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AV/VR Headsets A Big Flop As Apple Launches Device In OZ

Apple Vision Pro WWDC 2024 (Image: Sourced from Apple website)

As pre-orders for Apple’s Vision Pro in Australia commence later this month – even though the company is reportedly suspending work on the development of its Vision Pro 2 successor – global sales of augmented reality and virtual reality (AR/VR) headsets are proving to be something of a damp squib.

Newly released data by the International Data Corporation (IDC) show that worldwide shipments of AR/VR headsets declined 67.4 per cent year-on-year in the first quarter of 2024.

IDC’s Worldwide Quarterly Augmented and Virtual Reality Headset Tracker report said that the decline in shipments was expected as the market transitions to include new categories such as Mixed Reality (MR) and Extended Reality (ER).

Despite the decline, the average selling price rose to over A$1,500 as Apple entered the market and incumbents such as Meta focused on premium headsets such as the Quest 3.

Meta again led the market in Q1 2024 in terms of share, while Apple’s recent entry into the market enabled it to capture the second position.

ByteDance, Xreal, and HTC rounded out the top 5, according to IDC.

IDC Worldwide Quarterly Augmented and Virtual Reality Headset Tracker

“With mixed reality on the rise, expect strictly virtual reality headsets to fade in the coming years as brands and developers devise new hardware and experiences to help users eventually transition to augmented reality further down the line,” said Jitesh Ubrani, research manager, Worldwide Mobile Device Trackers at IDC.

“Meanwhile, extended reality displays are set to garner consumer attention as they offer a big screen experience today while incorporating AI and heads-up displays in the near future.”

Apple’s Vision Pro will go on sale in Australia at an expensive price point of A$5,999. Apart from Australia, pre-orders for the device have also begun in China mainland, Hong Kong, Japan, and Singapore last week, with Canada, France, Germany and the UK commencing alongside Australia.

“ASPs for augmented reality headsets have almost always been above this [A$1,500] price point, but ASPs for VR, MR, and ER headsets have typically been lower,” noted Ramon T. Llamas, research director with IDC’s Augmented and Virtual Reality team. “Apple’s Vision Pro drove ASPs higher for MR headsets, but the addition of lower cost devices from Meta and HTC have kept those ASPs from going much higher. Meanwhile, there were many devices for VR and ER priced below A$750.

“Looking ahead, we anticipate ASP erosion across all products,” Llamas continued. “Because the overall market is still in its early stages with more expensive first- and second-generation devices, prices will be high even as early adopters buy them. In order to reach scale in the mass market, vendors will need to reduce prices on later and upcoming devices.”

Media reports emerging this week have speculated that Apple has “suspended” work on the next-generation Vision Pro, and will instead debut a cheaper model which will arrive towards the end of 2025.
The Information reported that Apple began work in 2022 on a cheaper and lighter Vision product, internally code-named N109. Eventually, it intends to make that version of the Vision product as affordable as a high-end iPhone – around the A$2,900 mark.

The decision to axe the development of a high-end successor to the Vision Pro, and instead develop a more affordable version of it, may be a reluctant admission by Apple that it misread the actual market appetite for its Vision Pro product which first started shipping in the US earlier this year.