In what will come as a surprise to exactly nobody, the revolutionary if ridiculously overpriced Vision Pro virtual reality headset, which retails for $3,500, is not selling.
While it was hardly necessary - at least for anyone with a functioning frontal lobe - an analysis published this morning by the widely-read TF International Securities analyst Ming-Chi Kuo (best known for gathering intelligence from his contacts in Apple's Asian supply chain), who back in January correctly reported that Apple has lowered its 2024 iPhone shipments to a 15% decline, reported that Apple has cut its full year Vision Pro shipments to 400–450k units by as much as 50% versus the market consensus of 700–800k units or more.
Kuo also notes that Apple cut orders before launching Vision Pro in non-US markets, which means that "demand in the US market has fallen sharply beyond expectations, making Apple take a conservative view of demand in non-US markets."
Of course, it's not like anyone - except of course for AAPL's multimillionare management team - had expected that $3,500 heavy neck braces would sell like hot cakes - so it's not exactly a surprise to anyone, excpet Apple which is now "reevaluating its headset roadmap, potentially delaying the launch of a more affordable mixed-reality headset beyond 2025."
Below we excerpt from the full note.
- Apple has cut its 2024 Vision Pro shipments to 400–450k units (vs. market consensus of 700–800k units or more).
- Apple cut orders before launching Vision Pro in non-US markets, which means that demand in the US market has fallen sharply beyond expectations, making Apple take a conservative view of demand in non-US markets.
- Apple is reviewing and adjusting its head-mounted display (HMD) product roadmap, so there may be no new Vision Pro model in 2025 (the previous expectation was that there would be a new model in 2H25/4Q25). Apple now expects Vision Pro shipments to decline YoY in 2025.
The weak-than-expected Vision Pro demand means that the following new trends are likely to be below market expectations.
- MR headset devices. The challenge for Vision Pro is to address the lack of key applications, price, and headset comfort without sacrificing the see-through user experience. In contrast, VR is also a niche market, but at least there are proven successful applications (games), and trend visibility is better than MR.
- Pancake. As the upgrade of optical specifications for smartphones has slowed down for several years, investors expect Pancake, which has a significantly higher unit price than lenses, to become a new growth driver for the optical sector. Weaker-than-expected shipments of Vision Pro will lower Pancake’s contribution to the optical industry in the foreseeable future than investors’ expectations.
- Micro OLED. Vision Pro/MR headset is the most critical application of Micro OLED. With key applications not growing as expected, the timeframe of mass production and adoption of Micro OLEDs in other small-sized consumer electronics devices will be delayed.
Judging by the meltup in AAPL stock - as the rest of the tech sector is grinding lower - it seems that the catastrophic launch of the Vision Pro isn't news to anyone.
