- Apple Vision Pro: An Investors Perspective
Apple Vision Pro: An Investors Perspective
What AVP Means For Investor, Founders and The Industry
33 years after first trying VR and 7 years after my first investment in the category, I’m happy to say I think Apple may have just fired the starting gun for VR.
Midtown NYC, 2nd Feb 2024
Along that journey in XR there have been a few key personal milestones:
1991 - Queuing with my Dad at a computer games show to play Dactyl’s Nightmare in VR.
2015 - Trying modern VR for the first time at a frontier tech dinner event in Slush.
2024 - Flying half way round the world to pick up an Apple Vision Pro - Apple’s first VR headset.
Apple Fifth Avenue, NYC
33 years after first trying VR and 7 years after my first investment in the category, I’m happy to say I think Apple may have just fired the starting gun for VR.
But let’s not call it VR. Let’s call it Spatial Computing.
Welcome To The Era of Spatial Computing
This is the top image on Apple.com as I write this
Just as they did with the iPhone, Apple have quietly observed early entrants like Oculus, Valve and HTC, whilst investing heavily in R&D and acquiring 10+ ‘spatial’ startups. Notably these included Vrvana the mixed reality headset startup and several software companies like Faceshift, Emotient and SensoMotoric for face and eye-tracking.
Several additional acquisitions post 2020, not shown
And, as Apple are famous for doing, they’ve entered the market with late-mover advantage. Their ambition clearly seems to have been not just to release a great headset, but to define an entirely new category.
As a result Vision Pro is a high-end device that sets new standards in key areas such as screen quality and UX/UI. The device has also been positioned to not compete with its closest rival, Meta’s Quest 3, which is still an awesome device - especially for 1/7th of Vision Pro’s price - but, is seen by most as the best VR gaming device.
Having been hands-on with the device for several days now, I’m now even firmer in my conviction that Apple has been successful in terms of defining this new category.
Buzzwords come and go. But the phrase ‘Spatial Computing’ is not one that Apple is going to easily part with. At some point I’d like to write a post on how FOV Ventures thinks about Spatial Computing (spoiler: it’s not just VR and AR).
But rather than go into that now, I’d like to just summarise my first impressions of using the Vision Pro and provide some additional thoughts on startup opportunities and market timing from an investor’s perspective.
Three Devices In One
When Steve Jobs introduced the iPhone in that famous keynote, he did so by talking about 3 things it would do.
It was an internet browsing device, a music player and a phone. All in one.
Steve Jobs introducing the iPhone
John Gruber points out in his excellent written review that this same logic applies to the AVP. And I’ve found it helpful to use this framework.
1. Spatial Computing & Productivity Platform
A computer on your face
The Vision Pro isn’t the spatial computing device that will replace your phone. I’d bet that’s likely a ‘smartglasses + AI assistant’ form factor anywhere from 2027 onwards. But the computing/productivity use case is the one that might make it a daily driver for me.
At its simplest, the device is effectively a huge monitor for your Mac. It’s magical when the Vision Pro seamlessly syncs with your MacBook, just by looking at it. And although it’s currently limited to one MacBook screen, you can still layer Vision Pro and iPad apps all around the room for an infinite screen setup.
Today the screens in-headset are mostly flat 2D apps and browser windows. So the real leap will come when new startups, as well as existing iOS apps, start to leverage the 3D and XR capabilities of the Vision Pro to bring new possibilities and workflows. This is one area that we’re keen to see new founders building in.
Many years ago, at HTC’s VIVE X we invested in this category with Primitive, a VR collaboration tool for distributed developer teams that specialised in things like code visualisation. But the market was too early and crucially the pre-Vision Pro displays were simply not good enough for working with text-heavy apps.
I’m now seeing apps like Naer and Fluid revisit this category for the Quest 3 and am excited to see who will be building what for the Vision Pro, which has a much higher capability of text-based applications.
2. Personal Entertainment Device
Your own portable movie theatre
The next use killer case, straight out of the box, is personal entertainment.
The Vision Pro is effectively the equivalent of a $2000 home theatre setup, with giant screen and surround sound. Flying home from New York, I was able to put my headset on, pop in my AirPods Pros and enjoy Napoleon on a giant screen without disturbing any fellow passengers. The immersion goes even further when you change the environment to actually be seated in a virtual cinema.
Flights will never be the same again!
Interestingly, Greg Castle (an Oculus angel investor), recently shared that United Airlines were in talks with Oculus to replace business class screens with VR in 2016.
But the Vision Pro, is the first headset were this is truly possible, from your own personal device.
Flight home from New York
Personal movie theatres has been a potential killer use case since the early days of VR.
Startups like Bigscreen pioneered in this space, making the viewing experience social and fun (they now have their own dedicated headset, which I have yet to try). And US startup NextVR, was an early mover before getting snapped up by Apple themselves. So we knew this was always going to be a focus of the Vision Pro.
The difference between then and now… the screen quality is phenomenal, AirPods bring the surround sound, and ‘it just works’. Right from the offset you have your entire Apple library waiting for you. And although Netflix is conspicuous in its absence from the VisionOS store at launch, other streamers such as Disney+ are there.
