Yuji__0 watch their video
Mario Silva profile picture
Ask to any Apple's user, if he or she will buy Meta's AR. Apple is not competing with Meta directly, it is clear that Apple is targeting a high-income socioeconomic segment. Knowing how Apple manages its "new products", these glasses will evolve in design and will have a higher range of prices in the future.
@Mario Silva My family all have iPhones and we also have Quest 2 VR. I work in IT and most have android phones and Quest 2.
@BigEarn - "I work in IT and most have android phones"

Most of what user base? I'm in IT in higher ed, and all my dashboards show Apple is dominant with students and faculty, whether Mac or iPhone.
@metoo5 Just pointing out most tech professionals tend to buy Android because they see no need to overpay for the status of an iPhone. Makes sense higher ed "students" buy iPhones. It's a status thing. Same reason my kids begged me for iPhones. One in HS and two in college.
While I love it, want one and may ultimately buy one, that price tag is a killer and disappoints me as a long term aapl investor
Basit Saliu profile picture
@biggdogg Interesting enough this could revive the second hand market big time.
@biggdogg - You're not an early adopter. No reason to be disappointed.
Basit Saliu profile picture
Apple Vision Pro to AR/VR is like iPad to Tablet computers. There were little zero market or interest until they were launch. Apple is also acknowledging people like me who wear prescription glasses and also colour blind which will make this platform/product line a resounding success in near future. Apple will be the first $10 trillion company (like I said before)
Danoxx profile picture
@Basit Saliu What that means then is that, by using Seeking Alpha you literally have been tipped off before the crowd, in short, buy more apple shares.

www.youtube.com/... The first eight minutes says it all, and the vision will never cost below $2000 dollars, at least not anytime in the next four years but the good news is, it’s going to replace some of the other devices, if you want it to.

Anyone who wants to buy it, better start saving and investing…….
Basit Saliu profile picture
R1 SoC, EyeSight, visionOS, and a (likely) dedicated app store in 5 years Vision Pro will have a total monopoly on AR/VR and in distant future Apple will be like the OASIS in Ready Player One.

Note: I apologise if I was a little critical however it because of the price.
@Basit Saliu i cannot see why Apple would be in a monopolistic situation at all. Just like for the rest of their products, they’ll have a great market share of premium products, but it will never be a winner-takes-all situation.
Meta has the tech for a rival to the reality pro, but they have no interest in releasing such an expensive headset.
Johnny Zhang, CFA profile picture
@Basit Saliu I agree. In the long run, Apple Vision Pro has the potential to become a dominant player in the market. As this technology scales up and becomes more widely adopted, we can expect the price to decrease.
Basit Saliu profile picture
@BEI Monaco Before Apple Watch there was Fitbit which was dominating and now Apple Watch have 48% of the smartwatch market share with Samsung and Huawei at a miniscule 8% and 7% respectively with Fitbit nowhere to be found. iPadOS now have 38% of the Tablet market which had zero market or consumer interest until 2010 with Android falling to 48% from 80% before all the Tablet well like Amazon Kindle used only for reading e-books.
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