by Apple’s (AAPL) Vision Pro officially hit the market on Friday, marking the company’s most significant product launch since the Apple Watch back in 2015. But enthusiasm for the company’s most ambitious product in years was tempered on Wall Street after Apple reported a slowdown in Chinese sales during its first fiscal quarter.
The Vision Pro, as Apple calls it, is a spatial computer. But for the average person, it’s a high-powered AR/VR headset.
I first used the Vision Pro after Apple debuted it during its WWDC event in June 2023, and again just before its February 2 launch. And yes, it’s as great as you’ve heard.
But there’s a lot riding on the Vision Pro’s long-term success as Apple looks for its next big product platform. With storm clouds swirling over Apple’s Cupertino headquarters, the company needs a win more than ever.
Apple’s rough start to 2024
Apple has been dealing with a range of difficulties during the first few weeks of the year, and it’s not looking any brighter heading into February. But the most pressing issue facing the company right now is slowing sales in Greater China.
Apple’s third largest market behind North America and Europe, China has been a key catalyst in Apple’s growth story over the years as the country’s expanding middle class and rising smartphone sales fertile ground available for the popularity of the iPhone in the region.
According to Counterpoint Research, Apple remained the best-selling smartphone brand in China in Q4 2023, taking 20% of the market compared to local rivals Xiaomi, Huawei, and Honor, which took 16%, 15.2%, and 15.1 %, respectively. But Huawei saw its year-on-year market share jump to 71.1% from the previous year thanks to its new 5G smartphones, while Apple’s number fell by 9%.
That, combined with China’s lumbering economy, meant Apple’s total Greater China revenue fell from $23.9 billion in Q4 2022 to $20.8 billion in Q4 2023.
According to UBS analyst David Vogt, if Apple’s decline in market share is permanent and the smartphone market grows by a projected 3% in 2024, “the lost share in China could push iPhone revenue to slightly more than $7B, pace iPhone revenue heads 3.5% and company-wide ~1.9% headwind.”
There are many regulatory headwinds
Apple is also facing regulatory problems in the European Union as it works to combat the bloc’s Digital Markets Act (DMA). Coming into force this year, the DMA ensures that large technology companies do not have too much power over the wider technology ecosystem. So far, Apple has announced that it will open up its platform, allowing users in the region to install third-party app stores and giving app developers the option to offer third-party payment options to users further. nor Apple’s in-app payment system.
But there is a catch. If developers decide to use external payment options, they will still have to fork over cash to Apple. However, the tech giant says the charge, which amounts to a 50 cent fee, only applies to developers whose apps are downloaded more than 1 million times a year. After that they will have to pay that fee for all subsequent downloads.
Critics, including Spotify CEO Daniel Ek and Epic CEO Tim Sweeney, have hit back at Apple with Ek calls new rule “hostile” and Sweeney saying that a “A terrifying new home of Malicious Compliance.” The EU has yet to decide whether Apple’s new rules comply with the DMA.
In the United States, meanwhile, Apple is staring down potential Justice Department antitrust litigation. According to the New York Times, the DOJ is looking at how Apple regulates its hardware and software as a way to keep consumers locked into its ecosystem and fight off competitors. Although it could take years for any lawsuit to end the legal system it could draw attention to the company at a time when it is trying to push into a new product category.
Here comes the Vision Pro
The Vision Pro serves as Apple’s next generation computing platform. At $3,499 it’s not exactly priced to move for the average consumer, but that doesn’t minimize its importance to the company.
After years of development, the headset can not fail. And while I was only able to use it briefly over two separate sessions of about 30 minutes, it’s hard to imagine a competitor matching what Apple has to offer anytime soon.
The display is the sharpest I’ve seen on an AR/VR headset, the fit is comfortable, and the interface is incredibly easy to navigate. Apple has a huge library of apps for the Vision Pro, although some notable big names are missing, including Netflix and YouTube.
There’s also the fact that the Vision Pro is powered by an external battery that Apple says gets two hours of battery life, which may be a turn-off for some users.
I’ll dive deeper into what it’s like to use the Vision Pro when I get my hands on one for an extended period of time, but it’s safe to say that Apple has created an incredible piece of technology. Now it needs to be sold to the general public on it.
Add that to the list of challenges the company will have to overcome in the coming year.
Daniel Hawley He is the technology editor at Yahoo Finance. He has been covering the tech industry since 2011. You can follow him on Twitter @Daniel Howley.
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