Apple's Vision Pro will be very hard to find when released next year and not because of demand
At a price of $3,499, Apple might not find a huge number of consumers banging on its door looking to buy the spatial computer. On the other hand, it is cutting-edge, it will attract first adopters, and it has the Apple logo on it (enough said). Now it turns out that there might not be as many Vision Pro units ready to be sold as Apple had originally hoped. According to the Financial Times, the Vision Pro's complex design is causing problems manufacturing the product.
Fewer than 400,000 Vision Pro units will be produced due to the complexity of the product
The number of Vision Pro headsets that will be built by the lone contract manufacturer assembling the device, China's Luxshare, will be under 400,000 per the report. Originally, Apple hoped to produce 1 million Vision Pro units. Still, the shortfall might not come as much of a surprise to Apple, especially since the company likes to keep things so close to the vest. Back in January, well-known TF International analyst Ming-Chi Kuo said that software issues were holding back the device.
Kuo, who originally forecast that Apple would ship 800,000-1.2 million units of the mixed reality headset, revised his numbers in January and said that fewer than 500,000 units would be delivered by Apple next year. Susannah Streeter, head of money and markets at Hargreaves Lansdown commented, "Apple's Vision Pro headset was already running up against challenges, given its high price point, and now it's veered into another potential setback." Streeter said Apple has recovered from similar issues before once the products were tested by users.
The Vision Pro switches back and forth from virtual reality (VR) to augmented reality (AR). The former allows users to create immersive environments that are not real but look and sound as though they are. The real future for Apple appears to be in AR where real-time video feeds are overlaid with computer-generated data. If AR glasses do end up replacing the iPhone, the Vision Pro is the first step toward that transition.
Apple is believed to be upset with the low yield of micro-OLED panels that Apple is sourcing from Sony, the lone source of this key component. Sony's Terushi Shimizu, head of its semiconductor division, said that the company kept production low because of concerns about how the market would respond to the product. He noted, "We will be watching to see how much demand (for micro-OLED displays) will increase. But I don’t think we will be aggressive [in producing] in the same scale as image sensors."
Apple has been working to produce a less-expensive version of the headset that would see some features cut. Samsung and LG are supposedly producing the displays for the cheaper model. Apple also has been insistent that the panels used on the product be micro-OLED and not mini-LED.
Apple baked suppliers' low yields into the price of the Vision Pro says one tech consultant
At $3,499 the Vision Pro is not really made for consumers except for those who must have the latest and greatest technology and can afford to buy it. Months ago the word out of Apple's camp was that the product was the most complex device that Apple ever devised and built. That thought was repeated by Jay Goldberg, founder of tech consultancy D/D Advisors, who said, "A lot of this is normal growing pains. This is the most complex consumer device anyone has ever made."
Goldberg said that Apple baked low yields for components into the $3,499 price tag. "Someone has to pay for that," he stated. "I think Apple went into this with a lot of 'bad yield' built into the model. There is a lot of technology in the Vision Pro and they knew it would take a while to scale up. Apple knows they won’t make money on this in the first year."
One bullish report calls for 20 million Apple headset users within five years
The Financial Times report says that Apple has asked two suppliers based in China for enough components to produce 130,000 to 150,000 units of the device in the first year. The production shortfall has hit Luxshare pretty hard since the contract manufacturer was reportedly ramping up to produce as many as 18 million units annually in the coming years.
Wall Street analysts have wildly different forecasts for Vision Pro shipments in the first year. Wedbush was calling for 150,000 units to ship while Morgan Stanley called for 800,000 units to be delivered. Goldman Sachs forecast that as many as 5 million headsets would be shipped by Apple next year. As a comparison, 1.4 million iPhone units were sold by Apple during that product's first year.
One bullish report came from Canalys. The research firm says that within five years, 20 million people will be using the headset. Analyst Jason Low says, "Given the limited production numbers, it will be flying off the shelves, pre-ordered by Apple’s loyal fans and high net worth users in the U.S."
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