After years of swirling rumors, it looks like Apple’s first real foray into virtual reality will actually take place this year. But as the company prepares to unveil the hardware and software it’s been working on for years, reports on many details are unclear.
According to Bloomberg’s authoritative Apple reporter Mark Gurman, Apple still has “many kinks to work out” with the device, regarding “hardware, software and services, as well as how it will be marketed and sold.” Name those kinks if you like – I’m not going to shame you – but they don’t seem to cover them literally every aspect of the device?
What I’m saying is that if the device isn’t moving, our ideas of what it could be certainly are. And yet, there are really two paths Apple can take based on what we think we know. Will this be a product that ordinary people have to buy, or is this an expensive preview of technology that won’t appeal to the masses for a few years?
Which path Apple chooses will have a major impact on how the product is received and whether future Apple products in the category have a chance of succeeding.
At the core of every major Apple product launch since the App Store’s debut has been the idea that third-party app developers will help make the platform great. The thriving community of third-party developers is one of Apple’s greatest assets. Developers fell over themselves to write software for the new iPad and Apple Watch, counting on Apple’s platform power to make it all worthwhile.
This is where rumors that Apple’s first AR/VR headset is extremely high-end and expensive collide with the company’s longstanding strategy. There’s nothing wrong with selling a small number of expensive devices with huge profit margins, but unless the software on those devices is equally high-quality and expensive, there’s no reason for developers to embrace the platform. A gold rush only works if there’s gold in the hills, and that requires a large number of potential software buyers.
If Apple expects to leverage its existing developer base – those who know how to use Apple’s development tools and APIs, which will presumably be reused as part of the operating system running on the headset – it will have to convince developers that a huge market is waiting for them. And that it will appear soon enough that those developers will not go bankrupt while they wait.
Step away from the abyss
In recent weeks, media reports suggest that the Apple headset, when it arrives, will be built with cutting-edge hardware and priced accordingly. It will be more than $2,000, one report said. Another said more than $3,000. Wow! That’s a lot for an unproven product category.
If the company really intends to convince regular users to buy this headset and developers to create apps for it, Apple needs to sell a lot of it. That probably requires an investment in the platform, in the form of not getting the usual profit margin out of a piece of hardware to build demand.
I am a strong supporter of this approach. It’s hard to imagine Apple launching itself into a new product category once it’s convinced it’s going to be hugely important to the company (and presumably to the world!), with a product so expensive that very few people will struggle to buy it. And so, to get the ball rolling, to get developers to make apps, to make the whole category seem reasonable and desirable, I’d suggest Apple price the headset as low as possible. That means taking little or no profit margin or even a loss on first-generation video game console-style products.
Of course, this is not a viable long-term strategy for Apple. It’s the exact opposite of what the company usually does. But in the short term, getting the product and category off the ground and paying off in the long run would be a bold move.
Overpriced and underloved
Now imagine Apple just can’t bear to lower the price to something expensive but not unreasonable. In that case, Apple must choose one of two paths.
The first path is the path that best fits the modern Apple playbook. It’s also the one that, in my opinion, would be the most disastrous. In this scenario, Apple would release its cutting-edge product for $2,000 or $3,000 and treat it like a MacBook Pro or an iPhone: a product with so much obvious value that anyone would want to buy one.
I find it hard to believe that even Apple could pull this off. And the less likely the product will sell millions of units, the less likely developers will invest heavily in software.
Then there’s the fact that Apple is one of the most watched and talked about companies in the world. If the company misses its mark, it risks tarnishing future products in the product line as overpriced and unnecessary. That attack can be overcome over time, but why choose an uphill slog when you could avoid it?
It’s not for you
So if Apple has to price its first headset so highly that ordinary people will refuse, it has to choose a second path. This path isn’t one Apple is used to walking, but if it works hard, it can probably work out.
The solution is to tell ordinary people not to buy it.
Sounds weird, right? If Apple presents the new product as a preview of great things to come, but designed for software developers and high-end business users, it might disappoint the rest of the world. If done right, it could even serve as a way for everyday people and software developers alike to get hyped for the future of VR and AR on Apple’s platforms, especially if the company makes it clear that it expects to build future products that be more affordable.
That’s a lot to ask of Apple, I realize. But I find it hard to believe that Apple would choose to come out with a product that is priced so high that it will never ship in large quantities, thus nipping a promising product category in the bud. This is why the better options for Apple are to swallow hard and leave money on the table to make the product more affordable – or keep the price high and politely inform the rest of the world that this isn’t the headset of the future is , but the device that points the way to that product.
It’s Apple’s choice. And it looks like we’re getting dangerously close to finding out which path the company finally decides to take.