Apple's MR Headset Could Be A Hit Like iPhone, iPad With These 2 Two Things: Gurman

Apple Inc.'s AAPL Vision Pro may not find much traction with its current pricing and form factor, according to Bloomberg columnist Mark Gurman.

iPhone, iPad Flew Off Shelves At Launch: The Vision Pro mixed-reality headset will take much longer to be a significant revenue contributor, Gurman said in his weekly Power On newsletter. Recall how the iPhone and iPad were major revenue earners nearly instantly, Gurman writes.

The iPod took a bit longer, generating about 16% of the company's sales in 2004 — three years after its launch. And when the iPhone was announced in 2007, the share of iPod to Apple's annual revenue was at 40%, Gurman said.

Meanwhile, iPhone unit sales rose to 1 million units in three months of its launch and topped 10 million units in the first full year on sales, the Apple specialist said. By 2009, it generated about a third of Apple's total revenue, he added.

Similarly, iPad was an instant blockbuster. It generated nearly $20 billion in revenue or about 18% of total sales by 2011, a year after its debut. The company sold 15 million iPads in the first year, nearly tripling iPhone's initial performance, he said.

Apple Watch started off slower than iPhone and iPad, but has since become an important part of the business. The Wearables Home and Accessories segment, of which Apple Watch is included, fetches annual revenue of $40 billion, the columnist said.

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Vision Pro A Different Story: The Vision Pro will debut at 10 times the $349 pricing of Apple Watch.

The MR headset will launch only in nine countries, and Gurman does not expect the product to expand internationally for several months after its early 2024 launch. It will unlikely arrive at resellers until 2025.

The Vision Pro is a different story, it's heavy, may not have a compelling use case and requires an external battery, the columnist said. “A bigger challenge will be convincing people to do something they've probably never done before: wearing a computer on their face,” he said.

If Apple hits the low end of its tempered Vision Pro unit expectations of 400,000 to 500,000 units, it can rake in revenue of $1.5 billion in year one, assuming an average sales price of $3,700 and incorporating optional prescription lenses and extras, he said.

"To become an iPad-sized business, the category would have to grow by 20 times to about 8 million units annually," Gurman said.

Given the device's drawbacks and price, this will be a tall ask in the foreseeable future, he said.

New cheaper models, subsequent versions with new features like better connectivity to the Mac, improved video conferencing, cellular connectivity, and a slimmer form factor will get Apple closer to that goal, he added.

Even if a cheaper version comes in at $1,500 to $2,000, most people might still opt for the safer pick such as the Mac, an iPad or other existing devices, the columnist said.

“And that will be the case for most consumers until Apple can get the product down to the price of an iPhone and into a form closer to a pair of eyeglasses,” he wrote.

Apple closed Friday's session down 0.59% at $190.86, according to Benzinga Pro data.

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