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Tim Cook seeks Apple’s next iPhone moment with bet on VR

Apple chief Tim Cook - APPLE INC HANDOUT/EPA-EFE/Shutterstock
Apple chief Tim Cook - APPLE INC HANDOUT/EPA-EFE/Shutterstock

In his 12 years in charge of Apple, Tim Cook has turned the Silicon Valley giant into the world’s biggest company, multiplied revenues, and sold billions of iPhones.

However, one thing has continued to elude the 62-year-old: Under Cook’s tenure, the company is still yet to release an industry-defining product on the scale of the iPod or iPhone, which debuted under Steve Jobs’ leadership.

While devices released since Jobs’ death in 2011 have become market leaders, such as the Apple Watch and AirPods, they revolve around the iPhone’s forcefield, rather than creating their own orbit.

On Monday, that is likely to change. Apple is widely expected to unveil a long-awaited virtual reality (VR) headset, the culmination of years of skunk works research into the technology.

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The device, which Apple watchers are speculatively calling “Reality Pro”, is expected to fire the starting gun on a push into headgear that could one day see us wearing reality-enhancing eyeglasses as naturally as we cradle iPhones.

Apple is likely to manage expectations as the VR headsets are not expected to sell in the same volumes as the iPhone. For one thing, the first version of the device is forecast to be expensive, with a rumoured price of $3,000 (£2,400). It will not be released for several months at the earliest, and battery life will be limited.

However, there is no doubt that the launch is the most pivotal of Cook’s leadership. VR – and its sister technology augmented reality (AR), in which virtual objects are projected onto a person’s view of the real world – represent a new computing paradigm: an alternative to the iPhone, rather than an augmentation of it.

“It feels like the riskiest product launch they’ve ever done,” says Ben Wood, a long-time Apple watcher at analysis firm CCS Insight. “There are a lot of challenges to overcome to have a successful product and the expectations for Apple will be sky high, because everything they do, people expect it to be the best.”

VR is not a new technology. Nasa worked on prototype headsets as early as the 1970s. Nintendo released a “Virtual Boy” headset in 1995 but halted sales after a year following damning reviews and complaints of nausea and headaches.

Mark Zuckerberg paid $3bn for VR company Oculus nine years ago, and in subsequent years HTC, Meta and Sony released headsets that connected to powerful gaming computers or consoles.

Wood says: “So far, there’s very little evidence that virtual and augmented reality is something that is on a very strong growth trajectory.”

An apparent breakthrough moment came in 2019 when Facebook released the Quest, the first headset that could play powerful games without having to plug into a computer. Its successor, the Quest 2, was seen by Mark Zuckerberg as the “first mainstream VR headset”.

In 2021, sales of VR headsets almost doubled to 11.2m units. The Quest 2 accounted for four in five of those. Zuckerberg was captured enough to rename his company Meta and declare that the virtual reality universe was the future of the internet.

A year later, that vision is hanging by a thread. Sales of VR headsets fell by 21pc in 2022, according to IDC, and by a huge 54.4pc in the first quarter of this year.

Meta's Quest VR headset - ROBYN BECK/AFP via Getty Images
Meta's Quest VR headset - ROBYN BECK/AFP via Getty Images

Cook’s challenge on Monday will be answering the question: what VR is for? The device is expected to allow FaceTime video calls, fitness features and 3D versions of Apple’s existing apps, although it will also have a heavy focus on gaming, the technology’s most clear use case to date.

Software developers are expected to be among the first customers of the device and they will be relied upon to create new experiences, in the same way the iPhone gave birth to Uber, Tinder and Instagram.

Gene Munster, of Deepwater Asset Management, says that the device will be a “stepping stone” to a more compelling AR device that will sell in greater quantities down the line.

Apple’s own employees have reportedly been split on the launch, according to the New York Times, with some leaving the project because of concerns about how successful it will be.

Sales are expected to be modest at first, with analysts at Bank of America predicting just 200,000 units will be sold this year.

“It’s important to recognise that the headset version three years from now will be cheaper, faster and have many more use cases,” analyst Wamsi Mohan said.

Apple can afford to wait for VR and AR to become mainstream. It has created industries before. However, succeeding where so many others have failed could be Cook’s defining challenge.

Cook told a group of students last year: “You’ll wonder how you lived your life without augmented reality, just like today you wonder: How did people like me grow up without the internet?”