Apple is going to win the AR war – or no-one is

I feel a bit sorry for Mark Zuckerberg.

After spending years attempting to pivot his company around a bold new idea – ‘The Metaverse’ – Apple has almost certainly blown up all of his plans in the space of one presentation.

With the launch of the Vision Pro next year, the battle for augmented reality (AR), virtual reality (VR), spatial computing or whatever we call it, will be reset. And, despite the Vision Pro’s $3,500 price, it seems inevitable that Apple will set the terms of doing business for this emerging product category.

This is terrible news for Meta. One of the reasons Zuckerberg leant so hard into VR/AR was that it presented an enormous opportunity for the company to become the platform-holder for the Next Big Thing.

As things currently stand, a significant strategic weakness of Meta compared to its fellow tech giants is that it doesn’t control either of the two mobile platforms. Everything the company does is mediated through Apple and Google’s app stores and web browsers.

This has several important consequences. First and foremost, it hands Meta’s rivals a veto over new apps and services offered by the company. But just as importantly, it means that Apple and Google can act like feudal lords, extracting a tax on everything that passes through their gates – whereas Meta has to fight for every dollar it earns.

The Metaverse was one possible escape route from this status quo. If Zuckerberg could make Meta the AR/VR platform, the power relationship would be inverted. It would be Meta that set the terms of engagement for the entire industry.

History repeats itself?

It wasn’t a ridiculous bet. Technological transitions shake up the foundations on which the industry rests, as new winners are crowned and previous incumbents struggle to adapt to the new reality.

We saw this in the 1980s, when Microsoft’s DOS and then Windows upended IBM’s personal computing monopoly. Then, in the early noughties, Apple and Google ended Microsoft’s supremacy as the mobile phone became the device around which the entire tech ecosystem is organised.

So Meta coming out on top in a world of VR and AR headsets would not be unprecedented, as it’s a story we’ve seen time and time again.

However, now that we’re entering the early days of another potential platform shift, I’m sceptical that history is going to repeat itself in the way Zuckerberg wants. I don’t think that Meta is poised to ‘win’ this new category. In fact, I think the likely outcome is that Apple will retain its place on top of the pile.

Why? Because this time is different.

First and foremost, unless there is another major technological breakthrough, such as the development of ‘true’ smart glasses, I think it is unlikely that AR/VR will replace the smartphone as the central node in our lives^[1].

This isn’t just because of where technology currently is^[2]. It’s because a headset is, by definition, more invasive than a black rectangle that fits in our pockets. I doubt that even the most dedicated Vision Pro buyers will be strapped in 24/7.

A better model for the role of AR/VR is like that of a smartwatch, a tablet, and whatever we call Apple CarPlay and Android Auto. They’re accessories to our phone that we use in specific circumstances, so our technological choices for these products necessarily relate to what works with our phone.

There’s a second reason too. Unlike IBM, which allowed others to dominate PCs, and unlike Microsoft and Nokia, which missed the smartphone revolution, Apple seems unusually well prepared to prosper in AR/VR. In many ways, the Vision Pro is the ultimate expression of a number of Apple’s strategic competencies.

The Apple Advantage

Why am I so bullish? Essentially, it comes down to three core ingredients where Apple maintains a significant competitive advantage over its rivals.

The hardware

First is on hardware. Leaving aside aesthetic preferences over styles of industrial design, what’s more important is that Apple has spent the past 15 years designing its own silicon chips, instead of relying on third-party processors made by the likes of Qualcomm.

The advantage of doing it yourself is already clear in the iPhone: Apple’s chips run faster, more efficiently and generate less heat than any comparably powerful silicon. This is thanks to the tight integration between hardware and software, and it means that the newest iPhone can have what are, on paper, lower specs than a comparably expensive Android device, but achieve a greater level of performance.

These attributes are even more advantageous when you have to wear the computer on your face rather than carried in your pocket. Every gram of weight will be directly felt, and if it runs hot, it won’t just be your palm getting warm.

Given these limitations, it is hard to imagine how a comparable headset made by Meta, Google, Magic Leap, Microsoft or anyone else will be able to compete.

There aren’t many ways around this. Any AR-equivalent of Android that emerges as a common platform will be hamstrung by the necessity of hardware being general purpose instead of specifically made for the headset. And any workarounds, such as offloading compute-heavy tasks to the cloud, are much more difficult when augmenting reality requires ultra low-latency data processing.

So it seems inevitable to me that, in the short to medium term at least, Apple will maintain a decisive hardware advantage.

The ecosystem

The inevitable problem when launching any new platform is “What about apps?” Without the support of third-party developers, any new platform is dead on arrival. In fact, arguably one of the most significant problems with existing AR/VR hardware is that it lacks any killer apps that will persuade users to spend time with their headset on.

