★ Vision Pro Bites Dog
It’s almost as though — hear me out — Apple launched Vision Pro in 2023 for long-term strategic reasons, not with short-term sales in mind.
Wayne Ma and Qianer Liu, reporting for The Information (paywalled, alas — here’s Techmeme’s roundup of summaries and regurgitations), “Apple Sharply Scales Back Production of Vision Pro”:
Apple has sharply scaled back production of its Vision Pro mixed
reality headset since the early summer and could stop making the
existing version of the device entirely by year end, according
to multiple people directly involved in building components for
the device.
The move suggests that Apple has enough inventory built up to meet
demand for the foreseeable future. It follows Apple’s decision
earlier this year to focus on building a model that’s
cheaper than the current version — which retails for $3,500 — for possible release by the end of 2025, as The Information has
previously reported. […]
Counterpoint Research said Apple sold around 370,000 headsets in
the first three quarters of this year and estimates that it will
only sell around 50,000 more units by year end.
I’ll start by pointing out, just as an example of conventional wisdom, that the Time magazine story I linked to earlier today, about Vision Pros being used by surgeons, flatly described Vision Pro as “a commercial flop”.
There’s no question that Vision Pro sales are, by the standards of most Apple products, low. On a unit basis, they’re a rounding error compared to products like the iPhone, iPads, Macs, and AirPods. Apple stopped releasing unit sale numbers for any of its products long ago, but working backwards from iPhone revenue numbers, which Apple does release, most estimates peg iPhone unit sales at around 210–240 million per year. That’s about 600,000 iPhones sold per day. So if we accept Counterpoint’s above-cited estimate for Vision Pro unit sales — which seems about right — that means Apple sells about 1.5× more iPhones on an average day than they’ll sell Vision Pros in the entire year. I find that a useful perspective.
But all of this coverage, from The Information’s report on production pausing to Time’s offhand dismissal of Vision Pro as a “commercial flop”, insinuates (in the case of The Information) or just presumes (Time’s case) that Vision Pro sales are significantly lower than Apple expected. The Information doesn’t say that. In fact, their report yesterday goes out of its way not to compare actual sales to expectations — an omission I’ll return to shortly. Nobody compares Vision Pro sales to Apple’s expectations, because seemingly no one outside the company knows how many Vision Pro units Apple expected or hoped to sell. My gut feeling, though, is that Vision Pro sales are, at worst, just a little on the low side of where Apple’s internal expectations were. Most of that gut feeling is simply based on everything that was reported about Vision Pro before it hit the market.
Start with the obvious. Vision Pro costs around $4,000 per unit, all told, which is far more expensive than iPhones, iPads, and even any consumer-grade Mac. The vast majority of Apple’s entire customer base has never spent more than $2,000 on any electronic device, I bet. It’s a brand-new computing platform without much software. It’s a brand-new entertainment device without much exclusive content for the device. It’s big and heavy for a headset and requires a tethered connection to a battery pack, and even with the battery as an external puck, lasts only a little over 2 hours unplugged from a power source. Apple knows all of this — especially regarding consumer price sensitivity — and thus knows better than anyone that all together it makes for a hard sell. Tellingly, Apple — universally regarded as one of the best marketing companies in the world — has bought very little advertising to promote Vision Pro. It’s almost as though — hear me out — Apple launched Vision Pro in 2023 for long-term strategic reasons, not with short-term sales in mind. How many units did even the biggest optimists inside Apple expect them to sell, even if Apple could manufacturer as many units as needed to meet surprisingly high demand?
But here’s the key. Apple almost certainly could not manufacturer as many Vision Pro units as it wanted, if market demand had turned out to be much higher than expected. If, against expectations, Vision Pro were today the hottest item on gift wishlists for the upcoming holiday season, you’d have to buy them on the secondhand market at a markup, not at retail price from Apple.
I’ve mentioned this before, but in June 2023 TheElec reported that Sony, the exclusive supplier of the high-resolution OLED displays in Vision Pro, only has the physical capacity to manufacturer 900,000 units per year, and with two displays per Vision Pro, that put a maximum capacity on Vision Pro production at about 450,000 headsets for the year. That’s only slightly higher than the actual sales estimate The Information cites from Counterpoint Research, of 420,000 units.
News publications love to cite their own previous reporting when it turned out to be accurate. Who doesn’t love to gloat? I sure do. Which thus makes it highly conspicuous that The Information is painting ~420,000 unit sales of Vision Pro as a grand disappointment, when, on 31 May 2023, Wayne Ma himself reported the following, under the headline “Apple’s Learning Curve: How Headset’s Design Caused Production Challenges”:
The headset is the most complicated hardware product Apple has
ever created due to its unconventional curved shape, thinness and
ultralight weight — which has resulted in an expected
budget-busting price tag of around $3,000.[…]
Those and other design details have made it hard to manufacture
the device at scale and have pushed up the headset’s prospective
retail price, according to those people, along with industry
analysts. Apple is expected to ship fewer than half a million
headsets in the first year of its release, according to people
involved in its supply chain. That figure is in line with
projections from equity analysts and other reports. By comparison,
it took Apple about two years to sell 1 million iPods, only 74
days to sell 1 million iPhones and less than a day to sell 1
million Apple Watches.
That May 2023 report refers to it as “the headset” because it wasn’t even announced — and named — until WWDC a few weeks later. So before it was even announced, Ma reported that it would cost at least $3,000 and would sell fewer than 500,000 units in its first year. He was right about the price, and here we are in October 2024 with estimated sales numbers of … fewer than 500,000 units in its first year.
I’m not trying to whistle past the graveyard here. Surely Apple hoped Vision Pro demand — not sales, necessarily, but demand — might have been higher than it is. What’s noteworthy in this latest report from The Information is the claim that Apple is pausing component orders for now, having enough on hand to meet actual demand for the foreseeable future. In the hypothetical world where demand for Vision Pro is much stronger than it actually is today, Apple might still only be able to sell 450,000 units in the first year, but would keep producing them as fast as they can heading into 2025. But I really doubt that Apple considers actual Vision Pro demand much worse than mildly disappointing. Again, they never launched a major ad campaign. Not at launch, not in the summer, and not now, heading into the holidays.
At the very end of this new report, The Information writes:
In an interview published on Sunday, Apple CEO Tim Cook told The
Wall Street Journal the Vision Pro wasn’t a “mass-market
product” because of its high price. But he said there were
enough early adopters that were still willing to buy the device.
“People who want to have tomorrow’s technology today — that’s who
it’s for,” he told the newspaper. “Fortunately, there’s enough
people who are in that camp that it’s exciting.”
That’s the closest they come to suggesting Apple is OK with Vision Pro’s sales to date — by quoting Tim Cook, who, of course, is obviously going to put as positive a spin as he can on anything related to Apple.
A headline like, say, “Vision Pro Sales Are Exactly in Line With Expectations” is not going to hit people as a big story, but “Apple Sharply Scales Back Production of Vision Pro” does. It’s the classic “Man Bites Dog” being a story and “Dog Bites Man” not. Apple is a company that is famous for making spectacularly popular products. Vision Pro is definitely not a spectacularly popular product. But it’s disingenuous, to say the least, for an October 2024 report to suggest that Vision Pro sales are surprisingly weak when they’re almost exactly in line with uncannily accurate expectations set in a May 2023 report by the exact same reporter at the same publication.