Apple's Mixed-Reality Headset Faces Abundant Skepticism Ahead Of Debut

Apple (AAPL), after years of rumors, finally seems ready to launch a mixed reality headset. Apple stock investors want to know if the headset will become the next big hit like the Apple Watch or a failure like the Newton digital assistant.

According to media leaks, Apple will announce the computer eyewear at its Worldwide Developers Conference (WWDC), which begins June 5th with a keynote presentation by Chief Executive Tim Cook. The goggles will likely be available in fall, as they combine virtual reality with augmented reality.

According to various news reports, the headset could be called Apple Reality Pro (or Reality One) and will cost around $3,000. This headset would cost three times as much as the Meta Quest Pro virtual-reality headset, now at $1,000.

Wall Street and internal critics of Apple's headset have been numerous. Virtual-reality headsets are still a niche product that has yet to catch on in the mass market. Its rumored $3,000 price tag will limit its appeal.

According to former and current Apple employees, there are concerns and doubts about the product. They were concerned about the product's high price and its utility. However, the employees requested anonymity so they were not quoted.

Apple Stock Rises Before Announcement

Despite this, Apple stock is trending higher in advance of WWDC. Apple stock was up 27.5% year-to-date, as of Tuesday's close. The S&P 500 index, however, was up 6.8%.

According to reports, the Apple headset will look like ski goggles. It also comes with a hip-pack for power. The headset will also be equipped with sensors that allow for gesture control and hand tracking.

Apple's headset will feature high-end displays as well as a dial that allows you to switch between real life and virtual reality. It will also use external cameras to transmit video from the real world to its wearer.

Apple and other tech companies have a long-term goal of creating lightweight, augmented reality glasses that can be worn all day. These glasses will overlay digital information into the user's field of vision.

Analysts say augmented reality glasses will be available in the future, but they are still years away.

A Second-Generation Headset is in the Works for 2025

Apple's product roadmap for the headset features a second-generation product in 2025 and a lower-cost version of the original. Bloomberg reported that technical issues have delayed the development of smart glasses with augmented reality.

Jitesh Ubrani, an analyst at IDC, stated that Augmented-Reality glasses are very difficult to create. They would have to include high-resolution transparent displays and processors, as well as long battery life in a stylish, lightweight device.

He said, "These are difficult problems to solve."

Virtual-reality headsets can block out the world around them and place wearers in a completely digital environment that allows for video and games. Mixed-reality headsets like the Apple product are able to play virtual reality content as well as simulate augmented reality by using video pass-through.

Ming-Chi Kuo, an Apple stock analyst with TF International Securities, said that mass production of Apple Reality headsets has been delayed to the mid- or late third quarter. He stated on Twitter that it is likely that only between 200,000 and 300,000 units will be shipped this year.

Kuo stated that Apple isn't optimistic about the headset "recreating an amazing iPhone moment". The introduction of the iPhone in 2007 was a huge success for Apple.

Apple could market the headset as an enterprise product, or call it "a hobby", to lower expectations. This would be similar to what it did with its Apple TV set top box.

Apple Stock News: First Step In Long-Term Strategy

Dan Ives, analyst at Wedbush Securities, said Apple is releasing a first-generation product primarily to get software developers to work on content and gather feedback to improve the product.

Ives stated to IBD that this is just the beginning of a longer-term strategy for Apple. He says that the second and third generation headsets will be more important to the company.

Ives stated that Apple will demonstrate how the headset fits in the company's wider ecosystem, which includes software and services, at WWDC. The headset will offer more immersive experiences through the company's fitness and gaming services, as well as music and video.

He said, "I can see this being used to play a game of soccer with the cast from 'Ted Lasso'."

Ives stated that Apple will also be showcasing its achievements in artificial intelligence with the new headset.

Ives rates Apple stock outperform, with a target price of 205. Apple stock closed Tuesday's regular session at 165.63

It's not the best climate for a pricey product launch

Ives stated that he believes Apple will make its headset a major success and grow it over time. Apple doesn't have many failures, such as the Newton personal digital assistant that it discontinued after four years.

Other than Apple and Facebook parent Meta there are many other companies that make virtual-reality and mixed reality headsets, including Canon, HTC and Microsoft (MSFT), and Sony (SONY).

Ubrani, an IDC analyst, stated that Apple's entry into a market has always been the tide that lifts all ships. They did it with the iPad. They did the same with the Watch. They've also done it with other product lines.

However, with the global economy in shaky shape, it is not the ideal time to get an Apple headset, Wedbush's Ives stated.

Ives stated that it is not a strawberry, champagne and whipped cream macro. "So, when is the best time to release this?"