Morgan Stanley currently forecasts that Apple's headset business will "conservatively" ramp up to $4 billion per year in revenue after four years. In theory, this would be below the product ramps of the Apple Watch and AirPods in their post-launch timings.
$4b per year is 1.1m units at $3500 in the 4th year of sales? Yeah, conservative. They may be able to do that in year 2 or year 3.
As a contrast, Meta's Reality Labs division has never made $4b per year. Here's Reality Labs' financial performance:
This is amazing, and speaks to Zuckerberg's absolutely control of Meta. That operating loss line continues to scale with the revenue line. This implies that if Meta sells more Quest units, they will have more operating losses. IOW, for every Quest sale they have at $500, they lose about $2500.
A normal CEO would have stopped this a year ago, at least. That loss line has to stop getter bigger. There has to be projections in Meta when the Quest ecosystem can pay for itself, and it looks very far away.
Would be interesting to see what the AVP financials are like.
Great graph! So if you dislike Zuck/Meta, the way to help bring him down is to buy as many Quest units as you can and just put them on a shelf, unopened.
Why would people do that? Just don’t buy. But people who boycott Meta are a tiny niche as all their properties are doing very well save for Reality Labs. Facebook, Instagram and WhatsApp have metastasized into culture and it takes a lot of people to stop using them.
This advantage is bigger than Apple’s ecosystem as Apple has competition. No real competitors for Facebook, Instagram or WhatsApp. You can switch to a Windows and Android ecosystem without much pain.
Reality Labs though? Wow. They have spent about 40b in the last 4 years to make about 8b? And their active users on Quest is single digit millions?
Apple has likely put in 10b over the last 8 years or so on this. I think they need to be on order 10b per year to recoup their investments and make it a self sustaining business. 3 to 4 million units per year depending on ASP.
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Apple has likely put in 10b over the last 8 years or so on this. I think they need to be on order 10b per year to recoup their investments and make it a self sustaining business. 3 to 4 million units per year depending on ASP.