by Apple’s ( AAPL ) much-anticipated Vision Pro headset has finally hit store shelves. It came six days after the tech giant reported first-quarter results that underwhelmed investors.
DA Davidson Managing Director Gil Luria says the Vision Pro “changes perceptions about Apple’s ability to innovate,” an issue that has arisen because the company hasn’t launched a new product category in a few years. Luria thinks the device will change the way we do computing” and that “Apple is leading us into the future.” Luria also explains that in the future devices like glasses are likely to be more than the big headphones that consumers have discussing them today.
In the earnings report, one sore spot for investors was Apple’s sales in China. On that point, Luria says there is “little visibility” in Chinese sales, describing the outlook as “murky.” Luria argues that there are many factors related to Apple’s business in China including the country’s weakening economy, the competitive handset market, and a government that can be defensive.
Watch the video above to hear what Luria has to say about progress with the iPhone and how Apple can use AI generation.
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Editor’s Note: This article was written by Stephanie Mikulich
Video transcript
JULIE HYMAN: Apple’s Vision Pro hits shelves today with CEO Tim Cook celebrating the launch at the company’s flagship store here in New York City on Fifth Avenue. It’s Apple’s first major new flagship since 2015, with a price tag of nearly $3,500. This comes on the heels of earnings, of course, last night, but the stock is lower edge, really bounced around because of weakness in China. He is well off his low part of the day. Bring in Gil Luria, managing director of DA Davidson, to talk more about this. Hey, Gil. Good to see you.
GIL LURIA: Good to see you.
JULIE HYMAN: We start with the Vision Pro and then we can expand it to the earnings. $3,500, a great product by most reviewers, that’s what they’re saying. What does this – what does the Vision Pro do for Apple?
GIL LURIA: Well, the first thing it does is it changes perceptions about Apple’s ability to innovate. We haven’t had a new product category in a while and this is a huge innovation. It will change the way we do computing. Spatial computing is very different than how we do it now, how we interact with applications, how we see what we see, where the battery is, where the display is. So Apple is giving us the future. So far, at a price point that most people can’t afford, but it will at least give some people perspective on where things are headed, especially so that developers of the applications and develop the new tools that are more suitable for spatial computing.
JARED BILKRE: Gil, maybe I’m just reading into this personally, but I see the pictures with Tim Cook with the new headset on. He doesn’t look like the happiest person. And you know, I go back, Jony Ive, really never in AR and VR. Not sure if this would support it. In fact, he left Apple before this was really developed. I’m just wondering if there is something there. If you think people inside Apple are really gung-ho about this.
GIL LURIA: Well, again, the point is, this is not what we’ll have on our heads in five years. No one will want this heavy, clunky device with an external battery that weighs a pound, and has multiple straps that need to be adjusted. This is not what it will look like in five years. In five years, it’s going to be just glasses. All we need are glasses to see our surroundings, we can see multiple screens, and multiple applications at the same time, and that’s how we’ll use this device. It’s not going to look like the big ski goggles they wear today.
JULIE HYMAN: Gil, can we assume that even as this spatial computing innovation is happening, the iPhone is kind of an innovation, right? It has become like the — are we going to see another leap of innovation in smartphones, or, with the existing technologies, almost as far as it will go?
GIL LURIA: Well, I think there are a few more opportunities for innovation. So phones can be lighter, thinner, possibly transparent, and foldable with some other handset manufacturers. But what would really look out is that Apple will introduce new AI generation capabilities, probably in the case of WWDC in June and they could tie it to the next iPhone cycle.
So the iPhone 16 may be the only handset capable of running these types of applications. And if that’s the case, we’ll have a big upgrade cycle. The last time we had a big upgrade cycle was the iPhone 12, which was the first phone that could go on a 5G network. If they make a phone that’s the first and only phone that can do something that consumers want, like generation capabilities, that could drive another upgrade cycle.
JARED BILKRE: I have to ask you about China because that has been a sore spot, not only for Apple, but for the whole exporting world for that matter. What do you think the future holds for Apple, especially in China?
GIL LURIA: We have little visibility, the outlook is murky because there are so many factors that contribute to performance in China. First, the Chinese consumer, the economy is weak, the market is weak, the real estate markets are weak, the sources of wealth are spreading to that Chinese final consumer. Then you have – it’s the most competitive handset market with a local incumbent that’s very competitive in terms of prices, but also has some rich features they’re introducing.
And then finally, you have the government decide how protective they want to be. There are reports out of China that they are not allowing government-backed agencies, people who work in those types of agencies, to have iPhones. Perhaps, as retaliation around our measures to limit AI chips. Perhaps, as part of a larger political statement. Either way, those are things that will be very difficult for Apple to predict. It will continue to be in that market. In fact, they still had the highest share in China last year with all this, but it will be very difficult to predict what will happen to that in the future.
JULIE HYMAN: Gil, you mentioned AI in passing, right? And Tim Cook teased that something is coming from the company on the AI side. I mean, Apple often leaks a little. Maybe we’ll get a little more insight into what it could be. But I mean, do you have any theories? And I think, a three-part question. Do you have any theories? When do you think we will learn more? And what is that going to do for Apple?
GIL LURIA: Well, so usually it’s not Apple that’s leaking, it’s their – they have such a wide supply chain that just– that someone, somewhere, an Apple vendor is usually the person leaking it . Apple actually tried really hard not to start running its product, but so – because there is so much speculation. And that’s what they’re doing here. What we don’t know right now is that there are already uses for AI. When we use our text to — and they autocomplete text, that’s what AI is used for.
You could expect that to expand from there. But based on the resources they have and the attention they’re focused on, and how important it is to their future, I would expect some things that we haven’t thought about yet to come out later this year, to make the experience improve. , to help us summarize experiences, pre-community messages, and perhaps help more with translation, to language or programming, or to maneuver applications. There are many things they can do. And again, they have so many resources, so many smart people working in Cupertino, that I would expect them to do something that will affect us.
JULIE HYMAN: Gil, thank you very much. Appreciate it.
GIL LURIA: Thank you.
