Apple MR is here, warming up for the "Next Decade"

$Apple(AAPL.US) showed a "comeback against the wind" performance in the first quarter and remains the dominant player in the mobile phone market. Just a month later, Apple released the previously "pigeonholed" MR product - Vision Pro.

Even after the mobile phone market has stabilized, Apple can still increase its market share by relying on its own product strength. However, in order to open up long-term imagination space, Apple still needs a new hardware to achieve new breakthroughs. Although the company began to conceive 10 years ago, Apple's products have been slow to appear even after meta has launched several generations of Oculus products. Is Apple holding back a "big move"?

Although Oculus Quest2 has caused waves in the industry, it still cannot gain more consumer recognition due to problems such as dizziness and delay. According to the latest report from IDC, in the absence of exciting products brought by existing players, the market urgently needs a product from Apple to boost confidence.

At this time, Apple's first MR product (Vision Pro) was finally released. The Dolphin mainly wants to take a look at this new product with everyone.

After watching the press conference, there are two main feelings:

1) Price: Expensive, the most direct feeling. The price of 3500 US dollars is higher than the market's original expectation of 3000 US dollars. One Vision Pro can buy 2 iPhone 14 Pro Max, with surplus;

2) Performance configuration: Micro-OLED is here as expected, and there are other small surprises. ① Specially designed R1 chip; ② The newly launched VisionOS system; ③ Free your hands and give up the controller.

(For details of the product, please refer to the specific content of this article)

The Dolphin believes that the release of this Apple MR product is still very meaningful:

Short-term perspective: Although Apple's product has highlights, the price is higher than expected, which will have a certain impact on overall sales. And the release time will be in early 2024, so it will not bring actual performance this year;

Medium and long-term perspective: ① Apple has entered the field, and after more than ten years of accumulation, it finally has a product, opening up a new hardware field for Apple again; ② The release of Apple's products boosts the AR/VR market, which has declined significantly; ③ The entry of major manufacturers promotes large-scale production, which is conducive to cost reduction and product price reduction, and expands the entire market; ④ The introduction of new chips and new systems, as well as the abandonment of controllers, can accelerate industry innovation. Apple's Performance in the Next Two Years Will Still Be Mainly Based on Its Current Business, and the Dolphin Estimates That the Net Profit for FY2023/2024 Will Be 100/108 Billion US Dollars, Corresponding to a PE Ratio of 28/26 Times the Current Stock Price, Without Obvious Underestimation. The Dolphin Believes That MR May Be Apple's Star Business in the Future, but There Are Currently No Clear Signals.

New Products Bring New Perspectives. We Will Continue to Track Apple's Business Changes and Update Them in a Timely Manner. Welcome to Follow the Dolphin.

Let's Take a Look at Apple's MR Products with the Dolphin:

I. Apple's Layout in MR

In fact, Apple began to lay out VR/AR as early as 2010. At that time, the company spent $29 million to acquire Polar Rose, a company that specializes in face recognition technology.

Subsequently, Apple successively acquired VR/AR-related technology companies such as PrimeSense, Metaio, and Fly Media, thereby expanding the company's 3D motion capture technology, AR and machine vision technology, and spatial perception technology.

After years of acquisition and independent research and development, Apple has now accumulated more than 5,000 patents related to AR/VR technology. This also makes the market believe that Apple will inevitably launch MR products.

And now, Apple has finally released the "long-awaited" MR product-Vision Pro. Let's take a look at the first MR product that Apple has accumulated for more than ten years and launched.

II. Configuration & Cost

First, let's take a look at Apple's new MR product-Vision Pro.

2.1 Specific Configuration of Vision Pro:

Price: $3,499

Release: Early 2024

Chip: M2 chip + new R1 chip (mainly used for high-speed data transmission)

Operating System: VisionOS, the first space operating system with a three-dimensional interface

Hardware Configuration: 23 million pixel Micro OLED screen + 3P Pancake, 12 cameras, and 6 microphones, etc. Operation method: Use iris recognition to unlock, and can be controlled by eyes, hands, and voice (without controller)

Application: Project movie screens, computer desktops, and play 3D videos, etc.

