Apple famously doesn’t rush into new markets. They don’t hold back until they are sure they have a guaranteed hit, often ceding first-mover advantage to rivals.
But nearly a decade is a long time to wait for a groundbreaking new gadget, even by the high standards of Cupertino perfectionists. That’s the same amount of time the company is working on two of his most anticipated new products: a car and a “mixed reality” headset that combines elements of virtual reality and augmented reality. Each of these products has reached some sort of crossroads, presenting a test to the company’s vaunted launch discipline.
Apple’s last major gadget release was the Watch nine years ago. In a similar time frame, Steve Jobs introduced his iPod, iPhone, and iPad. This is the first in a series of industry-shaking firsts that may never be matched. His successor, Tim Cook, has always faced doubts about his ability to find Apple’s “next big thing,” but he has successfully managed the iPhone and expanded into a profitable services business. As a result, the company’s stock price has increased 15 times since Jobs’ death in 2011.
Mr. Cook can hardly be accused of bristling. Under his watch, Apple’s research and development enthusiasm has steadily increased. Spending on research and development reached nearly 8% of revenue last year, up from just over 2% a decade ago.
This reflects increased spending on existing mobile platforms as Apple has taken over the development of most of its products’ core technologies, from chips to advanced software. Bringing generative AI to its devices is the latest frontier, but as usual Apple has remained silent on how it plans to use the technology. But if smartphones are a big part of the R&D escalation, running long-term projects for major new computing platforms like mixed reality headsets and cars isn’t cheap.
The long-delayed Apple Car is the most intriguing of the bunch, with Bloomberg reporting this week that its potential launch has been pushed back again to 2028. It was never easy to see how Apple could gain a clear advantage when it was so far behind. – Liquid and capital-intensive markets. As self-driving car companies have experienced delays and setbacks across the board in recent months, the chances of outsiders riding the wave of disruptive new technology have become even more remote.
The auto industry also poses a challenge to Apple’s lucrative business model. Tesla’s industry-leading gross profit margin in its automotive business briefly exceeded 30% in 2021. But since then, Tesla’s profit margins have fallen below 18% due to rising interest rates and increased competition. Compare that to Apple’s gross profit margins, which were close to 45% last year, in an industry far less affected by economic conditions.
Meanwhile, Apple’s first mixed reality headset, the Vision Pro, will finally hit the market next week. Sales expectations were unusually low for a breakthrough product from a company with a reputation for defining important new consumer technology markets. This reflects short-term supply constraints, but the $3,499 (€3,220) price also makes it prohibitive for most people.
[ Apple launches Vision Pro mixed reality headset into unproven niche market ]
Last year’s very limited and highly controlled “hands-on” testing resulted in much praise for the user experience, but the technology still has room to grow. The headset has an external battery pack, and early reports from reviewers suggest it’s heavy when worn.
It’s also not clear what buyers will use it for. Apple is touting the Vision Pro’s potential as a work tool, but it’s also touting it as an entertainment device and a way to shoot and watch 3D videos. The decision by some major entertainment companies, including Netflix and Spotify, not to release apps for new devices at launch could also limit their appeal.
That’s why the launch of Vision Pro seems premature. But it’s never easy to see how general-purpose computing platforms will become popular, and what gaps they will fill in users’ lives. When Jobs first showed off his iPhone, he pitched it as a device that was perfect for three things: making phone calls, browsing the web, and listening to music, but the App Store added to that equation. was not included.
For better or worse, the Vision Pro’s time has arrived. But it seems like it’s a very slow burn, and it’s too early to tell whether it will end up being a major new computing platform or a niche platform for Apple superfans. – Copyright The Financial Times Limited 2024