Jul 11, 2024

The Anemic Vision Pro

Yet more sales estimates paint a bleak picture...

Does IDC have any idea how many Vision Pro units Apple will sell this year? I don't know. Does anyone? Apple hasn't said a peep about sales so far and I suspect they won't in their Q3 earnings in three weeks either. Why? Because they're not impressive, obviously. We can (and will) argue about what Apple's actual expectations for the device were, but there's no denying this is a weird marquee product launch for Apple.

The $3,500 Vision Pro mixed-reality headset has yet to sell 100,000 units in a quarter since its launch in the US in February, and it faces a 75% drop in domestic sales in the current quarter, according to market tracker IDC.

Per IDC's chart (below), they estimate that Apple has sold 171,913 Vision Pros in the US through Q2. That's a humorously precise number given the lack of real data, but let's just go with it for now. For the year, they believe sales will be 202,805 in the US. In other words, IDC believes that 85% of the Vision Pros that will be sold in the US have already been sold as we start Q3. Apple, like all consumer companies, have sales that usually peak in Q4 around the holidays, but IDC thinks Apple will sell just 11,784 Vision Pros in that quarter (that alone is reason to think these numbers are BS).

International is a slightly different story because the device just rolled out in a bunch of countries around the world, of course. IDC thinks sales abroad will actually ramp and peak in Q4. All-in (US + International), IDC thinks Apple will sell 401,004 Vision Pros in 2024 (with 179,126 sales around the world so far).

Those US numbers are in-line with analyst Ming-Chi Kuo's estimates back in February, but the overall numbers are well below his estimates of 650,000–700,000. Regardless, this will be a tiny business, relatively speaking, for Apple this year. If IDC's numbers are close, Vision Pro will be under a $1.5B business for the company (not including peripheral sales). As I wrote back in February:

But for context, Apple's total revenue in 2023 was $383B. Of that, iPhone revenue was $201B for the year. Mac revenue was $29B. iPad revenue was $28B. It's hard to know what Apple Watch's revenue was as it's bucketed into "Wearables" with AirPods, HomePods, etc. (It's also likely where Apple will put Vision Pro revenue this year, I imagine.) That overall number was $40B in revenue for 2023 (estimates have Apple Watch contributing roughly half of that number, at $20B).

In other words, in year one, Vision Pro may be a business roughly 1/10th of the iPad and Apple Watch businesses (with the big caveats that the Vision Pro will have been U.S.-only for a large portion of the year – likely half, given Apple's fiscal calendar, which runs October to September – and won't have been in market at all in the first quarter of said fiscal calendar, so it's not exactly apples-to-apples). The first year of iPad revenue was $5B (iPhone didn't get broken out until 2009). So it's roughly half of that, with again, all those caveats (and the fact that the Vision Pro starts at $3,499, whereas the iPad started at $499).

Per their chat, IDC has sales starting to take off in Q3 2025, which seems to be when they believe a more affordable version of the Vision Pro will ship. Why do they think that? Dunno, there's a lot of guessing going on here, I suspect.

The gadget’s international launch at the end of June will offset weakness in the US. A more affordable edition — which IDC estimates would cost roughly half as much — should rekindle interest in 2025, but sales may not rise meaningfully over the coming year, IDC said.

"Half as much" would put the cost the the 'Vision' (the working name for the lower cost Vision Pro) at $1,750. Again, this seems like a total stab in the dark, especially since reports have stated that Apple is having a hard time figuring out how to get the price down, but is right in the middle of the $1,500 - $2,000 range that Mark Gurman put out there as a target previously. I still have a hard time believing the device is much of a hit at $1,750. As I wrote back in April, calling it a mistake that Apple launched the Vision Pro in its current state:

Yes, they may do a price cut in the meantime – I mean, at some point it feels like they'll have to. But that won't really matter if the other issues aren't resolved. A $1,700 Vision Pro is better than a $3,500 Vision Pro, I guess, but kind of in the way that a $250,000 Lamborghini is "better" than a $500,000 Lamborghini. A price cut, even in half, isn't going to drastically alter the market for this device.

As IDC notes, as I constantly note, as everyone notes, what Apple really needs here is content. Back to some thoughts in February:

Anyway, again, assuming these numbers hold any weight, the Vision Pro will end its first year as an interesting, but relatively small business for Apple. It's a decent starting point, but you have to believe that Apple could launch nearly anything these days from a decent starting point given all their product, distribution, and marketing muscle. All that really matters is what happens in year two and beyond. Including, of course, to the price!

For now, my advice: content, content, content, content, content, content.

Almost six months later and it's largely still crickets out here in that regard. Apple releases a few things here and there every few weeks, but it's been just a massive disappointment from the content perspective. Apple both must know this but also had to know this leading up to the launch. Which again is why I believe it was a mistake to launch the device this year. They should have done a dev kit in 2024, ramped up content behind-the-scenes, and launched the device in 2025.

Beyond the paltry sales, but related to them, there's this sort of stench of decay around the product already. And the international launch doesn't seem to be doing much to clear the air thus far. Perception can quickly become reality, even with virtual reality. Sorry, "Spatial Computing".