There is also the perennial chicken and egg problem: developers will be reluctant to build apps and tools for a new ecosystem until it has a proven audience. The problem for AR is that, as the Vision Pro’s $3,500 price makes clear, it is going to be a niche product for at least the first few years.

However, unlike Meta and Microsoft, Apple already has a way to square this circle: its existing developer ecosystem. That’s why the company announced that, from day one, the Vision Pro will be able to run many iPhone and iPad apps.

There are caveats to this – certain APIs and features won’t be available on the Vision Pro, which means some apps won’t work. While this means deployment won’t be as simple as clicking a single button, developers will need to spend relatively little time to get apps working on the new platform. Even if they don’t immediately take advantage of any Vision-specific features.

It’s a level of integration that Apple’s rivals can’t match. While developers have been building iPhone and iPad apps for close to 20 years now, Meta is trying to seed an entirely new platform.

And this is important in terms of the AR-battle to come. It means that when you unbox your Vision Pro, you’ll probably be able to go to the App Store and download Twitter, YouTube and Solitaire – immediately giving you a reason to use the new headset^[3].

Privacy

Perhaps the low-key yet smartest thing Apple has spent the past decade doing is brand itself as the “privacy” company. As you read these words, you may already be picturing the little Apple padlock symbol.

Part of this is a smart reaction to Apple’s weaknesses. It knows that it can’t outclass Google’s cloud capabilities, so instead it has made it a core brand value that data remains encrypted and on your device. Only you can access that data.

While this is a compelling feature for a phone to have, if you’re wearing a dozen different cameras on your face, and your every eye-movement is being tracked, then suddenly privacy becomes even more essential.

This will help when the inevitable privacy debate plays out when the Vision Pro finally hits stores. For the device to work, it will require the constant processing of data from the device’s numerous cameras and sensors. But because Apple has spent the past decade cultivating its reputation, we instinctively trust the company when it tells us what it is and isn’t uploading. The same can’t be said for all of Apple’s rivals.

Victory…?

These are not the only factors that are going to determine the victor in the category. For example, there are what any competitor is going to need simply as table stakes – money and scale – both of which Apple has in abundance.

And though making predictions is usually a deeply terrible idea, I simply can’t imagine a situation in which Apple does not end up the market leader in AR/VR.

This is because any other company that wants to carve out its own space in AR is going to have to not just come up with a better product (difficult because of Apple’s vertical integration from chips to UX), scale it (difficult because of Apple’s cash reserves), grow a developer ecosystem (difficult because a Vision Pro is essentially an iPad on your face), and then win the trust of users over privacy (which is a function of brand, and is easier for established brands).

So for Apple not to win, it would require a significant ‘black swan’ event. Such as a rival making a significant technology breakthrough, or Tim Cook stepping down to be replaced by Elon Musk.

As things currently stand, Apple currently maintains both a qualitative advantage, in terms of technological edge, and a quantitative advantage in terms of the financial and ecosystem resources at its disposal.

…or death?

Although I’m bullish on Apple against its in-category rivals, that doesn’t mean I think the Vision Pro and its successors are going to be a huge success.

At this point, it is still an open question whether consumers at large will want a product like the Vision Pro.

Though I’m personally looking forward to trying the Vision Pro in an Apple Store next year, and then waiting until 2028 to buy the Vision Air 3, or whatever, I know I’m a weird outlier. It’s very conceivable that normal consumers won’t want to wear a computer on their face, even when prices fall.

We already have some evidence of this. Meta has reportedly sold 20 million Quest headsets, yet the scant survey data we have suggests that even headset owners are not very consistent headset users.

So the burden is still on Apple (and its rivals) to provide the killer use-case that proves the category.

If this doesn’t happen, it will mark the beginning of another ‘winter’ for the category. If even the Vision Pro, with all of the advantages listed above, can’t make AR a thing people want to use, it means that the problem isn’t with Apple – it’s with the category as a whole.

This tells us something important about the VR/AR battle to come. If I’m right, either Apple is going to win – or no-one is.

This article has been tagged as a “Great Read“, a tag we reserve for articles we think are truly outstanding.

^[1] Mark Zuckerberg himself reportedly responded after the Vision Pro announcement with relief that Apple hadn’t achieved a new technical milestone, such as projecting digital data onto glass. Instead, the Vision Pro is essentially an iteration of a number of existing technologies.

^[2] Though it was striking that in every demonstration scene of the technology, the user was seated and not, say, walking along a busy street.

^[3] The ecosystem argument also applies to the announcement that you’ll be able to extend your Mac’s displays with virtual screens in-headset. Other headsets can do this too, but require the installation of desktop software and some faffing about. By contrast, for Vision Pro, this feature will be inevitably baked directly into macOS – making connecting your computer to your Vision Pro just as easy as using AirPlay.