Nine predictions about the Apple Headset and the VR industry

Blume investment team member Joseph Sebastian gazes through the crystal ball to present nine predictions about the highly-anticipated Apple headset launch on June 5th evening (EST) and its possible impact on Apple/VR industry. This piece is published before Apple's WWDC 2023 event happened.

Apple has been rumored to be working on a headset for years, and there is increasing speculation that the product could be released later today. My colleague Swathi and I at Blume Ventures have been tracking the space closely for the last 6 months ( especially since the Trademark RealityOne was registered). While Apple has not confirmed any details about the headset, we can make some educated guesses based on its past products, market trends, rumors, and some industry insights.

Here are nine predictions about the Apple headset release:

1. MR headset: The continued challenge with VR has been its isolating effect on the user. Apple is likely to use a Mixed reality approach that will allow users to see the real world through the lenses of the headset, while also seeing virtual objects that are overlaid on top of the real world. This opens up a wider set of collaborative use cases.
2. Completely new UI / HCI: Apple has a history of introducing new user interfaces and human-computer interfaces (HCI) with its products. The ’84 Macintosh was the first popular computer to use a mouse / GUI, the iPod had the clickwheel, the multi touch bases smartphone UI, and the Apple watch introduced a digital crown based HCI. The Apple headset is likely to introduce a completely new UI / HCI that is specifically designed for MR. Its entirely possible that apple will choose to ditch the controllers and go with eye and hand tracking (patent applications already suggest this direction). Apple will do to VR controllers what it did to the smartphone stylus.
3. Solving the killer app problem: Beyond gaming, VR has not seen a killer app that has captured the public imagination. Historically (as in the case for email for the desktop, chat for the web and whatsapp for the smartphone) communications has been central use case for ensuring the adoption of new computing platforms. Apple is likely to build an app similar to facetime and emphasize on it during the launch. Content consumption ( Apple TV) would also be another key use case.
4. Leveraging the apple ecosystem: Unlike Meta, Apple has the benefit of a large established ecosystem that the headset can leverage and many patent filings point to this. The Apple headset is likely to be tightly integrated with the rest of the Apple ecosystem. While all of this might not be integrated in the first edition, one can imagine a world where the headset authenticates a user via apple watch, the iphone can be used as a quasi controllers ( after all it does have a gyroscope, acclerometer and camera), will work as an external display for your mac ( as the immersed app enables in the Meta quest) and it will definetly use Siri. The headset could also be used to access Apple’s vast library of content, including movies, TV shows, and music.
5. Apple Stock will fall 3–7%: When Apple releases a new product, its stock price often tanks. This is because investors are concerned about the high cost of development and the risk that the product will not be successful. In the case of the Apple headset, the cost of development is likely to be even higher than for previous products, such as the iPhone and the Apple Watch. Additionally, the market for MR headsets is still very small, so the stock market is likely to react to this risk negatively after the announcement.
6. VR startups will be back in vogue for funding: As the chart above suggests, VR startups had fallen out of favour for VCs over the last year. The release of the Apple headset is likely to revive interest in VR startups. In the past many VCs have built dedicated strategies around major paradigm shifts that have been very succesful.
7. The convergence of AI and VR: Many exciting products will be built at the intersection of AI and VR. Generative models could be used as key developer tools to reduce development timelines for VR. There are already several exciting pilots out there.
8. The next app gold rush: The growth of new platforms tend to be exponential in a way that makes it impossible to imagine the real size of the market. Steve jobs reportedly remarked when the ios App store reported $30mn of revenue that “ Who knows, it will be a $1bn marketplace at some point of in time”. App store sales are at least 70x that today. A similar scale could be achieved for XR in the coming years.
9. The emergence of global consumer apps from India: India has steadily moved up the value chain at every major paradigm shifts in computing platforms. When Windows 95 was introduced, many would recall that there were virtually no Indian-made applications to open when one clicked the start button. However, the advent of the internet led to the emergence of portals like Rediff and Sify, showcasing India’s capability to adapt and create relevant content. Similarly, with the rise of smartphones, a plethora of Indian apps and games captured the imagination of domestic users. Now, with the paradigm shift to VR, perhaps the time has come for India to establish itself as a global player by building popular consumer applications for the world — from India.

These are just nine predictions about the Apple headset release. Only time will tell if these predictions will come true, at the very least hope this read was an enjoyable roundup of all the information out there on the apple headset.