Apple’s ( AAPL ) Vision Pro officially launched on Friday, marking the most significant product launch for the company since 2015’s Apple Watch. But enthusiasm for the company’s most ambitious product in years has waned on Wall Street after Apple released a report. Slowdown in China sales in the first quarter of the fiscal year.
Vision Pro is, in Apple’s words, a spatial computer. But for the average person, this is a high-powered AR/VR headset.
I first used the Vision Pro after Apple launched it at its WWDC event in June 2023, and again just before the February 2 launch. And yes, it’s as impressive as you hear.
But a lot depends on the long-term success of the Vision Pro as Apple looks for its next big product platform. And as storm clouds roll over Apple’s Cupertino headquarters, the company needs a win more than ever.
Apple’s difficult start to 2024
Apple has dealt with a number of challenges in the first few weeks of the year, and the outlook isn’t looking bright as we head into February. But the most pressing problem the company currently faces is the slowdown in sales in Greater China.
China, Apple’s third largest market after North America and Europe, has been a key catalyst in Apple’s growth story over the years, as the country’s expanding middle class and surge in smartphone sales have provided fertile ground for the iPhone’s rise in popularity in the region.
According to Counterpoint Research, Apple was still the best-selling smartphone brand in China in Q4 2023, compared to 16%, 15.2% and 15.1% of the market from local rivals Xiaomi, Huawei and Honor, respectively. He captured 20%. However, Huawei saw its annual market share increase by 71.1% compared to the previous year, thanks to its new 5G smartphones, while Apple fell by 9%.
This, combined with China’s sluggish economy, meant Apple’s overall Greater China revenue fell from $23.9 billion in Q4 2022 to $20.8 billion in Q4 2023.
According to UBS analyst David Vogt, if Apple’s decline in market share proves permanent and the smartphone market grows an estimated 3% in 2024, “loss of share in China could weigh on iPhone revenue by slightly more than $7 billion, 3% on iPhone revenue.” There could be a volatility of .5 and ~1.9% of the total company headwind.”
Regulatory winds are too strong
Apple also finds itself in a tangle of regulatory issues in the European Union as it tries to navigate the bloc’s Digital Markets Act (DMA). The DMA, which will come into force this year, ensures that big tech companies do not have too much power over the wider tech ecosystem. Apple has so far announced that it will open up its platform, allowing users in the region to set up third-party app stores and giving app developers the option to offer users third-party payment options beyond Apple’s in-app payment system.
But there is a problem. If developers decide to use external payment options, they will still have to pay cash to Apple. However, the tech giant says the 50 euro cents fee only applies to developers whose apps are downloaded more than 1 million times a year. After that, they will need to pay this fee for every subsequent download.
Critics, including Spotify CEO Daniel Ek and Epic CEO Tim Sweeney, responded to Apple with the following words: Ek calls new rule “hostile” and Sweeney said it was a “Deceptive new example of Malicious Conformity.” The EU still needs to decide whether Apple’s new rules comply with the DMA.
Meanwhile, in the US, Apple is facing a potential antitrust lawsuit from the Department of Justice. According to the New York Times, the Justice Department is investigating how Apple controls its hardware and software as a way to keep consumers locked in its ecosystem and combat competitors. While any case could potentially take years to work its way through the legal system, it could distract the company at a time when it is trying to break into a new product category.
Here comes Vision Pro
Vision Pro serves as Apple’s next-generation computing platform. Its $3,499 price isn’t quite a move-in price for the typical consumer, but that doesn’t diminish its importance to the company.
After years of development, the headset cannot fail. And while I was only able to use it briefly over two separate sessions of around 30 minutes, it’s hard to imagine a rival that matches what Apple might be offering anytime soon.
The screen is the sharpest I’ve seen on an AR/VR headset, the fit is comfortable, and the interface is incredibly easy to navigate. Apple boasts a massive app library for the Vision Pro, but major names like Netflix and YouTube are missing.
There’s also the fact that the Vision Pro is powered by an external battery, which Apple says has a two-hour battery life, which could be a drawback for some users.
I’ll dive deeper into what it’s like to use the Vision Pro once I have it in my hands for a long time, but it’s safe to say that Apple has created some incredible technology. Now he has to sell it to the public.
Add this to the list of challenges the company will have to overcome in the coming year.
Daniel Howley He is the technology editor of Yahoo Finance. He has been interested in the technology sector since 2011. You can follow him on Twitter. @DanielHowley.
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