Apple might not save the XR market after all

Noted Apple analyst Ming-Chi Kuo wrote on Medium that Apple has cut its shipment forecast for its expensive mixed reality (MR) headset.

According to Kuo, who works for Hong Kong-based TF International Securities, Apple expects to ship 400,000-450,000 units this year, down considerably from its previous forecast of 700,000-800,000 or more.

Described by Cult of Mac as the most reliable voice on all things Apple, Kuo said the iPhone maker has opted to cut production of Vision Pro ahead of its international launch. This suggests Apple has plenty of inventory, which implies that demand in the US has "fallen sharply beyond expectations."

Therefore, Apple has also taken a conservative view of demand outside its home country, he said.

Kuo also claims that Apple is reviewing and adjusting its head-mounted display (HMD) strategy, and might not release an updated model in 2025, despite a previous expectation that one would be unveiled during the second half.

Weight has been lent to Kuo's assertions by Bloomberg chief correspondent and reliable source of Apple news, Mark Gurman.

In a newsletter date 21 April, he wrote that according to his sources, requests for Vision Pro demos at Apple stores "is way down," and that "people who do book appointments often don't show up, and sales – at least at some locations – have gone from a couple of units a day to just a handful in a whole week."

Gurman owns a Vision Pro headset himself, but confesses that his usage of it has gone from every day to once or twice per week. He says it is too cumbersome to use on a daily basis, and it lacks a killer app that would compel him to make greater use of it.

Officially launched last June, Vision Pro grabbed attention for its unusual approach to enabling an MR experience – rather than put a head-up display on some clear glasses, it uses an array of cameras to feed the wearer a real-time view of the surrounding environment.

It also grabbed attention for its hefty price tag of $3,499. That same amount of money can buy a 16-inch MacBook Pro powered by Apple's most advanced silicon to date, the M3 Max. As devices go, a laptop is a lot more versatile, and the owner looks no more or less silly with one strapped to their head (opinions may vary).

Apple has a celebrated reputation for arriving fashionably late to new device categories and launching products that inject a profound sense of coolness and desirability into the segment. And despite the cost, there were high hopes that Vision Pro would do the same for the struggling augmented/virtual reality (AR/VR) market.

In late March, Counterpoint Research revealed that shipments of extended reality (XR) headset slumped 19 percent year-on-year in 2023, driven by the lack of new devices and compelling use cases beyond gaming.

However, Counterpoint predicted at the time that Vision Pro would stimulate XR content production and entice other OEMs to get in on the act.

IDC separately predicted that XR shipments would grow 44.2% this year to 9.7 million units, fuelled in part by Vision Pro and the halo effect Apple has.

But with weak demand forcing Apple to scale back its ambitions – including allegedly putting a follow-up device on the back burner – this could quite easily stunt growth in the AR/VR hardware market.