Endurance: 2 hours (using external battery)

Streaming media partner: Disney

Overall, Dolphin believes that this Apple MR has exceeded expectations in many other aspects, except for the M2 chip:

①Chip end: In addition to the M2, this time also specially designed the R1 chip, mainly for processing cameras and sensors;

②Abandon the controller: Completely abandon the controller, and can be controlled by eyes, hands, and voice;

③Operating system: The dedicated VisionOS is the first spatial operating system with a three-dimensional interface;

④Spatial audio system: Positional sound according to the real environment or virtual screen.

2.2 Apple MR's pricing and cost situation:

For the first MR product released by Apple, the price of 3500 US dollars was expected, but it is still expensive. Dolphin and everyone will take a look at where the product is specifically expensive.

According to industry research and industry chain research, Dolphin estimates that the BOM cost of Apple's new MR product (Vision Pro) is approximately US$1360. The largest material cost comes from Micro OLED display, camera module, SoC chip, and pancake (optical module). The total cost of the four parts is nearly 700 US dollars, accounting for more than half of the overall material cost.

Considering the transportation and other costs after the product is manufactured, the cost of a single MR device is about 1500 US dollars. Considering the final retail price of the product (3500 US dollars), Apple's MR material/transportation cost ratio is about 45%, plus other miscellaneous costs such as tariffs, the corresponding gross profit margin is still above 40%.

Although this is the first MR product launched by Apple, Dolphin believes that the company's current positioning of the product is Apple's first trial MR product, which is more targeted at loyal Apple fans, technology enthusiasts, and ecological collaborators.

Product comparison

So what is the difference between Apple's Vision Pro and other high-end flagship products from other brands on the market? Dolphin mainly compared the head-mounted display products of Meta and HTC priced over 1000 US dollars. 1) Price: Apple's Vision Pro is the most expensive head-mounted display device, with a single unit price of $3,500, while Quest Pro and HTC are priced at $1,500 and $1,099, respectively;

2) Weight: The weight information of Vision Pro has not been announced yet, while the flagship models of $Macys(M.US)eta Platforms.US and HTC weigh 722g and 625g, respectively. From the Apple press conference video, the demonstrators were mostly sitting, so Dolphin speculates that the weight of this product should not be light. From the components, the weight of Vision Pro may exceed the other two products;

3) Chip: Only Apple uses self-developed chips, while Meta and HTC use Qualcomm chips. Apple has opened up a path for future independent development, while other manufacturers may be trapped in homogeneity in terms of chips;

4) Display: Apple adopts the Micro-OLED solution, which is currently the best on the market. The cost of this solution is the highest, but it also allows Vision Pro's dual-eye resolution to reach 8K;

5) Control method: Apple's innovation this time abandons the controller, and can be controlled through eyes, hands, and language, which is also the first in the market.

Dolphin believes that Apple's MR product Vision Pro is indeed expensive, but it has also made significant improvements to the entire head-mounted display device, including the best Micro-OLED solution, self-developed VisionOS system and chips, and the abandonment of the controller. From the disclosed information, Apple's Vision Pro should be the best MR product currently.

Dolphin's historical articles on Longbridge Apple:

Financial report season

May 5, 2023, financial report review "Apple: Turning the tide in adversity is the true "king of machines""

May 5, 2023, conference call "Apple's turnaround in adversity, is it all thanks to emerging markets such as India? (Apple FY2023Q2 conference call)"

February 3, 2023, financial report review "Apple: The thunder that has been entangled on the body has finally come out" 2023 年 2 月 6 日电话会《 Demand Impact Limited, Guiding Confidence Continues (Apple FY2023Q1 Conference Call)》

2022 年 10 月 28 日电话会《 Apple: The Peak Season is Not Prosperous, and the "Roll King" Cannot Escape Decline (FY2022Q4 Conference Call)》

2022 年 10 月 28 日财报点评《 Apple: The Only Giant Who Hasn't Fallen, How Long Can It Last?》

2022 年 7 月 29 日电话会《 Only the iPhone Business is Embarrassing, How Will the Management Explain? (Apple Conference Call)》

2022 年 7 月 29 日财报点评《 The Slightly Increased iPhone Has Become Apple's Last "Fig Leaf"》

2022 年 4 月 29 日电话会《 Apple Gives a Weak Guidance Due to Multiple Factors (Conference Call Summary)》

2022 年 4 月 28 日财报点评《 Apple, Who Is Crazy About Making Money, Should Worry About Growth! | Earnings Season》

2022 年 1 月 28 日电话会《 Apple: Supply Crisis Eases, Innovation Ignites Real Technology (Conference Call Summary)》