Apple's headset could be a cash cow for VR market investors, says Ming-Chi Kuo

AppleInsider

Apple's mixed-reality headset announcement at WWDC will give a boost to not just Apple's supply chain, but the entire VR market, analyst Ming-Chi Kuo insists.

A render of a potential Apple headset [AppleInsider]

Rumors and speculation have hyped the Apple VR and AR headset as an almost sure thing for WWDC in June. Following an earlier doubting of whether it will make an appearance, TF Securities analyst Ming-Chi Kuo is now back on board with it actually happening.

In a Medium post on Monday, Kuo believes it is "highly likely" that Apple will make its headset announcement at WWDC. "I think Apple is well prepared for the announcement of this new device," Kuo proposes.

While good for Apple, the announcement should also bode well for supply chain members who may see share prices rise.

Aside from Luxshare's assembly of the headset, Kuo posits that the Sony-exclusive micro OLED displays, TSMC-exclusive dual processors, Everwin Precision-supplied casing, Cowell-exclusive camera modules, and the Goretek-exclusive external power supply will be the "top 5 most expensive material costs" for the device.

Kuo adds that Cowell should be the largest beneficiary in terms of revenue and profit contribution to suppliers, due to it having the "smallest revenue size."

If the announcement goes "better than expected," Kuo insists headsets will "soon become the most important new investment trend in the consumer electronics sector."

In early April, Kuo proposed that Apple's headset is "likely the last hope for convincing investors that the AR/MR headset device could have a chance to be the next star product in consumer electronics."

While Kuo offers positivity, a report from Saturday claimed that Apple is "already anticipating some production issues" and that "manufacturing delays" is pushing mass production into September.

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williamh

I would like to thank the author for not rolling out the "expected to cost $3,000" as has appeared in every other story about this headset.  I honestly think that line is Apple FUD intended to make the actual cost look cheap. 

blastdoor

I wonder what “dual processors” means. 

Could that be M2 ultra? From TSMC’s POV, an ultra could be seen as “dual processors” in the sense that it’s made of two dies. 

dewme

I’m not following Kuo’s logic here. I don’t see anything in the current VR market that’s poised to be moving towards being a cash cow for investors, I.e., deliver steady returns with minimal investment. I think his premise is that Apple’s entry into the VR market will somehow legitimize or mainstream these existing VR products in the eyes of consumers at large who are still unsure about how VR headsets could potentially fit into their lives, thus raising the tide for all current VR companies.

That could happen, I suppose, but it could also turn out to be more like the iPhone’s introduction to the smartphone market wherein Apple’s entry so thoroughly deviated and improved on the status quo that any thoughts of current players graduating to being cash cows evaporated. Anyone hoping that the Nokia’s and RIM’s of that market were headed to cash cow pastures was probably disappointed to see their current investments turn into ground beef.

I don’t have high hopes for VR headsets based on what’s currently out there. But Apple has surprised us before and we may be more than impressed at what they have to show for their efforts, regardless of the price. A lot of so called “experts,” including one named Steve Balmer, were quick to write off the initial iPhone due to its “exorbitant” price. The rest of the story is as they say, history.

Let’s wait and see what Apple has to show us before speculating about its impact on the VR market as a whole. It could turn out to be infusion (Kuo’s bet), confusion, disruption (iPhone case), or a big hollow thud. I’m hoping disruption wins, but confusion is nipping at its heels based on some of the team reluctance we’ve heard about. Apple had better make sure that doesn’t happen. 

marvin

blastdoor said:

I wonder what “dual processors” means. 

Could that be M2 ultra? From TSMC’s POV, an ultra could be seen as “dual processors” in the sense that it’s made of two dies. 

It's unlikely they will use the M-series chips as they use a lot of power. They'd be best having chips closer to iPhone ones that run < 5W and probably with some custom functions (R1 = Reality One chip on 3nm, 2-4TFLOPs).

Maybe they will have one processing chip per eye to help keep it cool. If they had a more powerful chip on one side for both eyes, it would heat up one side of the face. They can have dual R1 that sync data between them.

dope_ahmine

The Macalope says “no one” will buy the Apple headset.
  

marvin

dope_ahmine said:

The Macalope says “no one” will buy the Apple headset.
  

They said very few people will be able to afford a $3k headset, which is an obvious statement. This figure was just made up and has been repeated by so many reports without any source for years:

https://twitter.com/alexeheath/status/1357351682464641025

Apple knows what unit volume they can get at that price point (under 3m = $9b). If their unit volume aim is higher they will build it to a lower price point.

12 cameras x $20, NAND $50, processor x2 $100, displays x2 $150, battery $20, connectivity $20, chassis $50, tracking sensors $50 = $680 parts + $100 assembly = $780. With 40% margin, retail is $1299.

But they can sell an iPad at profit for $329 so their parts and assembly cost must be pretty low to have a display + processor + 64GB NAND + chassis + battery + connectivity + 2x cameras + motion sensors:

https://www.apple.com/shop/buy-ipad/ipad-10-2

At 30% margin, that's $230 cost for everything. Even doubling up on that cost leads to a $699 price point with 30% margin.

If they wanted to, they could build a headset below $700. The original iPad launched at $499, today that would be $699.