Why Apple’s headset could seriously boost the flagging VR market

Why Apple's headset could seriously boost the flagging VR market
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The virtual reality (VR) market did not have a good 2022, but if Apple’s (AAPL) long-rumored headset is dropping this year, some analysts say could send VR botching toward mainstream consumers.

By 2022, sales in the VR market were down about 2% year-over-year to $1.1 billion, according to research from the NDP, while Meta (META) has reportedly struggled to maintain consumer interest in its new Meta Quest Pro, lower the prices just last week. But if Apple enters the market this year as they expect, it could start to change the way the public views VR.

“In VR, we haven’t hit that hockey stick moment yet, where this is just going to take off like we saw with smartphones,” said IDC research director Ramon Llamas. “We’re not yet at the place where people are looking at this and saying, ‘Wow, I just want to put that on,’ but Apple can only help create that hockey moment.”

Llamas believes that the combination of Apple’s design capabilities and far-reaching ecosystem could welcome new consumers to the market.

“Apple is perhaps the most trusted brand in the technology industry, and it’s in Apple’s DNA to make things so damn easy to use,” he told Yahoo Finance. In addition, Apple’s “broad ecosystem of devices and applications and services” can provide a wide range of entry points for consumers, as they move back and forth seamlessly between, say, Apple TV and applications from their Apple Watches or iPhones.

“How would you like to watch Apple TV on your VR headset? There’s a certain flow there that can add up,” Llamas said.

Photo by: STRF/STAR MAX/IPx 2022 7/30/22 Atmosphere at an Apple Store in Greenwich, Connecticut.  Here you can see the iPhone 13 on display.

Photo by: STRF/STAR MAX/IPx 2022 7/30/22 Atmosphere at an Apple Store in Greenwich, Connecticut. Here you can see the iPhone 13 on display.

“That’s where the battle will really begin”

If Apple’s headset does indeed hit the shelves this year, it will undoubtedly shake things up for VR’s incumbent leader, the Meta (META). Currently, Meta has a staggering 82% grip on the VR market, according to IDC.

“Meta is the clear market leader in VR and very advanced in building a compelling B2C and B2B ecosystem – the Meta-Microsoft partnership is one example,” said Rolf Illenberger, CEO of virtual reality software provider VRdirect. “However, Meta faces an uphill battle when it comes to acceptance by business customers. Apple already knows this market and leveraged its smartphone business in the B2B space. Meta will continue to be the market leader, but the competitive dynamics will grow.”

That dynamic could potentially develop into a full-fledged distance between Apple and Meta over time.

“Once Apple’s headsets get two or three cycles when we’re past the ‘warts-and-all’ stage, we’ll be able to go feature-by-feature and ask who does it best,” Llamas said. “That’s where the battle will really begin.”

However, that is probably years in the future. Basically, VR is still in its early innings.

“A VR-related Apple announcement will definitely help the VR market, but there are some major hurdles (lack of depth and breadth of content, convenient and accessible devices and experiences, and usability) that VR needs to overcome that cannot be addressed by a sole vendor,” said Gartner Principal Analyst Tuong Nguyen. “Apple can certainly pick up the pace, but it will have to be a concerted industry effort.”

“There is still a big gap between what we want and some are promising versus what it can actually deliver,” Nguyen added.

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and again LinkedIn.

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