In the headset, you can also enjoy over 150 3D movies and Apple have also worked on a number of free films and documentaries shot in Apple Immersive Video — 180-degree 3D 8K recordings captures with Spatial Audio.
Again, this is nothing new, but viewing this content on such a high quality device really does make a difference. There was an explosion of immersive film making in 2016-18 in the first phase of VR. A lot of VC funding when to startups in that space, like Within (now Supernatural!) and Jaunt, but ultimately the scene fizzled out, with a handful of industry events like Venice Immersive, being the main outlet for aspiring immersive film creators. Now with Apple’s focus on seated, entertainment use cases, it will be interesting to see if there’s a resurgence.
Last but not least it’s well worth mentioning the other personal media on this device ie. your entire Photos library. In particular, panoramas and the newly introduced ‘Spatial Videos’ that can be captured by anyone using the latest iPhones. I took a family vacation to New Zealand over Xmas, just as spatial video capture had been introduced. It’s hard to explain in words how powerful it is to have captured those memories. $3500 for a lifetime of memories? Priceless!
In terms of startup opportunities here, it’s still difficult to tell.
A few entrepreneurs are making quick bucks with apps like Juno that take advantage of the fact that YouTube is still not natively available for VisionOS (either as an app or in the browser). It’s difficult to see where startups will be able to be disruptive in the premium entertainment category. However, there are a number of companies like Condense, Trickshot, Gracia and others that have been spending time building the tools to make more immersive content. Vision Pro is a huge boon for those startups. There could also be some other interesting opportunities with UGC content. Instagram built tools that leveraged the new affordances of the iPhone (GPS, camera-in-pocket, swipe to scroll) and ultimately went on to build huge networks around those tools.
3. A VR/AR headset
Ironically, the area that the Vision Pro is arguably weakest in right now is true AR and VR experiences.
Some of the devices true AR moments (ie. overlaying the real world with digital data) almost go unnoticed. For example there is a nice augmented keyboard view and the aforementioned ‘connect to Mac’ overlay that hovers above your MacBook when you look at it. This is where Apple will need to better catalyse their 3rd party developer ecosystem. Currently, most of the apps available to date are simply ported 2D iPad apps. While this bring a lot of content natively to the device, none of these utilise the true potential of spatial computing.
We’ve seen lots of concepts, but it remains to be seen if these will actually come to fruition. The reality is that not enough devs have been able to get hands on with the device to properly start developing.
Existing XR startups are still making up their minds whether to use up precious runway and dev cycles in order to either port or build a dedicated VisionOS app.
So this first generation Vision Pro is effectively a dev kit. Expect developers to start building in much higher numbers over the coming months and there will almost definitely be a nicely built out section of XR apps, and hopefully even some new killer apps or system sellers amongst them.
So, What about Gaming?
This is not (yet?) a gaming device.
Apple Arcade is available at launch and I would love to see Xbox Game Pass come to the Vision Pro. You can pair an Xbox or PS5 controller to the device and 2D gaming on the big screen is still awesome. But if you’re looking to game natively in VR then there’s a distinct lack of content — and VR controllers.
So the Quest 3, at $500, is undoubtedly the device for you. And if you’re an existing VR gaming studio/startup then you’re very likely to be targeting the Quest ecosystem, which saw record revenues this quarter.
I’ve said it before, but now really is a great time to be making VR games, whilst the market is large enough to make revenue, but small enough to not be as competitive as other platforms.
So where does that leave us with the Vision Pro?
Studios like Resolution Games have released Gaming Room and indies like Realities.io have ported their gorgeous 3D puzzler ‘Puzzling Places’ for launch. But it’s still a little too early to tell.
Outside of Apple Arcade, the company clearly doesn’t want to position this first device for gaming, but I would expect over time we’ll see this change. After all, gaming apps make up a whopping 70% of iOS App Store’s revenue.
I’ve already met some gaming startups that want to work on new Vision Pro first titles that cater to the unique hand/voice/eye input, as well as to a more mature audience that is likely to have this device and not just want to play Rec Room, Roblox and Gorilla Tag.
I’d personally love to hear from any studios who want to be experimenting early on the platform, iterating quickly on native VisionOS games, in search for the Angry Birds and Monument Valley’s of today.
Why is This Device So Good?
The Vision Pro is probably one of the most impressive and technically impressive devices ever to be put together.
Yet it’s the simple stuff that really shines. There’s no one unique new killer ‘spatial’ thing that no one has thought about before. The real beauty is in the delightful execution of many small things, that all add up. Some of these include:
i) Delightful UX. By introducing tap and swipe they also set a brand new UX paradigm that is still so pervasive that many toddlers growing up today will reach out to swipe regular TV screens, wondering why it doesn’t work like all the other devices they’ve used.
ii) Screen quality. From reading emails to watching immersive videos, hitting this new high for screen quality is a total game changer. I don’t think Apple would ever have released a device until it was able to hit this quality. And as we’ve seen with the iPhone, we can expect even better displays in the future (while the current ones get more accessible for non-Pro lines).
iii) Apple iCloud. Having all your data, photos, mails, apps, bookmarks, contacts and movies on your device the instant you turn it on is a surprising game changer. Meta have a strategic disadvantage here. When I first tried the device, I had to us my US Apple ID. Only later did I switch to another Apple ID that had my full data. The difference was surprisingly striking.
iv) Cross-Device Functionality. Spatial videos are a great example of Apple creating true synergies between their devices. Get a new iPhone. Enjoy stunning looking memories in-headset. It’s the same with the MacBook sync. And the high quality Spatial Audio from the AirPods. I was surprised there were no Watch synergies, but maybe we’ll see those in the future.
v) In-Store Demos. Seeing so much retail presence for an XR device was so refreshing to see. Apple are really pushing this and having so many stores worldwide for consumers to try the Vision line is going to be a non-trivial factor in its future success. So many first experiences of XR will happen in Apple store’s and may likely provide a longtail of customers for the Quest 3, looking for similar capabilities at a lower price point.
Apple Fifth Avenue, New York
Is This A Perfect Device?
In short… No.
The reviews have mostly been positive, with the negative ones seeming to be contrarian for the sake of being contrarian.
But there are undoubtedly plenty of flaws that will need to improve over time. As Benedict Evans points out, when considering a brand new category it’s always worth going back and reading reviews of the time for other entries. Read this piece from the NY Times in 1985, explaining why no-one would ever want or need a laptop.
All that said here are things that have been called out by other reviewers:
FOV - Apple haven’t released the specs but we’re pretty sure the device’s field of view is narrower than the Quest 3. For most it won’t be an issue, but those who already spend a lot of time in VR will notice for sure.
Light leakage - this is my biggest gripe personally. Despite doing the face scan ahead of pre-order, the facepad still seems to leak the smallest amount of light. Not a big issue for most use cases, but annoying when settling down to a movie in a dark, virtual cinema.
Weight - as someone who’s been regularly putting headsets on their face since 2016, I’m still astonished that headsets have got to the weight they are today. It’s always going to be preferable to have a lighter headset. For me the weight issue is solved by using the second strap shipped with the device - I used for 4hrs straight on the plane with no issues. But didn’t get past 45 minutes with the single strap. No doubt we’ll see 3rd party accessories here too.
Eyesight - The outward facing eyes, heavily advertised about the device. I’m glad Apple did this. They took a risk and made something iconic. But I can’t say it’s added to my overall experience so far, and I’m sure it’s added to the weight. I’ll be watching with interest to see if Eyesight makes it into future generations and non ‘Pro’ lines.
Battery - in an ideal world the device wouldn’t need an external battery pack. But as I’m mostly sat whilst using the device this hasn’t been an issue at all.
Personas - I haven’t used this feature much yet, but with Apple marking this as ‘beta’ it’s clear that we’re still in the uncanny valley with Apple’s realistic avatars. However Marques Brownlee was very positive about the overall effect of immersive FaceTime calls once you get over the initial valley.
Price - This device starts at $3,500. By the time you add more storage, accessories and new apps, the price tag could be closer $5k. Which prices out a huge portion of the existing, and potential, XR audience.
Personas in ‘beta’
Is It Worth The Money?
No doubt it’s pricey — although actually very comparable to the first Apple Macintosh in today’s money.
I’m lucky to be able to justify my own purchase as a work expense. But this first generation Vision device won’t be for everyone. This first generation is really for developers, industry, press, Apple die-hards and those that just love new tech.
It’s a dev kit, review kit and an expensive gadget, all rolled into one.
However, it was re-assuring to talk to Apple store staff in New York and hear that at least half of their post-morning sales on the first day were coming from people that likely didn’t class themselves as existing VR users.
So why did Apple do this when the nearest competitive device, the very capable Meta Quest 3, is only $500? Ultimately, I don’t think they had a choice.
In their pursuit of setting a new quality bar they simply had no choice and were also working against constraints in the supply chain. But even if the constraints hadn’t been there I still think the high price is a genius move. By pricing the device so high they have done they’ve completely removed themselves from the same positioning as Quest. The high price also makes this a highly aspirational product something that Apple can get away with in a way that most others can’t.
Reminder of something I have talked about before: VR will become something everyone wants before it becomes something everyone can afford.
— Palmer Luckey (@PalmerLuckey)
Dec 24, 2015
This device isn’t flawless, but it is really exciting.
I think Apple have been successful in carving out a new category, whilst giving themselves some very strong foundations to build out the overall Vision OS ecosystem and future generations of devices.
The most important thing is that it sets out a clear set of possibilities, with enough promise to catalyse interest from a new generation of developers, alongside investors, press and CEOs.
The Apple Vision Pro 1 is a developer kit, a review device, a foundation.
But for those who can afford it the value proposition of the spatial computer + large screen + home theatre + desirability is already enough to justify the outlay. For those who can’t afford it, expect sales of the already popular Quest 3 to surge.
The Vision Pro will lift all boats and don’t be surprised to see this successful launch entice other giants like Samsung/Google back into the spatial computing ring.
Exciting times ahead.
We’re actively looking for startups building for the Vision Pro. If that’s you then we’d love to hear from you.